11/09/2016
Political developments are ramping up after the Summer break and the Thessaloniki conference set the scene for Alexis Tsipras to lay out the government's plans for the next 5 years. It's the usual 'we have turned the corner' stuff and an appeal for foreign and local entrepreneurs to invest "without hesitation" in the economy. He also promised a stable tax environment for 12 years to any company investing more than €20m. Does this mean any company investing less than this amount will be subject to instability and uncertainty in relation to taxation?
Once again, it must be stated that unless the whole of Greek society is radically reformed, it will discourage investment, especially investment that creates jobs. An environment where you can spend up to two hours waiting to carry out a bank transaction or spend half a day in a public service department (often having to return more than once with more 'paperwork'), is not conducive to the efficient use of people's productive time, i.e. time at work. It is not evident that this government, or indeed any previous Greek government, understands that there is more to a business-friendly environment than a stable tax regime.
As pointed out in the article below, the unions are to continue the good fight, which thus far, in seven years of ongoing strikes, has achieved absolutely nothing. It remains to be seen what the next act in the Greek drama will bring but it is very difficult to visualise any recovery in Greece without radical reform or exit from the Eurozone.
http://www.ekathimerini.com/211933/article/ekathimerini/news/greek-premier-pledges-growth-amid-protests-austerity-plans
06/05/2016.
The public sector and private sector unions have called a 48-hour strike, to take place on Friday May 6th and Saturday May 7th. A protest strike and demonstration had already been called for Sunday May 8th in order to protest against the new tax and pension measures proposed by the government, with a vote to take place at midnight on Sunday. The result is a three-day national strike.
There will be no public transport until at least Monday, including no metro or bus service from the airport to Athens. Seamen are striking from Friday until Tuesday, so there will be no ferry services to the islands. Hospitals are also operating with emergency cover only as doctors and nurses are participating in the strike. Garbage collection is also affected.
There are a number of issues with this strike which defy logic. Firstly, this is probably about the 45th or 46th general strike since the crisis began and virtually none of the demands of the trade unions have been met. The measures being legislated for have been agreed as part of Memorandum 3, which all the main political parties accepted in Parliament in July 2015. Secondly, the unions are able to call lightening strikes without any strike notice and without a vote of the members. In this case it seems that the General Secretaries of ADEDY and GSEE, (the public and private sector umbrella union organisations respectively) have called a strike and whether it was with or without the consent of their constituent unions is unknown.
In addition, the unions never comment on the fact that these measures are being proposed in order to receive continuing loans from the EU. Without these loans it is difficult to see how the public sector and pensions in general can continue to be paid. Perhaps, defaulting on the debt and returning to the Drachma might be a solution but this option is never mentioned, in public anyway, by the unions or their umbrella organisations, ADEDY and GSEE.
Finally, as mentioned above, these strikes have achieved nothing in the past. The unions have held 'protest' strikes about changes in their pay and conditions continuously, but returned to work once the legislation is passed in Parliament. These strikes cause massive disruption in people's daily lives and are undoubtedly a contributory factor in job losses, apart from a reduction in revenue for business and the government. Permanent damage is also being done to the tourist industry, which should be exploiting the difficulties in Turkey, Egypt and other countries competing with Greece for tourists. For example, A person or family arriving in Athens airport Friday - Sunday for a holiday on a Greek island will have to take a taxi to Piraeus, costing €40-€45. They will be unable to travel by ferry to their required destination until the ferries resume on Tuesday. Anyone arriving on Friday in Athens will be stranded there, without public transport until at least Monday or Tuesday, unless they take a flight to the island they intend to visit. But if (when) the legislation is passed everyone goes back to work without a thought for the damage that has been done.
It could be argued that this is part of the industrial relations environment and culture of Greece but this will have to change for any progress to be made in relation to attracting investment, more tourists and economic recovery. Moreover, if the trade unions have a legitimate grievance, which they often have, then they should go on strike until a settlement is agreed. For instance, if pay or conditions are eroded, the union should call a strike until they are restored or a compromise is reached. There is no evidence of this actually happening since the crisis began in 2010.
The view expressed on this blog since the crisis began is that no Greek government will have the political will to overcome the opposition of vested interests to the measures to modernise the Greek economy. The vested interests include trade unions, which should try to be part of the solution, instead of exacerbating the already deep-rooted problems facing Greece.
http://www.amna.gr/english/article/13708/Trade-unions-announce-general-strikes-from-Friday-against-planned-pension-and-tax-reforms
05/03/2016
The article below outlines the tax changes for 2016 and the effect these changes will have private sector workers earning over €30,000 per annum. This is proof, if more proof were needed, that SYRIZA have no vision or plan to sort out the huge problems facing Greece. Imposing excessive taxation on workers in the private sector has very negative outcomes, such as a reduction in disposable income, leading to reduced consumer spending, resulting in a drop in VAT returns. Moreover, this measure will act as a disincentive to workers and also encourage emigration. Therefore, it's clear that very little thought is being applied when it comes to devising an equitable tax policy. It appears as if SYRIZA just reacts on an issue by issue basis to each problem that arises and seems to have very few ideas about how to devise national policies or govern Greece.
http://www.ekathimerini.com/206665/article/ekathimerini/business/more-taxes-looming-for-salaried-workers-in-the-private-sector
On a different subject, the main political parties have agreed a statement between them on the handling of the refugee crisis. They agreed to honour the promises made to the EU in relation to the crisis and to request the EU border control agency, Frontex, and NATO, to assist Greece in controlling the flow of refugees from Turkey. There were a number of disagreements but at least there is some measure of co-operation between the main parties.
http://www.ekathimerini.com/206663/article/ekathimerini/news/pm-opposition-chiefs-set-out-common-points-on-refugees
02/02/2016
There will be more turmoil in Greece, and particularly Athens, this week due to a transport walkout today and a general strike on Thursday. These 'protest' strikes are against the proposed pension and tax reforms required under the terms of Memorandum 3. The refugee crisis is having a very negative impact on Greece but is also exposing the lack of organisation and accountability in Greek society generally. It appears no government department is responsible for dealing with the refugee crisis and there is no co-ordinated effort between the various government departments and agencies to tackle this issue. It is as if the magnitude of the problem is so great that no one does anything. The same explanation can be applied to the economic crisis of the past 6 years. There are changes that could have been implemented, which would not have solved the crisis in themselves, but would have made life a little easier or efficient. Changes like these would also mean one less issue to deal with. Consider what has been done in relation to the sale of baby food, or milk. These are measures that should have happened many years ago, yet the Greek government was forced to implement changes like these as part of the bailout agreement. The conclusion has to be that Greek society is not very well-ordered and hence the spectre of Grexit continues to haunt Greece and its people. (see article below).
http://www.politico.eu/article/why-were-not-safe-from-grexit-yet-syriza-greece/
20/01/2016
For some years now it has been argued here that it is highly unlikely that any political party, or combination of political parties that form a government in Greece, will be able to implement the measures and reforms contained in the various memoranda. PASOK and New Democracy both failed to implement Memorandum 1 and 2 respectively and there is no reason to believe that the same fate will not befall SYRIZA.
Pension reform and the tax proposals related to farmers are the latest stumbling blocks faced by the government. It seems every union and professional organisation in Greece is opposed to the contentious proposals related to pension reform contained in Memorandum 3. There have been strikes and walkouts by seamen, transport workers and lawyers recently. Moreover, doctors are walking off the job on Thursday in protest against the pension proposals and another general strike has been called for February 4th. In addition, farmers are blocking some main highways to add their weight to the protests.
While there are huge numbers of people opposed to pension reform, no suggestions are being made as to how the various pension funds can be made viable. It seems logical to assume that if the current level of pension payments are to be retained, the government should be able to afford to pay for it. However, Greece is currently living on borrowed money, which will dry up if the reforms are not implemented. As if that was not bad enough, the forecast in relation to the economy is not very encouraging. The report below sees a 2.9% contraction in GDP for 2016, on top of the estimated 25% reduction in Greek GDP since the crisis began. In order for the pension funds to be viable, people need to be contributing into them, which means jobs, but unemployment is at around 26%. Investment is needed to create jobs but taking the disruption caused by strikes, walkouts and protests into consideration, the chances of anyone investing in Greece are slim. This along with the continuous government changes to the tax system and capital controls on the banks, makes the business environment extremely uncertain and acts to discourage investment. It is also having the opposite effect, where companies are now divesting out of Greece, particularly the Athens Stock Exchange.
It seems that if pension reform, and the other measures in Memorandum 3 are not implemented by the government, then they will be implemented by default, literally and metaphorically.
http://www.ekathimerini.com/205267/article/ekathimerini/business/ernst--young-forecasts-gdp-contraction-of-29-pct-this-year
The link below, published today Feb. 21st, also discusses some of the above.
http://www.ekathimerini.com/205262/opinion/ekathimerini/comment/two-sides-of-the-same-coin
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