THE FAILURE OF THE PRIVATE SECTOR IN GREECE

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Dr. Periklis Gogas is an invited contributor to The Business Thinker magazine. He is a faculty member at Democritus University of Thrace, Greece, teaching Macroeconomics, Banking and Finance

For many years now in Greece, even before the recent fiscal crisis, the public sector and the government employees were targeted by Greek national media and the public as the source of many problems that clouded the country’s future. At the center of the debate there is always the myth of the “high” salaries paid in the public sector, the constitutional provision for the permanence of public servants and their alleged low productivity.  At the same time, many young people in Greece have as a career objective to work for the public sector. To the “surprise” of most people, recently, a female student that aced the university entrance exams said to the press that her goal is to graduate from the university and get a job in the public sector. But why is this surprising? Why do people in Greece tend to ridicule the tendency to become a public servant? Is it really such a bizarre and blameworthy aspiration or something very rational given the special circumstances? We tend to criticize such a behavior but at the same time we choose to ignore the serious problems of the Greek private sector: the lack of meritocracy, the family run businesses no matter how small or big they are, the inability to get promoted to career building positions, the very low salaries and overall benefits that amount to only one third of what you get paid in a similar position in another European country. A young person in Greece entering the work force knows that as a government employee he or she will get a higher salary, better social security package and a secure job. Moreover, the most capable, studious and eager for learning will be able to pursue graduate studies at the master’s or Ph.D. level without endangering their livelihood by losing their job. The time has come for the Greek private sector to evolve and change in a radical way their outdated mentality and severe nepotism. It is time to hire the best educated man or woman for the job and not the son, daughter or nephew instead. It is really “strange” that at most key managerial positions in Greek private sector firms you will always find relatives and acquaintances of the owners. Are they actually the best people for the job out of what the Greek job market has to offer? In 90% of the cases, no, they are not! The result is that Greek private companies are trapped within a vicious cycle of introversion and ineffectiveness that leads to low productivity, low competitiveness and inexistent innovation when compared to the international market. It is sad for us academics to watch everyday young people, Greek scientists graduating from Greek or foreign universities not being able to find employment in the Greek private sector and especially a job related to their studies but the same people with the same qualifications manage to get employment when they seek a job in British, German or Canadian companies. How is it possible that these young scientists that are eager to work and to build a career for themselves are not any good for Greek companies but they get hired in better positions and with much better salaries in foreign companies?
The main problem in Greece is not the public sector and government employees! It is not the wages of the public servants that are high but –as data show- the corresponding wages at the private sector are notoriously low as compared to other countries. Moreover, Greek private sector employees are first in Europe in total weekly working hours and they are second after Korea when compared to the OECD countries. Also, what official statistics cannot report is what we all know, that even in large companies employees are not paid any overtime worked, they do not get all the vacation time they deserve by law and in many cases they are paid far less than what their official contract suggests.
The main problem in the Greek economy is the private sector: if this was functioning efficiently, if it was productive and competitive, the young people would never pursue a career at the public sector. Do we ever wonder in Greece why the young people in Canada, Sweden and Germany do not think like that? There is no motive for an educated person in these countries to work in the public sector when salaries in the private sector are much more competitive, there is serious potential for building a professional carrier and so many choices around.

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About the Author:
Dr. Periklis Gogas is a faculty member at Democritus University of Thrace and an adjunct lecturer at the Greek Open University teaching Macroeconomics, Banking and Finance. He is also a Financial Consultant for Gerson Lehrman Group, Austin, Texas. He received his Ph.D.degree from the University of Calgary with supervisor Dr. Apostolos Serletis and worked for several years as the Financial Director of a multinational enterprise. His research interests include Macroeconomics,
Financial Economics, International Economics and Complexity and Non-linear Dynamics.

2 thoughts on “THE FAILURE OF THE PRIVATE SECTOR IN GREECE”

  1. Renee Pecot-Xenakis
    Beautifully and succinctly written! This is the existing paradox as I also see it from the outside. It also begs the question how much longer the tax structure and labor laws in Greece will help proliferate this blatant exploitation. This d…ilemna is not only typical of Greece. The US has similar problems but our economy is more dynamic and there are also more opportunities for mobility. It didn’t take western Europe very long to modernize their economy – my hope is Greece will heed good advice sooner rather than later. Thank you very much for such an enlightening read – keep the good work coming and I hope to contribute in the future.

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