It is the end of the summer season so no more blog posts on Greece. Except of course that the country has found itself in the eye of a financial typhoon and I am constantly being asked about it. So here is a series of blog posts on the Greek problems
It may be apt to remember that only six years ago, the country was the 2004 European Football champion, had staged an incredibly successful Olympics and even won the 2005 Eurovision Song Contest with Elena Paparizou’s ‘My Number One’. But in the same way that the Labour party’s reputation economic prudence went awry with the 2008 financial crisis, so did Greece’s mid-noughties achievements. History may well show that the 21st century started not with 9/11 but with Northern Rock.
Let’s first explode some myths.
Myth Number one: Greeks are lazy and just lie on their beaches while their northern neighbours toil away. The OECD-published statistics show that the reverse is true. In the last decade, Greeks have worked around 2,100 hours per year on average, while Germans work around 1,430, the Finns around 1,700, the French around 1,550 and the Brits (who like to believe their own half-truths) around 1,650. The problem is not that Greeks are lazy – on the contrary. The problem is that they are not as productive as their more advanced northern neighbours.
Myth Number Two: It is Greek social handouts that are the cause of the problem. This is the most ridiculous of all claims, as anyone who has been in Greece is aware that unemployment benefit is negligible and that pensions vary between €300 and €800 on average. Like in all Mediterranean countries, it is the extended family that supports older relatives. Regards health: the waiting lists in hospitals and the quality of care is such that everyone who can goes private or contributes brown envelopes to jump queues. No, the problem is that the state sector is huge and includes water companies, electricity suppliers, telecoms (until recently), chemical factories and, of course, an overbloated army.
Myth Number Three: Greeks are not taxed much. Well, the tax table is as follows:
|Annual Income||Incremental tax rate %|
It is worth dwelling on the Greek tax system, though. The problem is not one of taxation. It is one of tax evasion. In 2009 only 33,000 Greeks declared an income over €100,000 and in 2010 the figure had dropped to 31,000; only 74 declared an income greater than €900,000.
This leads to some interesting stories which I will leave for Part II.
But the next post is about productivity.