Even worse days for firms in 2002?
Greek enterprises continued to perform badly in terms of turnover and profitability in the first two months of the year, according to analysts. Despite the first glimpses of a recovery abroad, the disappointing results of Greek firms last year – an estimated 5 percent below market expectations – do not bode well for the current year. Questions arise regarding the effects of a possible further deterioration in public revenue and employment, as recent data indicate that a significant cycle of contraction in economic activity has got under way in recent months. This is affecting consumer demand but especially private investment. Paradox Critics pinpoint the major problem as the apparent inability of the government to promote the reforms that will facilitate economic development and the competitiveness of enterprises. The paradox, business leaders will say, is that everyone – above all the prime minister himself, his ministers and political parties – seem to be eager to promote the structural changes necessary but in practice, they are all doing their utmost to undermine them. What is worse, this situation seems unlikely to end soon, for a variety of reasons. First, both the ruling and the main opposition party are permeated with, and reproduce, an extremely conservative ideology. For both of them, the public sector takes precedence over the private, the protection of entrenched interests is more important than competition, the maintenance of existing mechanisms is preferred over the creation of new opportunities. Second, labor unions remain stuck in a parochial conception of claims and demands, showing indifference to the health of enterprises and the economy and providing the main force for reaction against any attempt at reform. Even bodies such as the Federation of Greek Industries (SEV) are marked by conservatism and a tendency to preserve the status quo. Proof of this was provided by its recent concessions to the General Confederation of Greek Workers (GSEE) regarding pay raises. These concessions will have little impact on the 10 or 20 largest companies but will hit tens of thousands of other firms outside SEV’s core. Entrenchment The third reason is the ideology dominant in Greek society today. Convergence with Europe is not just economic; it also involves forms of organization and especially social attitudes, which in turn can accelerate economic progress. However, a job in the Greek public sector is more highly prized than any other, along with the ethic of a minimal effort and making easy money by circumventing regulations. Fear – of change, competition, entrepreneurship and the challenge of productivity – acts as a powerful resistance force. Last, the statist and conservative ideology is continuously gaining political ground instead of retreating. The election of Costas Laliotis to the post of the ruling PASOK party’s general secretary is a characteristic indication of the strengthening of the dividing lines between right and left, of the continuing worship of party mechanisms, of a return to the climate of confrontation and of the move away from European priorities. On the other hand, parties with bold reform proposals for the economy and society, such as the Liberals of Stefanos Manos, seem unable to hold their own. Alexis de Tocqueville, the great political thinker and philosopher, used to say that the threat to democracy and progress does not come from radicalism but from stagnation. To a certain extent, Greek society and the Greek economy are going through such a phase today. Given this climate, enterprises should be expected to much worse in 2002.
