We must become competitive! The quintessence of the Greek problem is that this company… sorry, I mean country is not competitive! And it MUST become competitive. And the ONLY way to achieve competitiveness is to slash wages and salaries! Of course. Whatever else?
Well, of course labor is a factor of production. But it is not the only factor of production. And anyway, the Greek economy is not one of heavy industry. Sometimes, and this may come as a surprise to the troika, you may find that you need well paid workers with skills and the ability to produce quality goods which a low wage worker may not be able to achieve. And if you look at the really competitive economies with trade surpluses, these are not the ones with the lowest wages.
But all the same, before these demons of the IMF (sorry Christine, you are quite lovely and very chic, but you remain a monster where your job is concerned. Well look how DSK ended up? It is a job that is not only bad for everybody else’s health but yours too.) Well, anyway, before all these members of the Spanish Inquisition, otherwise known as the troika start pontificating and dictating just how far down the Greek wage should be slashed, they might try to take a look at what the real problems of the Greek economy are.
And by the way, since the country has been thrown into deep depression by the troika’s policies, wages had already gone down. Workers rights had already been abolished for most de facto, so why bother with the legislation? Surely, it’s the market that regulates this stuff isn’t it? Not where competition is concerned. Oh no! The only factor affecting competition is labour and labour must be cheap! Dirt cheap! And that’s an order!
Hmmm. Now I suppose it doesn’t matter that the whole taxation system has been ‘designed’ to put prospective investors off. The rules change every couple of months (the more so since the troika started running the Greek economy) every so often extra special taxes are slapped on everything from soft drinks to the electricity bill, out of the blue and so on and so forth. Rebates due have been forgotten because… We must balance the budget! So screw business. Not all that enticing for a prospective investor.
Next, red tape is not just red tape but positively red chains! Nothing works properly. It takes days and days or months and months, even years, to go through all the paper work needed to start up a business. Furthermore, from day one the business man is considered a liar, a thief, a cheat and treated as such. Not least by the tax authorities. And so on and so forth.
Today’s New York Times has an excellent article on a young man who went through hell to set up an export business in olive oil and olive products. Ultimately he prevailed, but just how many others have just given up in despair? Or taken their business to other countries as this young man nearly did? (To the UK, not some labour cheap country, because that was not the problem!)
So if any of these nice people working so hard to help Greece get its economy back on its feet again are sincere about that, perhaps they should spend more time and effort on the real problems of the Greek economy rather than cooking up red herrings like ‘the unit cost’ of production, i.e. the cost of labour.
Just as they say if you look after the pennies, the pounds will look after themselves. If you look after the real problems shackling the Greek economy, the cost of labour will look after itself. It always does in the end.