the case of greece revisited a. dedoussopoulos panteion university athens, june 2013 promoting a...
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THE CASE OF GREECE REVISITED
A. DEDOUSSOPOULOS
PANTEION UNIVERSITY
ATHENS, JUNE 2013
PROMOTING A BALANCED AND INCLUSIVE RECOVERY FROM THE CRISIS IN EUROPE
THROUGH SOUND INDUSTRIAL RELATIONS AND SOCIAL DIALOGUE
WHAT THIS SESSION IS ABOUT
ASSESSING THE IMPACT OF CRISIS AND POLICY REFORM ON THE LABOUR MARKET AND INDUSTRIAL RELATIONS
STRUCTURE
Description of PolicyMacroeconomic EffectsLabour Market ImpactsImpacts on Industrial Relations and Social
Dialogue
PART ONE
ON POLICY
POLICY ORIENTATION
A DOUBLE TARGET Sustainability of the Greek public debt Increasing competitiveness
DIAGNOSIS A large public sector An inflexible labour market
PRESCRIPTION Internal devaluation
A radical reduction in the public sector Wage reductions leading to price reductions
A FALLACIOUS CONCEPTUALISATION 1
The size of the public sector has been smaller than the average in EURO area Public spending exceeded EU average for two years
proceeding the crisis (2008-9) Public revenue systematically lagged behind EU
average by 6 percentage points in GDP Tax system increases unequal distribution of income
The obvious policy prescription A radical reorganization of taxation and the tax
collecting mechanism (not implemented yet)
A FALLACIOUS CONCEPTUALISATION 2
A highly segmented labour market A rather well protected segment (less than 1/3 of
wage employment) A rather highly deregulated segment
Evidence of sufficient labour market flexibility Employment levels have been responsive to changes
in production (Okun law variation) Wage structure has been flexible (increasing wage
deviation over time) High layoffs – hiring rates Relatively high levels of inter-firm movement of
personnel
PART TWO
MACROECONOMIC IMPACT
MACROECONOMIC IMPACT
2000 2002 2004 2006 2008 2010 2012 2014
-8
-6
-4
-2
0
2
4
6
8GDP RATE OF CHANGE
2000
Q1
2000
Q3
2001
Q1
2001
Q3
2002
Q1
2002
Q3
2003
Q1
2003
Q3
2004
Q1
2004
Q3
2005
Q1
2005
Q3
2006
Q1
2006
Q3
2007
Q1
2007
Q3
2008
Q1
2008
Q3
2009
Q1
2009
Q3
2010
Q1
2010
Q3
2011
Q1
2011
Q3
2012
Q1
2012
Q3
0
10,000
20,000
30,000
40,000
50,000
60,000
GDP BY QUARTER
Y2000 Y2008 Y20120%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
69.1 72.269.8
19.7 17.8
19.4
23.6 24.114.2
25.0 24.225.1
-37.0 -38.3-28.6
COMPOSITION OF DEMAND
IMPORTSEXPORTSINVESTMENTPUBLIC CONSUMPTIONPRIVATE CONSUMPTION
2000 2002 2004 2006 2008 2010 2012 2014
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
PIVATE CONSUMPTION
2000 2002 2004 2006 2008 2010 2012 2014
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
PUBLIC CONSUMPTION
2000 2002 2004 2006 2008 2010 2012 2014
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
INVESTMENT
2000 2002 2004 2006 2008 2010 2012 2014
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
EXPORTS
2000 2002 2004 2006 2008 2010 2012 2014
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
EXPORTS 2
exports goodsexports services
2000 2002 2004 2006 2008 2010 2012 2014
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
IMPORTS
1995 2000 2005 2010 20150
20
40
60
80
100
120
140
160
180
200
DEBT TO GDP RATIO
FORECASTS ACTUAL FIGURES
AUTOMN 2010 INTERIM 2012 SPRING 2013
GDP RATE OF GROWTH
2010 -4,2 -4,92011 -3,0 -7,12012 1,2 -4,7 -6,42013 0,0 -4,2 2014 0,6
UNEMPLOYMENT RATE
2010 12,5 14,22011 15,0 20,72012 15,2 19,7 26,02013 19,6 27,0 2014 26,0
BUDGET DEFICIT
2010 -9,6 -10,72011 -7,5 -9,52012 -7,6 -7,3 -10,02013 -8,4 -3,8
2014 -2,6
A PROVISIONAL CONCLUSION
From internal devaluation to a Schumpeterian creative destruction?
If destruction is plain to see, where is the “creative” part? Tourism Niches of foreign investment – Privatisation project
Real estate Energy Transportation
Industrial concentration into large enterprises Retail trade – small scale manufacture
A MORE DEFINITE CONCLUSION
Adjustment though quantities not through prices Wage cost accounted for only a 14% of total cost in
2007 in manufacture All other cost elements have been kept intact or raised
Cost of borrowing Public utilities rates Indirect taxes Cost of imported raw materials
PART THREE
LABOUR MARKET IMPACTS
1998
α
1998
γ
1999
α
1999
γ
2000
α
2000
γ
2001
α
2001
γ
2002
α
2002
γ
2003
α
2003
γ
2004
α
2004
γ
2005
α
2005
γ
2006
α
2006
γ
2007
α
2007
γ2000.0
2500.0
3000.0
3500.0
4000.0
4500.0
5000.0
f(x) = 14.5123076951313 x + 3934.3566453435R² = 0.9483904968577
f(x) = 15.0005425761747 x + 3391.24535788358R² = 0.956165378163117
EMPLOYMENT AT THE "GOOD" TIMES
totalLinear (total)non agricultural Linear (non agricultural )
2000.0
2500.0
3000.0
3500.0
4000.0
4500.0
5000.0
f(x) = − 3.18392971057465 x² + 17.2247656877891 x + 4538.1015211418R² = 0.983776274983181
f(x) = − 2.66572801438016 x² + 8.38998151003944 x + 4036.38860864675R² = 0.986343372410688
EMPLOYMENT AT THE TIMES OF CRISIS
totalPolynomial (total)non agricultural Polynomial (non agricultural )
CONSIDERATIONS
The linear trend coefficient is slightly reduced, but it does not change much
The effect of the crisis is fully captured by the t square variable, indicating an accelerating negative effect
On the whole, the Greek economy has lost 871.000 jobs during the period 2009a – 2012d. This means that, had the Greek economy regained the pre-crisis rate of employment growth since the 1st quarter of 2013, it would have taken 14.5 years to achieve the 2009a level of employment.
2008
α
2008
β
2008
γ
2008
δ
2009
α
2009
β
2009
γ
2009
δ
2010
α
2010
β
2010
γ
2010
δ
2011
α
2011
β
2011
γ
2011
δ
2012
α
2012
β
2012
γ
2012
δ
-12.00
-10.00
-8.00
-6.00
-4.00
-2.00
0.00
2.00
4.00
RATE OF CHANGE IN EMPLOYMENT (SAME QUARTER PREVIOUS YEAR)
totalnon agricultural
STRUCTURAL IMPACTS
Employment level reductions are widespread. All sectors of economic activity have experienced severe employment losses
However, employment losses are more concentrated in Construction (22.2% of total job losses) Manufacturing (18,2%) Trade (16.9%) Agriculture (8.3%) Tourism (6.7%) Education (5.8%) Domestic Services (4.7%) Transportation and storage (4.5%)
THE TIME EVOLUTION
Manufacturing and construction industries have been hit hard from the beginning of the crisis
Trade and other service sectors have felt the impact on employment later on (in 2012 the trade sector alone has contributed a 26.5% of total job losses)
FULL TIME JOBS vs. PART TIME JOBS
-60 -50 -40 -30 -20 -10 0 10 20 30
-100
-50
0
50
100
150
200
THE EVIDENCE FROM LIB 1
New Contracts Full Time Jobs Part Time Jobs Job Rotation
2009 945138 746911 157738 40489
2010 875952 586281 228994 60677
2011 762544 460706 233538 68300
2012 683443 375843 241985 65615
COMPOSITION OF NEW CONTRACTS
2009 100 79,0 16,7 4,3
2010 100 66,9 26,1 6,9
2011 100 60,4 30,6 9,0
2012 100 55,0 35,4 9,6
THE EVIDENCE FROM LIB 2
TOTAL PART TIME JOB ROTATION
TOTAL ROTATION 1 ROTATION 2
2009 16977 12219 4758 4146 612
2010 26253 18713 7540 6527 1013
2011 58962 32420 26542 19128 7414
2012 84290 49640 34650 21278 13372
COMPOSITION OF CHANGES IN CONTRACT FORM
2009 100,0 72,0 28,0 (87,1) (12,9)
2010 100,0 71,3 28,7 (86,6) (13,4)
2011 100,0 55,0 45,0 (72,1) (27,9)
2012 100,0 58,9 41,1 (61,4) (38,6)
A PROVISIONAL CALCULATION
In 2012 37% of all employees has either Lost their job Have been employed as part-timers Or forced to accept job rotation
Wage reductions are in effect in line to the reduction of minimum wage rate reduction (22%)
Reductions in pensions, unemployment and mini-jobs have contributed severely in widespread poverty among population
Public provision of services such as education and health have also severely deteriorated for large sections of the population
PART FOUR
WAGE SETTING AND INDUSTRIAL RELATIONS
INSTITUTIONAL SETTING
Collective bargaining structure and processes have been redefined Minimum wage rate is unilaterally determined by
Minister’s decree, after consultation with social partners Sectorial and occupational collective agreements have
given place to agreements at the firm level Most enterprise agreements have been conducted by
“associations of persons” not by trade unions Individualised bargaining increases, as the number of
employees covered by collective agreements has been severely reduced
The role of the Organization for Mediation and Arbitrage has been marginalised
National General Collective AgreementSetting Minimum Wage
Mostly Politically Determined
Sectorial and Occupational Collective Agreements
Setting wage mark up
Bargaining - Trade UnionsOMEDMarket Forces
WIDE SPREAD
Collective Agreements at Enterprise Level
Setting wage mark up
Bargaining - Trade UnionsOMEDMarket Forces
LIMITED
Individual Bargaining
Setting wage mark up
Mostly determined by the employer
National General Collective AgreementNo Authority in Setting Minimum WageMinimum wage is Exclusively Politically Determined
Sectorial and Occupational Collective Agreements
Setting wage mark up
Bargaining - Trade UnionsOMED (marginal)Market Forces
VERY LIMITED
Collective Agreements at Enterprise Level
Setting wage mark up
Bargaining - Trade Unions – Ass. Of PersonsOMED (marginal)Market Forces
WIDE SPREAD FOR ASSOCIATIONS OF PERSONS
Individual Bargaining
Setting wage mark up
Mostly determined by the employerTerms and conditions of work – time schedules
COMMON
Employers’ opting out
SECTORIAL AND OCCUPATIONAL AGREEMENTS
MAY 2013 TERMINATED: 233 RENEWED: 33
YEAR AT ENTERPRISE LEVEL
SECTORIAL OR OCCUPATIONAL WITH NATIONAL
COVERADGE
2010
238 672011
179 282012
976 2
THE IMPACT OF THE ASSOCIATIONS OF PERSONS ON WAGE SETTING
2/3 all collective agreements concluded by associations of persons have led to wage reductions to the minimum wage rate
Individual agreements have resulted on a 22.9% wage reduction on the average
Trade union concluded agreements at the enterprise level have managed to retain wage levels by 33%
THE CENTRALITY OF MINIMUM WAGE SETTING
Wage ladders are collapsing as the minimum wage rate has been reduced and sectorial and occupational collective bargaining becomes
marginalisedSectorial and occupational collective bargaining and
wage setting enable both employers and employees to avoid a personal confrontation within the establishment and has provided the ground of remarkable degrees of functional and time flexibility, especially in small and medium enterprises
With a handful of exceptions, even large enterprises do not possess any system of linking rewards to productivity at the individual level, and even some they have it, they prefer not to operate it.
A CHANGING REGIME OF MANAGEMENT
As personal confrontation was eliminated, a paternalistic regime of management had been maintained, i.e., exchanging favours between the two parts, based on personal relationships, long tenures and loyalty.
The new legislation and the extent of employment crisis leads to the establishment of a new regime, that of authoritarian management in which management appears as an undisputed power, limited only by external factors.
Within this context industrial relations, collective bargaining and social dialogue seem to be words void of any meaning
TWO ILLUMINATING EXAMPLES
The conclusion of a sectorial collective agreement in summer 2012
The conclusion of a national general collective agreement in May 2013
MORE THAN ONE CAMP
Traditionally in national bargaining procedures there had never be a clear cut division between employers and employees. Small and medium enterprises, represented by GESEVEE and ESSE, have been occupying an intermediate position, leaning towards employees’ demands on wage issues.
It seems that nowadays a more clear cut division to be established between social partners representing large enterprises and those representing small and medium firms.
ON THE STATE OF SOCIAL DIALOGUE
Social partners appear to be confused, frustrated, disappointed and practically incapable to contribute to an alternative strategy for economic reconstruction.
Though most of them have openly opposed wage reductions and all of them anticipate that such reductions have negative effects on the prospects of economic recovery, they are reluctant to demand for a full restoration of social dialogue procedures and of collective bargaining at national level.
ON THE STATE OF SOCIAL DIALOGUE 2
Social partners representing employers are counting the possibility of a large scale exit of members from their organisation, if wage issues are not settled to their members’ short-term conceptions, i.e., a defensive stand of survival through wage reductions.
Internal conflicts may arise in the near future, especially in the trade unions, as traditional party affiliations are jeopardised.
Institutional settings, instead of providing a solid ground for much needed compromise, have created a labour market jungle.