Mar 26 2019

The Political Consequences of Intergenerational Mobility

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Across the developed world, pundits and scholars seek to understand the causes behind the abrupt increase in support for radical/populist parties. Societies, according to scholars of populism, are separated into two antagonistic groups; the elites and the people. Populist parties built upon this division to increase their support. In some contexts, they even managed to win elections or shift the political agenda closer to their political preferences. Whereas serious work has examined an array of possible causes, little has been done to understand the role of intergenerational (im)mobility.

Even before the onset of the financial crisis, a prominent concern amongst citizens was the fear that younger generations would not be able to acquire the wealth (in terms of cash, property etc) that previous generations managed to possess. The economic crisis slashed future income expectations and reinforced this belief. Is lack of intergenerational mobility related to populism? Does it affect stances regarding the welfare state? Does it affect how citizens evaluate the political system?

The premise of the study is that political systems are responsible for policy that directly affects the welfare but also the wealth of the people. Citizens, as a result, form expectations about their current and future income and reward the actors that help them materialize those expectations. When these expectations are not met, then the citizens will react by punishing the responsible agents. Political elites, that make up the most important part of “the establishment”, are the primary recipients of that punishment. When mainstream political parties are held jointly responsible for the lack intergenerational mobility, then punishment will go beyond the voting booth. Citizens will consider the old system as responsible for their misfortunes and they will tend to support political parties that generally oppose the establishment.


 

 

 

 

 

 

 

 

To understand the relationship between generational immobility and populism, a survey experiment was fielded in Greece to measure the effect of perceptions of immobility on populist attitudes. The treatment reminded voters that this generation of young Greeks will never possess or acquire the same amount of wealth as the previous generations did, while the outcome measures comprised of attitudes related to victimhood or relative deprivation (People like me do not get what they deserve from society), perceptions of elites (Political elites and the “system” serve the few and not the many.) and attitudes pertaining to whether respondents think that politics is a struggle between good and evil (Do you think that politics is about good and evil?). The empirical results showed that those assigned to the treatment group did express higher levels of relative deprivation, but the differences for the other two measures were statistically negligible at best.

The survey also measured the respondents’ support for the welfare state. Those treated were more likely, on average, to support a stronger welfare state although the effect vanished once the question was rephrased to incorporate additional taxation as the incurred cost for the extra spending. The final set of variables related to trust in the Greek political system and satisfaction with the way democracy works in Greece. Some modest effects were found regarding the former with treated respondents being less likely to trust the Greek political system as a whole. Finally, some heterogeneous effects were recovered (for example respondents aged 28 to 40 were more responsive to the treatment), but overall, the results were quite uniform.

To summarize, a simple (and conservative) prime of generational immobility managed to shift some of the outcome measures.  It appears that citizens are, to some extent, sensitive to this kind of information, but also that the already high degree of populism in Greek society is difficult to shift much further. What this also suggests, however, is that increases in optimism about household finances may reduce populism and increase system support. Crisis laden countries that were hit the hardest will probably return quicker to liberal normality. Economic optimism will readjust future income expectations and thus it will re-establish the belief (or misperception) that this generation of workers will do better or at least as well as the previous one. The structural difficulties and the stagnation of many of the developed economies will make it harder for political systems to induce the necessary optimism that would reduce populism.

On a final note, the project examined populism through the narrow lens of generational mobility, but the phenomenon is far more complicated than this. Populism comes in different flavours and the explanations behind each are numerous and interrelated. Future research should try to combine the competing explanations and delve deeper into the mechanisms that underpin lack of support for traditional parties and the emergence of the populist style in politics.

Note: This article gives the views of the author, not the position of Greece@LSE, the Hellenic Observatory or the London School of Economics.

Spyros Kosmidis is Lecturer in the Department of Politics and International Relations at the University of Oxford.

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Posted by: Posted on March 26, 2019 by HO Editor  

Mar 18 2019

Mediterranean ‘tiger cubs’: local innovation for global competitiveness

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Posted in: entrepreneurship, EU, Greece, Greek Society, nation competitiveness, The Greek Economy

In an ever-globalising world, smart local governance is a pre-requisite for regional competitiveness. By working closely with local entrepreneurs and foreign investors, municipalities can create incentives for growth and innovation, a function which state administrations lack the flexibility to perform. These regional ‘tiger cubs’[1] can help drive countries to economic growth.

Since the start of the crisis, Portugal has emerged as Southern Europe’s leader in ‘smart cities’, characterised by local pockets of technological innovation and public-private cooperation. In parallel, it is developing into one of the EU’s most exciting entrepreneurial ecosystems. The two are difficult to disaggregate, especially as the country’s new ecosystems tend to cluster around smart cities such as Colmbra, Leiria, Setubal, and Cascais. Their increasingly wide geographical distribution, with a proliferation of globally successful start-ups occurring across the country, is suggestive of a regional governance factor.

The city of Cascais offers some useful insights. It has received international awards for its success as a ‘smart’ city and regularly makes headlines with its daring new initiatives. The Cascais model promotes tech entrepreneurship by providing citizens with examples of how technology can improve people’s lives. City apps such as MobiCascais and Cascais Citypoints help create connectedness between citizens both socially and professionally, while the municipality has led a drive towards energy-efficient buildings. In another initiative, the city works closely with local entrepreneurs, incubating their start-ups, and connecting these with foreign investors. The movement to change Cascais started in 2011, at the height of the euro debt crisis. Today, the city ranks among Europe’s newest start-up hubs. Numerous small cities in Portugal follow the Cascais’ lead, while Lisbon and Porto continually adopt its best practice.

It might be argued that other factors explain Portugal’s post-crisis success. Access to credit, more stable taxation, municipal funding, and wider macro-economic conditions are all important in the context of Portugal’s recovery. But few of these indicators are markedly different than in pre-crisis years. Instead, the impetus seems to be a series of resourceful mayors, many from outside established political networks, elected on mandates of community regeneration by fed-up locals. These mayors carry a prevailing attitude that things need to change, and a belief, obtained through the crisis experience, that central government cannot provide all the answers.

This situation can be contrasted with Greece, where the crisis has been Europe’s deepest. According the European Commission’s Regional Competitiveness Index, an expert survey, Greece’s non-metropolitan regions are among the least competitive in the EU and have been since before the crisis. On ‘total regional competitiveness’, as well as ‘technological readiness’, and ‘propensity towards innovation’, most Portuguese regions have seen improvement since 2010. Many Greek regions demonstrate the opposite trend.

The Greek case has various particularities. Municipal officials, connected as they are in dense party webs stretching back to the capital, find it difficult to break from wider political interests. Moreover, these continue to look to Athens for support and guidance. The sense of reliance stems from a culture of administrative centralisation that has long characterised the modern Greek state. There are also cultural considerations, with local leaders and community members suspicious of change, supported as they are by an array of client-patron relations costly to dismantle.

These factors militate against the type of local agency demonstrated in Portugal, where administrative centralisation and corruption exist, but to lesser degrees. Nonetheless, the crisis provides a critical juncture at which there are opportunities for change. Portugal offers an interesting template: while the macro challenges are formidable, local imagination and daring can go a long way.

The city of Trikala is one example of where this is already happening. Its mayor, Dimitris Papastergiou, is not a politician but a technology entrepreneur. His vision is to create Greece’s first smart city – at the epicentre of a new start-up ecosystem in central Greece. To do this, he plans to build a city tech hub which allows officials to monitor in real time the number of available parking places, and hospital beds, or the status of rubbish collection.

To foster digital literacy and entrepreneurship, the municipality equips primary and secondary schools with micro-computers. Thus, students are taught ICT from an early age and encouraged to use these skills in later life. The municipal emphasis on digital innovation inspires members of the local community to become involved in new entrepreneurial activity. The number of tech start-ups has boomed in the last five years, while large numbers of high school students report they want to pursue a career in ICT. This is in stark contrast to the rest of Greece where young people, driven by a conservative society resistant to change, generally aspire to more stable jobs – in the public sector, medicine or law. Without more visible alternative paths, this reality will long endure.

Like in Trikala, and numerous better-known examples of Portugal, mayors must think creatively to modernise their services and drive new economic activity. In so doing, they will create jobs and attract investment. The digitalisation of public services and visible city innovations will inspire young people, for whom hope is in short supply.

With the local elections around the corner, more will need to follow Trikala’s lead. As one of few stable local actors, it is incumbent on Greek municipalities to assume responsibility in restoring the country to economic strength. But they must set politics aside and focus on achieving real change in their communities. In many cases, a disproportionate onus will fall on individual mayors, and their immediate teams.

Macro-level conditions will continue to be important, and Greece together with her European partners must work to improve these. But given the success of Portugal’s regional ‘tiger cubs’, the role played by local government deserves careful consideration among Greek policy makers – local and national.

 

[1] A play on ‘Anatolian Tigers’ – industrial cities in the east of Turkey whose economic success is built on local entrepreneurialism and municipal-private cooperation. Mediterranean tiger ‘cubs’ can be defined as small cities, or towns, devoted not to industrial activity but to services, and as ‘smart’ in the sense that they promote inclusive access to technology, whilst integrating digital technology into public services and community experiences.

Michael Cottakis is the Director of 89 Initiative and a PhD candidate at the LSE European Institute.

The blog post represents personal views and not those of the Hellenic Observatory or the LSE.

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Posted by: Posted on March 18, 2019 by HO Editor  

Mar 8 2019

Economic Crisis, Family and Domestic Violence: Is the ‘Safety Net’ Safe for All?

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Posted in: Domestic Violence, Gender, Gender Equality, Greece, Greek Society, Women's Rights

Anna Kyriazi                  Katerina Glyniadaki

The 8th of March is International Women’s Day. On this occasion, we want to highlight how traditional gender norms and economic hardship jointly contribute to violence against women. Across the world, much of the abuse women experience comes from romantic partners and within what is meant to be a safe family environment. And, an important factor that has been found to increase the rates of domestic violence is economic downturns. Given Greece’s decade-long economic recession, and given also the primacy of family as a social institution, what is the state of domestic violence in today’s Greek context?

The effects of the Greek crisis have been indeed devastating for the Greek society. The total unemployment rate reached a record high of 27.5% in 2013 (63.5% for young women), the GDP fell by 25%, and the suicide rate  rose by 35% between 2010 and 2012 alone. By 2016, more than a third of the Greek population was at risk of poverty or social exclusion.

In the face of extreme austerity and welfare state retrenchment, the strong presence of the ‘Greek family’ has played a pivotal role in preventing the exacerbation of, what some called, a humanitarian catastrophe. Apart from being a source of emotional support, ‘the family’ often replaced the failing welfare state on multiple fronts. Large numbers of women assumed caring roles, looking after the family’s children and elderly members. The transfer of money within the extended family also kept many of its members financially afloat, with one in three indebted Greeks asking for financial help from their parents. Moreover, unable to afford housing, many young adults stayed with their parents for much longer than they normally would, or returned to their parental home after having left for years. Even though the Greeks’ confidence in domestic and international political institutions and actors has declined dramatically in the last decade, the family continued to constitute the most trusted institution.

Figure 1: Trust in institutions, 2018

Source: Dianeosis 2018 A, available online at: https://www.dianeosis.org/2018/03/greeks-believe-2018/

 

Nonetheless, the role of the family in the context of the crisis, has not been necessarily positive for all family members. The fact that large numbers of women returned to the traditional gender role of ‘housewives’ might have been helpful for the family as a whole, but it compromised—among other things—their own economic independence. It is indicative that the rate of progress towards gender equality was slowed down during the crisis years, opening up further the gap between Greece and the EU average, and placing Greece in the last position among all EU countries.

Figure 2: Gender Equality Index, for the EU and Greece, 2005-2015

Source: EIGE, https://eige.europa.eu/gender-statistics

 

Although it is rather clear that the crisis caused a return towards more traditional gender roles and dynamics, the connection between the crisis and domestic violence is less clear, as the crisis coincided with a number of co-occurring phenomena:

  • The 3500/2006 law for combating domestic violence was implemented only three years prior to the beginning of the economic crisis. Therefore, any changes in recorded incidents may merely reflect that a greater range of behaviours are now officially considered criminal.
  • The General Secretariat for Gender Equality has made considerable steps towards providing support to domestic violence victims and raising public awareness. These efforts materialised from 2011 on—soon after the economic crisis began. Once again, a potential upward trend in recorded incidents might only reflect increased levels of awareness and use of services.
  • Since 2015, with the so called ‘refugee crisis’, the concept of violence against women has resurfaced in the public debate, often framed in terms of ‘cultural difference’. Here, the increased perception levels are not to be conflated with an increase in actual rates.

Considering the above, and since there is no available data that would (a) capture the true numbers of domestic violence incidents and (b) allow us to compare the ‘before’ and ‘after’ the crisis rates, we cannot confidently argue that the economic crisis has led to an increase in domestic violence.

Nonetheless, our study[1] involving interviews with experts and frontline workers shows that the pedestal on which Greeks place the institution of the family today, hurts the victims of violence more than it helps them. There are three take-away points here:

First, as women lose their economic independence, they also lose their ability to escape romantic relationships that were or became abusive. As a social worker highlights:

It is not their first request to leave, either because they have not thought things through, or because they do not have the economic ability. So, they return to their perpetrator because he was paying for them or because they listen to their family environment …

As this quote suggests, the economic dependence as well as the family influence, may deter victims from seeking alternatives. At times, this dependence may also be the very tool of abuse, meaning one intimate partner controls the other partner’s access to economic resources, thereby controlling their individual freedom.

Second, Greek women still hold dear the ideal of a cohesive nuclear family, which they are willing to preserve at any cost. This includes protecting the family’s reputation, preserving the status of men as the heads of the household, and avoiding the stigma associated with divorce. As an expert lawyer puts it:

Most [victimized] women hold the belief: “he is the man and he got angry”. Or, “But, am I going to divorce? What will my folks say? My folks consider him a good guy”. Or, they come for advice and they tell you, “I’m not ready to break up my household. Are children going to grow up without their dad?” […]. And, there is this so deeply rooted ideal of the family that in order for them not to ruin it […] they go on and choose the living hell.

Third, even when victims come to the difficult decision to report an incident, police officers may also discourage them in the name of the family. As a social worker explains:

There are some incidents in which they [the victims] want to go to file a report, they are ready. And, when they arrive at the police, the police officers, most of them men, discourage them. They rely on their own experiences, or stereotypes, [saying], “come on, go back to your husband”, “come on, forgive him, he will not do it again”, “how is the child going to grow up without a dad?” – so women immediately retreat and go away without reporting.

As it appears, in times of severe economic social disruption, the Greek family has played a dual role, both helping family members cope and holding some of them ‘captive’ in abusive relationships. Our research brings into sharp relief the link between economic and gender inequalities, on which the Greek social model is based. Considering also that the cost of intimate partner violence against women is estimated to be €2.4 billion per year for Greece, it is a call for policy-makers to decouple the protection of the economically vulnerable from familial structures of support. Because, in the path to economic recovery, there is also a need for equitable protection of social and human rights.

More specifically, our research points towards the following policy recommendations:

  1. With the aim to boost women’s economic independence:
  • Expansion of subsidised childcare programmes
  • Enforcement of Maternity Leave Policy
  • Expansion and enforcement of Paternity Leave Policy
  • Introduction of programmes that assist job continuity for women after giving birth
  • Expansion of programmes for the care of the elderly
  1. With the aim to combat domestic violence:
  • Introduction of preventative measures:
    • Awareness raising—especially among teachers, police officers, and public health professionals
    • Campaigns for the elimination of gender stereotypes that normalise violence
  • Improvement of the coordination of organisations that work to protect victims of violence on the ground
    • Single, shared database of recorded incidents
    • Clear channels of communication and cooperation
  • Introduction of correctional programmes for domestic violence offenders
    • Mental health support
    • Mandatory educational & treatment programmes

 

[1] This study was funded by ActionAid Hellas as a part of the organisation’s mandate in terms of advocacy and policy change in the field of women’ s rights. Read the study here .

Katerina Glyniadaki is a PhD Candidate at the European Institute, LSE and Managing Editor of GreeSE Paper Series.

Anna Kyriazi is a Postdoctoral Research Fellow Juan de la Cierva-Formación, Institut Barcelona d’Estudis Internacionals

The blog post represents personal views and not those of the Hellenic Observatory or the LSE.

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Posted by: Posted on March 8, 2019 by HO Editor  

Mar 4 2019

Refugees as catalysts for modernisation in social policy

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Posted in: Greece, Greek Society, Reforms, Refugees

On the 20th of February, 2019, Prof. Lyberaki participated in a panel discussion entitled “Greece Facing the Immigration and Refugee Crisis”, together with Mr. Lefteris Papagiannakis and Dr. Lilian Tsourdi, hosted by the Hellenic Observatory, LSE. Her presentation discussed some of the paradoxes of the existing refugee policy in Greece, focusing on the challenges as well as the bright side of the everyday reality of those involved. It also focused on the policy implications of this reality, underlining the lessons we can draw for social policy, now and in the future. The key points of her presentation are summarised below.

Refugees as catalysts for modernisation in social policy

  1. Two paradoxes on refugee policy

Talk of refugees sometimes confuses two issues. One is the situation of refugees currently in place, a question of social policy and the other is the conjectural issue of what might happen if another wave reappears, a matter of international relations. I will deal only with the former

Refugees in Greece have stabilised to 71,200 (UNHCR).  20% are on the islands, 30% are accommodated in apartments in urban centres, 24% are in mainland camps, while the remaining 25% have made their own arrangements outside the system.  1.4 billion Euros is earmarked by the EU to serve them to 2020.

Living arrangements vary. In the islands, things are shameful: endemic violence, insanitary environment, exposure to the elements. Those in the mainland camps, face overcrowding and geographical isolation – they are in the middle of nowhere. Those in urban accommodation enjoy freedom to act, but face a kind of poverty trap: if they were to start working, they would lose many benefits. They live in limbo – waiting to go to Northern Europe. Four observations follow:

  1. The numbers concerned are small for a country of 10 ½ million.
  2. The available funds are large per head of beneficiary,
  3. The benefits available to refugees can be more generous than what is on offer to local vulnerable groups.
  4. All this is played out at the tail end of the deepest crisis of the developed world. Prospects are still dire.

Two paradoxes are staring us in the face.

From the inside-out, a social paradox: Austerity in social policy; generosity for refugees.

From the outside-in, a fiscal paradox: How can conditions still be so bad, after all this money?

  1. Four recent stories highlight the conundrum

Story 1. A refugee child needs a difficult spine operation. A team of top surgeons offers to perform the operation for free. The public hospital could not sidestep the waiting list. A private hospital stepped in, but did not know how to donate the cost necessary. Day-to-day refugee work is a legal minefield. You need a can opener for a (legal) can of worms.

Story 2. A donor asks an NGO working with unaccompanied minors why they are serving 230 beneficiaries only. Why not spread the money to the 2000 others who are currently in the streets? Spreading benefits thinly may look good for donors, but will be ultimately wasted. If the objective is to create life chances, the minimum effort must include individual services and a long term commitment. Low quality is no quality. 

Story 3. Majd from Syria, a school leaver aged 20 with no qualifications, was trained by SolidarityNow as an interpreter and cultural mediator, in Arabic, Greek and English. He started work immediately, and after a while enrolled at a private University in Athens, studying English, with a scholarship from the US Government. Majd, no matter how good, could not attend a Greek public university. His take on all this was ‘Social Integration is no big deal; it is doable. It’s a matter of wanting it’. Solidarity works if it leads to empowerment.

Story 4. Social science graduates in Thessaloniki are living glory days. From being unemployed, they are now in heavy demand by refugee-linked NGOs. The sociology market is so tight that NGOs are poaching staff each from the other. The sudden demand to supply individual social services, and the emphasis on measurable results have already led to a pool of trained and experienced talent, who can do more than simply theorise about missed opportunities. New delivery structures and their staff are already in place.

 

  1. Civil society as a social policy lever: SolidarityNow

SolidarityNow (https://www.solidaritynow.org/en/) was founded in 2013 on the initiative of the Open Society Foundation as a response to the financial crisis. The fear was that the crisis was feeding extremism. Two Solidarity Centres, in Athens and Thessaloniki, were founded to provide free legal, psycho-social and employability services.

This work was underway, when the refugee crisis erupted. SN was well-placed to adapt the existing solidarity model to refugees. While it was not active on the beaches, it operated as second line of defence in integration and advocacy.

As a result, SolidarityNow is one of the largest NGOs in the social field in Greece. It has interacted with over 300 thousand individuals, 120 thousand through Solidarity Centres and provided shelter to 7,100 people across Greece. It employs 364 staff, one in six of whom are refugees, with a 2019 budget of 16 million euros.

So, SN is a social policy actor, whose refugee work is part of its overall mission. Nevertheless, the refugee crisis can still act as a modernization catalyst. SN is a social policy innovator:

  • Result- driven social interventions. In a system concerned with securing privileges, having to respond to the needs of refugees, means a confrontation with results.
  • Value for money. SN acts as a mediator between external donors and beneficiaries. It is accountable to both – and needs to prove itself constantly.
  • Social policy as a wider responsibility. The State is assisted by civil society, volunteers, donors and professionals. Novel needs demand novel approaches. First we need to test what works, amend it and scale up.
  • Social policy and life chances. What is needed is life chances, not hand-outs or favourable publicity.

Our work frequently involves thinking out of the box, handling unrelated issues together. In Long Term Care, a certified training course for carers addressed equally to unemployed Greeks and refugees could act as an inter-generational and inter-ethnic solidarity bridge.

The refugee crisis demonstrates why a modern country  needs an active and effective social policy. In this way the refugee crisis can force the pace of social reform in Greece and provide an example that can be applied more widely. It also demonstrates how national social policy cannot be an island – what happens in Greece (to both Greeks and refugees) is not simply a Greek problem but benefits from international and especially European solidarity.

Antigone Lyberaki is General Manager, SolidarityNow and Professor of Economics, Panteion University.

The blog post represents personal views and not those of the Hellenic Observatory or the LSE.

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Posted by: Posted on March 4, 2019 by HO Editor  

Feb 25 2019

Increasing the Competitiveness of the Greek Economy: the role of reforms of product market and regulatory institutions

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Posted in: Competitiveness, entrepreneurship, Greece, Reforms

While recently completing three programs of fiscal consolidation and bailout, to achieve high and sustainable levels of economic growth, Greece needs to restore its competitiveness. One of the main determinants of competitiveness is the quality of the set of rules and regulations that govern the operation of product markets. Well-designed regulations, suitably applied and effectively enforced, so they promote competition, investment, and entrepreneurship can make a country competitive and prosperous. Over-regulation is generally associated with creating inefficiencies and poor economic outcomes as it reduces the intensity of competition which in turn reduces allocative, productive and dynamic efficiency (innovation).

Unfortunately not much has been done, by any Greek government, in this direction. The Greek economy is heavily regulated – its markets are among the most heavily regulated among the OECD countries. Further, in Greece, important regulations such as the Competition Law and network industry regulations that could promote the good operation of markets have not been enforced effectively.

In a recent study[1] a number of recommendations are made to improve competitiveness by designing and implementing a National Competition and Competitiveness Policy (NCCP) plan. The NCCP includes competition law enforcement in the more narrow sense BUT is much more than that. It includes three sets of measures and associated reforms:

An efficient policy for the adoption and control of regulations, including measures to:

  • Remove existing regulations which, without being necessary, hamper growth
  • Allow new regulations to be adopted only as a last resort
  • Reduce the number of new regulations
  • Improve the design and ex-post assessment quality of new regulations
  • Improve the way in which regulations are implemented and monitored

To implement this policy, the government has to establish new organizational and decision-making structures, most importantly, if we follow the British model, an Executive Committee for Better Regulation (ECBR) – a governmental committee providing advice, information and recommendations to Ministries in conducting Regulatory Impact Assessment Studies. ECBR must be assisted by a Strategic Group on Better Regulation with representatives from SEV, of the workforce and consumers. Its mandate must include providing advice/recommendations to the Reducing Regulation Committee – a decision making body (Sub Committee of the Cabinet).

Next, a modern and effective legislative and institutional framework for dealing with cases where regulation is necessary for satisfactory market outcomes: Competition Law enforcement & ex ante regulation of network industries. In Greece the quality of institutions and of enforcement remains low. Some of the main problems are:

  • (Lack of) Independence of Competition Commission (Epitropi Antagonismou)
  • Absence of specialized Courts of Appeal
  • Inappropriate legal standards (decision rules guiding assessment procedures).
  • Insufficient resources in terms of quantity and quality
  • Inefficiency: long delays in investigations, in decision-making and in the appeal process.
  • The extremely important competitive neutrality principle, whereby public organizations and firms are treated on an equal footing to private firms, is not applied.

The importance of effective competition law enforcement is empirically demonstrated in a recent publication[2]. It is shown that it has a positive and statistically significant effect on labor productivity growth especially in laggard countries like Greece.

Finally, measures for the development and spread of competition advocacy are needed – to promote the short-and long-term benefits of competition, so that the competitive culture permeates deeply the Greek economy and society.

The deep economic crisis that started in Greece in 2009 was a long time coming. For at least two decades leading up to 2009, Greece has been steadily losing its competitiveness vis-à-vis other EU and OECD countries. This negative trend appears to have been halted following the reforms implemented under the Economic Adjustment Programs and in some cases there has been evidence of a slow but steady improvement from 2011-2012, which, unfortunately, seems to have been stalled and sometimes reversed from 2015 onwards. Thus, despite the progress, there is still significant room for improvement for Greece to regain its international competitiveness. The effective completion of structural changes and the formulation of a long-term strategy centered around a coherent National Competition and Competitiveness Policy plan should clearly aim to privatize public enterprises, liberalize product markets, remove unnecessary and distortive regulations and strengthen independent regulatory bodies. These reforms are critical for the short and medium term recovery and pivotal for creating the conditions for innovative and sustainable growth.

[1] Katsoulacos Yannis, Christos Genakos and George Houpis “Product Market Regulation and Competitiveness: Toward a National Competition and Competitiveness Policy for Greece”, in “Beyond Austerity: Reforming the Greek Economy”, Eds. Meghir K, C. Pissarides, D. Vayanos and N. Vettas. MIT Press (2017).

[2] Benetatou K., Y Katsoulacos, K Kyriazidou and G Makri (2019) “Competition Policy and Labor Productivity Growth: Some new evidence”, Empirical Economics.

Yannis Katsoulakos is a Professor at the Athens University of Economics and Business, Department of Economic Science and Visiting Professor at the Hellenic Observatory, LSE

The blog post represents personal views and not those of the Hellenic Observatory or the LSE.

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Posted by: Posted on February 25, 2019 by HO Editor  

Dec 10 2018

How to make the Greek economy rise again (and debt to fall)

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Posted in: EU, Greek GDP, Greek Politics, The Greek Debt Crisis, The Greek Economy

The Third Program of fiscal consolidation and bailout funding for Greece by European institutions and the IMF has been completed last August, eight years after the debt-crisis first erupted. Despite the jubilant mood adopted by the Greek Government to celebrate the end of “policy dictation from abroad” and a sense of cautious relief expressed by the European authorities, major problems that have precipitated the activation of the Programs still reign in. Not that Greece entirely missed the targets of fiscal tightening: in fact, the country has achieved one of the largest fiscal containment by turning a horrendous primary deficit of around -10% of GDP in 2009 into a strong surplus of 4% of GDP in 2018, much higher than the tiny average of 1.2% of GDP in the Euro Area as a whole; or the taming of the huge external deficit from around -15% of GDP in 2007, back to balance last year.

My concern is that these two great achievements are far from being robust and sustainable, unless a major restructuring of the economy is put forward. Take for example, the external balance. Its containment mainly came as a result of reduced imports thanks to the contraction of aggregate demand, while exports rose only marginally. As soon as demand recovers, trade imbalances are bound to re-appear. Or consider the fiscal target. Currently the Government has – unwisely – agreed to accumulate primary surpluses to the tune of 3.50% of GDP for 2018-2022, 2.50% until 2029 and 2% thereafter, a much tighter consolidation than followed in other Euro Area countries. Such an ambitious target is harmful to the economy that is still staggering after so many years in recession, but is also highly uncertain as it is based on hyper-taxation. Most analysts predict that Greece will remain trapped in anemic growth, slightly over 1%, for a long time.

Hyper-taxed and under growing, the Greek economy will prove strongly resistant to market reforms and continue to feel the heavy burden of indebtedness: last year public debt ended up at 179% of GDP, a huge deterioration relative to the 127% level that precipitated the crisis in 2010. Together with colleagues Milton Nektarios and Harry Theocharis, we set out to investigate how a credible and lasting solution is established in such way that spurns lasting growth and, therefore, facilitates the servicing of debt, encourages employment and helps the ailing social security system in Greece. Our analysis and proposals are described in ‘Restarting the Greek Economy: How by lowering primary surpluses, insurance contributions and the tax burden, Greece can lift growth, raise employment and stabilize public debt’.

Our alternative is based on a new policy mix with primary surpluses lowered down to 1.50% of GDP, a target closer to the Euro Area practices, while the rest 2% of GDP is allocated to finance investment in infrastructure, new technologies and export-led growth. Higher growth makes debt servicing all the more sustainable and, at the same time, encourages reforms in taxation and social insurance.

The reform in the social insurance relies on the complete annulment of the employees’ contribution rate and the reduction of the employer’s prime social insurance contribution, a total reduction of contributions by eight percentage units from 20% to 12% of the nominal wage rate. The measure aims to reinforce employees’ disposable income and cut out the incentives of moonlight employment, thus helping the finances of the system.

The tax proposals mainly aim at the simplification of the system in order to reduce tax-evasive behavior and balance the tax burden on personal incomes and small-firms. Regarding indirect taxation, the proposal suggests the introduction of only two VAT rates with a standard rate of 20% and a reduced rate of 10%, while the current mid-rate of 13% is abolished. Income tax reform envisages a unified corporate tax rate at 20%, and a personal tax rate at 20% gradually rising by 1% to a maximum of 30% for the Euro 50,000 income bracket.

Our alternative is the outcome of a detailed empirical investigation of labour market practices, the operation of the Greek tax system and the measurable effect of investment on economic activity. However, the real question is whether it stands any chance to appeal to policy-makers in Greece and the European authorities, since a substantial renegotiation should take place between them prior to its implementation? Well, I think that a credibility argument enters here. An economy is prone to reforms only if it becomes more inclusive, and growth remains the single most important factor in ensuring such a prospect. To let Greece continue on the current fiscal extravaganza will only mean further problems in the near future.

Nicos Christodoulakis is Professor of Economic Analysis at the Athens University of Economics & Business, and Visiting Professor at the Hellenic Observatory, LSE.

The blog post represents personal views and not those of the Hellenic Observatory or the LSE.

 

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Posted by: Posted on December 10, 2018 by HO Editor  

Nov 8 2018

Moscow-Athens Links: Rhetoric and Tactics

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Posted in: Geopolitics, Greece, Greece's Foreign Relations, Greek Politics

Greece is ‘the closest collaborator and partner of Russia in Europe’ said the Russian President Vladimir Putin to the Greek Prime Minister Kostas Karamanlis during their meeting on 9 December 2004 in Moscow. The Greek Prime Minister returned the compliment with a more strategic phrasing: ‘You have called my country a strategic partner of Russia, this corresponds to the level of our relations and I consider it a stable parameter of our foreign policy’.[1] The Russian Foreign Minister, Sergey Lavrov, addressing the Greek public a few years later on 2 December 2009 said, ‘I think there are few countries in the world that are bound by such a long history of sincere friendship as Russia and Greece. Russian-Greek relations have always rested on the solid basis of trust and mutual sympathy between our peoples’.[2]

Much has been said and written about the ‘special relationship’ between the Greek and Russian people that allegedly translates into a ‘strategic’ relationship implying at times a ‘geopolitical axis’ of deep historical and cultural roots. Russia’s post-Cold War foreign policy provides no evidence of a ‘strategic’ place reserved for Athens. Contemporary Russian policy does not take place in a historical vacuum. It displays continuity with the southern policy of the Soviet Union which took no proactive mediating or conflict resolution role in any of Greece’s first order security concerns (Turkish claims over the Aegean; Turkish occupation of Cyprus). What about the recent past?

The expectations of Athens that post-Cold War liberalism would allow the two partners to forge closer energy cooperation and work together to shape an inclusive, principles-based European security order have proven futile. Despite the common views on how stability and security could be best served in the war-torn Balkans of the 1990s, Russia was the first major power and permanent member of the UN Security Council to recognise FYROM with its constitutional name on 4 August 1992, while Athens was giving a hard diplomatic fight over this identity rather than security issue. Russia became the fiercest opponent of the 2018 Prespes Agreement between Skopje and Athens to resolve this name dispute after 25 years of stalemate.

What has happened on the much anticipated bilateral energy partnership, an idea shared cross all Greek political parties? The lure of Russian gas and oil-fuelled pipelines that would elevate Greece’s geopolitical and economic weight has evaporated slowly only to increase Greece’s dependency on energy pipelines crossing Turkey which Moscow calls an ‘energy strategic partner’.

On security issues, Greece, an EU and NATO member, has been following a pragmatic approach, keeping an open ear to Moscow’s security concerns in Europe. President Medvedev’s call in 2008 on a new European security dialogue was taken aboard by Athens who used its OSCE Chairmanship in June 2009 to launch the ‘Corfu Process’ to restore trust between the West and Russia after the Russian-Georgian war. The effort did not advance amidst a new Cold War type of deteriorating relations between the West and Russia especially after the Crimea annexation in 2014.

Putin’s hard power politics in Eastern Europe and the embracing of a propaganda war with European countries made Russia not a stabiliser but a revisionist power, undermining western governance structures. A revisionist Russia in a strategic partnership with (an at times anti-Western) Ankara makes it a very difficult partner for Greece. The tactical consensus reached by current political leaderships in Moscow and Ankara over a wide range of important issues (Syria, NATO’s role in Black Sea, defence cooperation, energy) indicates a shared view on contemporary international politics, even if one of shallow historical roots. Policies should, however, be carefully assessed even if part of tactics. Lacking a sound global strategy Vl. Putin has often resorted, many times successfully, to crafty tactics to meet Russia’s interests in today’s complex world.

An interest-based policy is a pragmatic foreign policy of any Greek government. Words of friendship are welcome and should be integrated in shaping multidimensional external relations. But they do not substitute for the only historically proven anchor of Greece’s economic development and security; its European allies. No specialness but pragmatism depicts Athens-Moscow links.

Contributor: Panagiota Manoli is Assistant Professor in International Political Economy at the Department of Mediterranean Studies, University of the Aegean. She was a Visiting Researcher at the Hellenic Observatory from March to September 2018.

[1] https://www.news247.gr/afieromata/oi-rosoi-einai-filoi-mas-oi-ellines-prothypoyrgoi-poy-pigan-sti-rosia-apo-to-1979-os-simera.6339512.html

[2] Speech of the Russian Minister of Foreign Affairs Lavrov S.V. to the Greek society. Athens 2.12.2009. http://www.mid.ru/en/foreign_policy/news/-/asset_publisher/cKNonkJE02Bw/content/id/270818

The blog post represents personal views and not those of the Hellenic Observatory or the LSE.

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Posted by: Posted on November 8, 2018 by HO Editor  

Aug 21 2018

Leadership is about character, courage and empathy: Alexis Tsipras has failed on all fronts during the Greek fires

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Posted in: EU, Greece, Greek Politics, IMF, The Greek Debt Crisis, The Greek Economy

At least 91 people have been killed in wildfires in Greece, with the Greek government, led by Alexis Tsipras, facing criticism over its handling of the disaster. George Kassimeris argues that the response from Tsipras constituted a failure of political leadership, and it is difficult to see how he will be able to re-establish his reputation and the reputation of his party in the eyes of the country.

Cometh the hour, cometh the hollow man or in Greece’s case, the hollow prime minister: Alexis Tsipras. Greece, over the past week, has gone through its gravest and most traumatic crisis since the second world war, after devastating wildfires decimated an entire seaside community outside Athens. As the death toll has now risen to 91 with another 25 people still unaccounted for, the horrific images of terror, anguish and destruction will remain imprinted on the national collective memory long after the demolition of all charred remains.

Obviously, a wildfire as ferociously deadly as this one is beyond human blame, and the political miscalculations that have come to light – the negligent planning, the delayed rescue and aid efforts – should not all be laid at the feet of the Greek government. That said, there could be no clearer instance of a situation where serious, effective leadership was desperately required. Defining moments demand from national leaders courage, character, imagination and most critically compassion. The Greek prime minister (the youngest in the country’s history) has failed dismally to show any of these qualities.

Oblivious and possibly ill-informed about the speed and ferocity of the destruction taking placing, Tsipras at first reacted as if he had been so lulled by his summer sojourn that he was not quite ready to acknowledge reality, let alone attempt to master it. It took him more than 48 hours to decide to come out of his prime ministerial cocoon and deliver a few plain human sentences that people could understand before vanishing again. Only when the magnitude of the calamity became unbearable for the people on the ground did he resort on the fifth day –yes, the fifth – of the disaster to accepting ‘full political responsibility’, though without apologising or satisfying calls for the resignation of his civil protection minister and other key officials.

It was an empty, pointless gesture designed primarily for political damage-limitation purposes and which naturally added insult to injury for the people affected and the relatives of the victims. ‘How does he plan to redeem this political responsibility? What does political responsibility mean?’ a distraught 79-year-old man angrily asked a TV reporter, standing in front of his burnt home.

It is literally incredible that a politician like Alexis Tsipras, supposedly so savvy and politically astute could fail to appreciate how insensitive and contemptible this behaviour would appear. But then again, the same type of insensitive contemptible behaviour was displayed by George W Bush during Hurricane Katrina and Theresa May during the Grenfell Tower fires when both leaders not only failed to demonstrate compassion and empathy but even declined to visit the devastated areas right away. For the record, Tsipras’s unacceptably belated visit to the ravaged areas came a week after the event.

Political leadership is about courage, character and example. If such leadership is to mean anything at all, it must stand for principles that are believed in themselves. It is impossible to look at the Greek premier’s slow, detached, uncaring and unapologetic reaction to a grave national crisis and not conclude that sadly for him as a leader and tragically for the country as whole, he failed on every front.

As the county is trying to recover from the trauma of what happened, the question now is: will he be able to re-establish himself and his government in the eyes of the country? This is very unlikely, in my opinion. He has become damaged goods. His inability over the last week to do more than the bare minimum in a time of unparalleled disaster has cost him the respect of the Greek media and through them the faith of the Greek public.

Note: This article was originally published on the EUROPP – European Politics and Policy Blog.  It gives the views of the authors, and not the position of Greece@LSE , of EUROPP or the London School of Economics.

George Kassimeris – University of Wolverhampton
Professor George Kassimeris is chair in security studies at the University of Wolverhampton. He tweets @GKassimeris

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Posted by: Posted on August 21, 2018 by HO Editor  

May 29 2018

The #MeToo Movement and the Greek Silence

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Posted in: current affairs, Greece, Greek Society

By Katerina Glyniadaki

Earlier this month, the verdict of the ‘wolf pack’ case sparked the #MeToo movement to spread across Spain. Both in the streets and on social media platforms, the court decision was met with uproar. According to the supporters of the campaign, the judges were biased, and their decision was overly lenient towards the perpetrators and rather unfair to the victim. This event brought forward the institutionalisation of patriarchal attitudes in the justice system and the systematic discrimination against victims of gender-based violence (GBV). Even if several months later, the movement which started in Hollywood last October, reached Spain, too. Continue reading →

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Posted by: Posted on May 29, 2018 by HO Editor  

Apr 23 2018

How to boost Greek exports

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Posted in: exports, Greece, Greek GDP, The Greek Economy

By Peter Sanfey

The past year has seen some welcome, and long overdue, good news from Greece. After nearly a decade of deep recession, the economy started growing again in 2017, unemployment is falling and business and consumer confidence are rising. But sceptics would say that some bounce-back was inevitable after such a calamitous drop in economic activity. The question is whether this recovery is sustainable. The answer will depend largely on the extent to which Greek corporates can restructure their operations to take advantage of new opportunities in an evolving global economy. In other words, a sustainable recovery will need to be export-led. Continue reading →

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Posted by: Posted on April 23, 2018 by HO Editor