greece riot over debt crisis....

[Nointhemood]

police are trying to stop protesters from storming parliament.

13th and 14th month payments are designed to keep baseline salaries and the pensions paid on them lower. Greek doctors would consider the amount earned by an NHS GP to be an absolute fortune. Ironically the NHS in this country tended to be used by govts in the 1960s to soak up unemployment on relatively low wages, until, like the public sector in Greece it became highly unionised (and yes that includes the doctors too!) and wages rose. Now the more basic jobs are privatised and, as Riven points out, that is hardly an improvement.

Riven - I had a dumb moment there. What I should have said was this:

"Public sector = 40% of GDP" does not mean public sector employees earn 40% of all salaries in Greece. It only means that public companies' output is 40% of Greece's total output.

Given that state-owned companies are very rarely as efficient and profitable as their privately-owned counterparts, even a partial privatization would significantly jump-start Greek economy.

I was in Athens last week - it certainly doesn't feel or look like a modern European capital.

it's filthy, everywhere is covered in grafitti and the pollution is unbearable.

tourism is the life blood of Greece and if they carry on the way they are they are going to start to lose that as well...in the five days I was there just about every taxi tried to rip me off and cafes tried to charge me for things I hadn't ordered.

The Greeks need to totally overhaul their work ethic - shops still close on a Monday - even in the main shoppping areas, the Athens equivilent of Oxford Street - then they close again half day on a Wednesday. Banks close at 2pm. Taxis often won't drop you at your destination - ordering you out of the cab a few minutes walk away - totally defeating the point of getting a cab.

I know people will say, well that's just their way - but that's the problem. They need to change or they're going to end up a third world country.

I don't entirely disagree with you Cote but I'm not sure that Greece is awash with state-owned companies of the Italian monolith type. Certainly energy is no doubt in state control but Greece just doesn't have a large manufacturing base. A lot of it's GDP is in shipping - and many of the owners of that sector live in London on a non-domiciled basis, paying no tax on their Greek earnings here (presumably because they are paying it all back there ). Tourism is the other big sector but that is already large in small, fragmented, private buisnesses. Another highly profitable business in places like Greece and Cyprus is having the local monopoly on imports of branded consumer goods - something which keeps local prices very high. Again these monopolies are often concentrated in the hands of a few families, which may or may not live there.

scaryteacher - re Greece's military spending because "they think they are at war with Turkey re Cyprus"

As I wrote on another thread, Greece spends $6bn on defense per year and has 545,000 total troops. Turkey spends $49bn on defense per year and has 1.1mn troops. If Greek state thinks it is keeping up with Turkey on the military front by spending $$$, they are fooling their people deluding themselves.

Re Cyprus - Quite a lot has happened in the island's recent history, notably the 2004 referandums for reunification which the Turkish side endorsed by 65% of votes and Greek side refused by 75%. There is a problem here that more guns will not help with.

bellissima - When the owner of a company lives off-shore, he doesn't pay income tax on his personal gains. His company in Greece still pays corporate tax.

"Generals cost a lot."

Greece spends about 4% of it's GDP on defence.

So if it cut it's defence budget down to quite literally nothing it would take about 30 years to repay it's 120% of GDP debt.

Meanwhile Greece's deficit is about 12% of GDP, so cutting the defence budget completely would mean that it would still be going into debt by 8% of GDP every year.

Yes Greece does spend a lot on defence compared to other European countries, but it's a drop in the pond compared to both the size of the debt and the rate at which the debt is increasing.

So the whole "Defence is the problem" thing is a bit of a red Herring.

Outside of telecoms I hadn't particularly noticed that privatisation of our utilities has produced plummeting bills. Oh but we do have those lovely aggressive doorstep people telling us to switch companies - now that's a big bonus

Cote - if its an incorporated company and not an off-shore partnership or some other legal entity (quite common) then yes, after the accountants have shown the underlying profit, it should pay some corporate tax.

I think their behavior is appalling.

They lied to get into the EU,they have a history of defaulting on re-paying debt (we're much safer),they're not particularly good at collecting tax,their age of retirement is something like 56.....

They seriously need to get on with the austerity measures and start living in the real world like the rest of us. What exactly do they expect the gov to do,wave a magic wand?

It's a real shame as I adore Greece.

bellissima - Privatization is not supposed to lead to lower product prices. This is especially true in utility privatizations, where prices are in fact fixed by the state.

In some cases, product prices of privatized companies are even increased, as government subsidies and policies keeping prices under cost are ceased.

So in short, I am not surprised that your telecom privatization did not lead to "plummeting" prices.

What is supposed to happen with privatizations is increased efficiency which leads to higher profits and higher taxes for the state, as well as a better functioning and more rational market place in general.

Bellissima was saying that privatisation has worked in the telecoms field, and I agree with that.

There's genuine competition for telecoms and it has lead to innovation and better products. There's still room for improvements, particularly over BT's almost complete monopoly over the local loop but on the whole it's been a good thing.

But that's for telecoms, where it is pretty easy to pick and choose your provider and each one can offer different things.

When it comes to the other utilities I'm less than impressed.

elenio (lovely name) are teachers only earn 450euros? It seems very low even for a new teacher and even for net wage (i think Greeks talk net, not gross about wages?). And a head teacher only 1,000 euros?

Although from what i know they only work few months-the rest is holidays or strikes, and their days are very short comparing to teachers in uk. But still these wages sound very low....

Actually, EUR 450 for a teacher's salary sounds implausible as it is below the Greek minimum wage, which is over EUR 650, iirc.

Hi Laquitar - 450 is the minimum that teachers earn per month. The standard wage for a teacher is Euro 1000-1200 per month.
These are the lowest wages for teachers in Europe but it is true that they also have the least hours. They also have some of the worst working conditions in Europe though.

Some of the schools here are positively Victorian - without heating in the winter or a/c in the summer and the standard of education is shocking. The 'parrot' method is used and all day the children listen and write, listen and write, listen and write.
My nephew who is 7 has at least 1hr of homework a day and more at the weekends. Lock-ins at the schools are also very popular - this is basically when the children take over the school and stay all night (sometimes for days) in protest over the education they are receiving.
Corporal punishment has also only been banned since 1995.

I have a lot more sympathy for the students than i do for the teachers tbh. I should have given a better example of low salaries!
And although my MIL takes a 1000 Euro a month - i am pretty sure that she does not work that many hours! She is 62 and will be taking pension from next year.

The minimum wage in Greece is 680 Euro a month. They get away with paying lower by putting people on part time contracts. Overtime is rarely paid so many people end up doing over their contracted hours without being paid extra.

Thanks for the explanation Elenio. Mind you i'm still about the wages.

R.I.P. for the people who lost their lives yesterday (sad)

The low wages were not so much of a problem before Greece joined the euro. Cost of living when we had the drachma was very low.

You could easily afford to live a comfortable life in Greece. The wages did not change dramatically when we switched to euro but the prices did unfortunately.

Although i do not think that we would have avoided the debt that we are in now, even if we still had the Drachma.

If you were not in the Eurozone, you would not be able to borrow at Euro rates, and hence you would be able to take on much less debt.

But the problem was mainly due to excessive foreign borrowing, a problem with which Greece has had for a long time.

in the six years before joining the euro, only 27% of Greek debt was issued in drachma. At the end of 2000, just before Greece joined the euro zone, 79% of its outstanding debt was already denominated in euros.

I wasn't talking about the currency of debt (Euros, Drachmas, etc).

I was talking about the interest rate of the debt - iirc was around 12% before you joined the Euro, then came down to 3%.

People borrow less when money is expensive, that is, when interest rate is high.

The cycle of spending too much and borrowing too much has been spiralling out of control for too long now - this situation was always going to happen, a question of when not if.

Now we must see if the Greek government has the strength to put through measures which will dramatically change the way things are done in Greece - these are long-term solutions such as weeding out these bogus public sector employees and developing a proper infrastructure for taxation. things which will be incredibly unpopular and that is why they have not happened yet.

The people are right to be complaining now - yest, so m any have benefitted from the crazy historic practices over the years, but now only a few are being asked to repay the debt, and they are not the ones who can necessarily afford to do so.

There are a lot of very very rich people in Greece currently buying up huge swathes of London with their wonga and hiding eveyrthing they can - they won't let the austerity measures touch them. The government needs to spread the responsibility more equitably.