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Victoria Mindova

The Greek state machine has increased 10 times in 30 years. The onerous bureaucratic procedures and the cumbersome state system are the cause of the so-called "black hole in the budget" and a major obstacle to the creation of a healthy private sector. Despite the reforms and attempts to reduce bureaucracy, the Greek public system is operated by 15 ministries, 149 general directorates, 486 services and 3,720 departments. Bureaucracy in Greece costs the citizens 14 billion euro or 6.8% of GDP as reported by Panagiotis Karkatsoulis who is an expert advisor to the World Bank and the Organisation for Economic Development and Cooperation, a specialist in the field of public administration reform and management improvement.

Panagiotis Karkatsoulis outlined the main characteristics of the Greek public system at the Thought4action forum, which was organized on the initiative of the former deputy of PASOK during the rule of George Papandreou, Elena Panaritis. She specializes in the field of developing countries and she decided to return to the country in 2009 to contribute to the recovery of Greece after the first shock of the crisis. The economic developments and management disappointed her and after the parliamentary elections in 2012, her career as a deputy became a thing of the past. According to her, the lenders have given Greece the wrong medicine, which has led to the failure of the first recovery programme.

"There are strong powers of inactivity and lack of motivation in Greece", said Panaritis. She is firm that the Greek economy has been built quickly and on unstable foundations and therefore, the problems in Greece have come to light at the first shocks of the world economy.

In her opinion, the Mediterranean country has some vital advantages. One of them is that it is a small country. Reforms and economic policy change take place more easily in smaller countries than in larger ones, says Panaritis. Its citizens have a good level of education and the country has resources that can provide the basis for recovery of primary production. These are all conditions that make the change possible.

The problem is that the reforms, which must be implemented, have been seriously delayed. The reforms are so difficult to apply, because there is a wide range of interests, which will be impaired if the full liberalization of sectors is launched. This is the opinion of Christopher Pissarides, a professor of economics and political science and a Nobel Prize winner in Economic Sciences in 2010.

He is clear that the crisis in Greece is structural. The country has entered the new era of globalization with very low competitiveness. Protectionism prevails in its economy and it is characterized by low productivity. "A country that is not competitive will be in crisis in the new globalized market, which has happened to Greece". The large external debt, in his opinion, is a consequence of the wrong policy pursued in the public sector rather than a cause of the situation.

Pissarides believes that production should be in the hands of the private sector. The state should get rid of the management of the majority of the key enterprises and play a controlling role mainly as regards compliance with the law. If there are sectors or industries that are of great national importance, they should remain in the public sector, but should be managed on the basis of the market principles.

In order for the reforms in the country to be successful, the government should take care of the households with the lowest incomes. In addition to providing political rights, the government should establish adequate social policy to prevent the risky social strata from a complete collapse. "We need to protect the social dignity of the weakest", insists the Nobel laureate, because otherwise the reforms will not yield the expected result.

He believes that more flexible labour-law relationships should be introduced that will help employment, but overtime pay should be linked to the collective labour agreements and the productivity of production rather than to the strength of the relevant trade union organization.

Christopher Pissarides states that the role of the supervisory Troika is the same as that of any other lender. These countries (from Europe and the International Monetary Fund) want to be sure that the funds they have poured into the country's recovery will be effective and that they will get back what they have lent. The supervisors are pushing for structural reforms because the problem of the domestic economy is hiding in the country's government. If local governments cannot cope with their implementation, alternative measures need to be applied, which in the majority of cases are more severe than the reforms originally planned.
 
"Those who do not want the reforms are mainly the public workers, because they are the ones who will lose the most from the change of the system", said Pissarides. Furthermore, the private sector is posing another serious problem, as it is not exerting significant pressure to reform the public administration. The experts state that the reason for this apathy towards the reforms is that the private sector is closely linked to and even dependent on the state, which is another obstacle on the road to recovery.