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The liberalization of the professions will increase the GDP, but not now

09 May 2013 / 23:05:45  GRReporter
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Victoria Mindova

For more than five years now, Kostas, who is 38 years old, has been working as a taxi driver. He spends between eight and ten hours behind the wheel every day and believes that taxi driving, as a profession, is not suitable for everyone. According to him, the essential qualities of a good driver are calmness and constant attention to both the traffic in the streets and the customers.

Following the deterioration of the economic situation in the country, the volume of his work has significantly dropped. "There are days when I have to drive around  the streets of Athens for a couple of hours in order to find a customer for a trip from which I will not earn more than five or ten euro," says the man. However, he believes that taxi driving is a good way to make a living in Greece, although one cannot earn a lot of money from this profession.

The profession of taxi drivers is one of the hundreds of occupations that has been reformed in the process of recovery of the Greek economy over the past three years.

The main changes that the government has introduced through the liberalization of taxis are associated with the cancellation of the lifetime licence to operate or its posthumous transferal to a family member. The state has also introduced new nominal taxi licences and compulsory cancellation of the licence when the specified driver retires or passes away.

At first glance, this may seem like a simple bureaucratic change but in practice, the removal of the restrictions on the number of taxi licences has helped reduce the black sale of licences and has significantly decreased the price of the licences, which were sold against six-figure amounts until recently. In other words, the reform of the regulatory framework of the taxi driving profession has helped the market to self-regulate and reduced the prices of licences without a direct restriction by the state.

"In the pre-crisis period, you could earn 150 euro with the taxi in less than two hours every Saturday night. Now, it is much more difficult to find customers. However, I manage to cover my costs and I am working for myself. It's better than working for someone else," he points out the advantages of being the owner of a taxi licence and of driving the taxi yourself.

However, not all taxi drivers are in the same position. The number of taxi licences was lower than 11,000 in Greece prior to 2008. Their limited number had led to widespread speculation with their price and it could reach 200,000 euro. A large number of owners of taxi licences rented them, which additionally burdened the cost of the service.

For the time being, the price of the taxi licence has dropped to about 40,000 euro. According to Kostas, that price should be even lower. "There are young people who want to work but cannot find a job in their field. They can start working in my profession. If you have the necessary skills, this is an honest way to make money. Before they changed the law to regulate taxi services, you could become a taxi driver if someone had died or if you were able to pay dearly. Now, this is no longer the case," says Kostas.

The occupation of taxi drivers is among the 343 closed professions in Greece, which, until recently, were characterized by strict government regulation and restrictions. The liberalization of the professions and markets in Greece has started as part of the recovery programme in the country. It aims to restore the budget surplus of the country and the positive economic growth, which should be based on more solid foundations this time.

The research of the Institute for Economic and Industrial Research suggests that the liberalization of the restrictions in the Greek economy could increase the GDP by 15% in the long term. "If we introduce full liberalization in the market, but not following the example of Singapore and in compliance with the standards of the euro zone, Greece can benefit a lot," says Finance Minister Yainnis Stournaras.

So far, the government has liberalized 72% of the closed professions in the country. The long recession makes it difficult to notice any visible differences in the occupations but Stournaras claims that the real benefits from the measures implemented will become apparent with the advent of economic growth.

"This liberalization they are talking about should have been introduced some years ago, before Greece joined the euro area and before everything started to inflate," says in conclusion taxi driver Kostas, who does not believe in miracles and thinks that his generation is the lost generation of Greece.

Tags: EconomyMarketsLiberalizationGreeceTaxi
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