The Greek Public Sector Explained
Over the last years the Greek public sector has increased dramatically, both in the General Government and at the various Municipalities. That is because, over the last generations, the base of political power in Greece was providing public sector jobs in the exchange of votes. Every new government hired its own people in the public sector enlarging it more that it can afford.
Wages in the public sector were one and a half times higher than the private ones in average, including extra pensions and huge retirement’s benefits. Tax payers had to pay wages for an excessive number of employees, their huge (and completely unreasonable) extra pensions. The most important fact to mention is that the public sector did not return the equivalent productivity - if any - back to the market causing a gap in the economy. This gap is the major contributor of Greece’s excessive public debt.
The Troika (Greece’s creditors) made a condition for providing grants the layoff of employees of the public sector, though there have not been any significant changes. For every seven workers fired from the private sector only one is fired from the public. According to recent findings if the number of people laid off in public sector was doubled in years 2011-2012, the enormous taxation measures and painful cuts in salaries could have been avoided and in fact Greece could have achieved a surplus in 2012.The problem now is that the private sector has been utterly damaged over the years so it cannot absorb the fired work force from public sector, so now the outcome would be a great increase of the unemployment rate.
The change is yet to be seen…
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