3O APRIL 2014

THE PRESS PROJECT INTERNATIONAL

Interview to Dimitris Bounias

Today (Wednesday, April 30th), Deputy Finance Minister Christos Staikouras, during the presentation of the Medium-Term Adjustment Programme, announced that unemployment will be fall to 24,5% for 2014. Does this align with your forecasts?

Just yesterday, Guy Ryder, director general of the ILO, said to the EU Committee of Social Affairs that, as of 2015, recovery in Europe and in Greece will be slim and that unemployment in our country can’t be less than 22% by 2019. Our forecast at the Institute of Labour of GSEE was that unemployment at the end of 2013 would be 29% - it was 27,6% in the end. This discrepancy doesn’t come from jobs created from investment but from subsidized short-term employment programs. It is a regime of pseudo-employment for 75.000 people that, while active, hides them from the unemployment statistics. If in 2014 unemployment is at 24,5% - which I don’t think it will be – it’ll be because of similar programs and will not reflect real, sustainable jobs.

 

The lenders’ representatives have made dozens of forecasts since 2010, most of which have fallen wide of the mark. Why is this?

If we exclude the possibility of scientific inadequacy on their part, the main reason is that they based their forecasts on different indices and multipliers. When we were showing ours, they dismissed them as wrong. After 2012, when during their evaluations of the program, they saw their forecasts weren’t coming true, they adjusted upwards, approaching our numbers.

What our database has shown us is that when the GDP shrinks by 1%, unemployment rises by 0,8-1,2%, depending on which sector of the economy you are looking at. We had chosen a median value of 1%. Theirs was 0,3%. When they realized in 2012 that that did not reflect reality, they revised it to 0,8%. They’re getting there. My personal opinion, again, excluding the possibility of scientific inadequacy, that this was a conscious choice, a part of the initial design of the first adjustment program, to completely devalue labour on all fronts, to deregulate labour relations, shrink wages and pensions, abolish collective bargaining. Their neoliberal mentality dictates that by pushing salaries down - the so-called labour cost – the groundwork is set for businesses and the economy as a whole to be competitive.

 

It didn’t seem to work. Why is that?

This theory fell apart because the labour cost is only the 17th factor in total production cost by order of importance. So we went and fiddled with the 17th factor leaving the other 16 largely untouched. Reasonably, the effect this had on competitiveness is very limited.

 

Can you talk to me a little bit about your interaction with the troika?

There were four meetings. I was escorting the GSEE delegation as the scientific director. When they handed us the program before it was even announced, we evaluated it and warned them that their projections won’t come true. Now the labour market and the country’s production have collapsed – 25% of the GDP is gone. According to a recent survey of ours, if we were to accept an optimistic scenario of 1% recovery year-to-year, in ten years the outcome will be just 150.00 jobs. So instead of 1.400.000 unemployed, we will have 1.250.000. I don’t even want to imagine this scenario, how the society will pull through.

 

But, on a human level, the people that sat across the table from you, what were they like?

While the union representatives were bringing data like the aforementioned to the troika people’s attention, the latter were keeping notes but their stance was one of indifference and arrogance. This is why, after 4 meetings, and after seeing in 2011 that it was our forecasts that were being verified and not theirs, we did not respond to any subsequent invitations.

 

Internal consumption and social expenditure have taken huge losses as part of the program. How do you judge this design?

According to the neoliberal mentality, social expenditure is considered consumer expenses, and as such, they should be minimized. According to our view, this expenditure feeds capital back to the economy through demand and consumption.

As for consumption itself, its collapse is the reason why we’ve reached the point where labour is completely depreciated, but businesses as well – 230.00 had shut down by the end of 2013 and another 60.000 are expected to close in 2014.

 

Should you get elected, I understand that you will put the issues you’re raising on debate at a European level. Which course is Europe moving in?

As I recently said with EU Parliament President Martin Schulz present, it is hyperbole to perceive Europe as united, in this moment. It is united only as far as currency is concerned, and divided regarding everything else. While there, I asked: “Is there such a thing as social dialogue in Northern Europe? Not anymore in Greece. Are there collective labour agreements? Not anymore in Greece. How about mediation? It doesn’t exist in my country anymore. A minimum wage? That’s gone too, in Greece.” So, you see, what happened in Greece, with Europe’s tolerance, is a complete deconstruction of labour’s institutional framework.

 

What, in your view, are some course correction actions regarding Europe right now?

We need to adopt a radical approach, expressed through two immediate actions. First, we need to raise the issue of revising the European Treaty so that the three criteria – debt, deficit and inflation - will become four, with the addition of employment level. In this way, you introduce the concept of political interception of unemployment, as a core macroeconomics concept. Today employment has taken a back seat. This was proven a few months back, when at the EU leaders summit it was decided that 6,5 billion euros will be invested towards battling youth unemployment. If you spread this amount across young unemployed people in the EU right now, you come up with 260 euros per person. It’s issues like these that become fertile ground for euroskepticism and the rise of the neo-Nazis.

The second action that has to be taken is to revise the ECB’s mandate so that it is not restricted to keeping prices stable, but to expand with provisions against unemployment. If such changes don’t take place, in five years Europe will just be a market of services and products. It will not be a social and democratic Europe with balanced growth among member states. Just handling the crisis right now won’t cut it. There has to be a paradigm shift. Europe right now is a decadent old lady. Her competitors run with blazing speeds towards research and innovation. It might be just the states in the Mediterranean that are now paying the price, but France, for instance, is a good indicator of how this could spread to the core states.

 

Is the euro’s survival non-negotiable or, if worse comes to worst, could its breakdown be put on the table of discussion?

In each economy, it’s the currency that follows the production structure and not the other way around. As such, the countries of the South are now at a disadvantage. As of today, there is a model of unequal growth. The North conducts all sorts of economic activity across all sectors of production, while the South focuses on tourism and services. What this mean is a constant stream of wealth from the South to the North. If we do not construct a balanced growth model across Europe, even if, for instance, Greece repaid every last penny of its debt overnight, we would be in exactly the same situation in, say, 10 years from now. And this is largely due to the immense wealth transfer from the Mediterranean to the North, by means of consuming products that are produced in the North.

 

Which sectors of the economy and production should Greece focus on in order to turn towards growth?

Just fifteen days ago, with Greece’s Prime Minister and his financial team present, Angela Merkel said that Greece should look mostly towards tourism and services. She neglected the fact that a national product that is based only on the aforementioned sectors, is not adequate to sustain its population – thus other activities are necessary as well. The main sectors that could power a recovery, in our view, are the following: energy and hydrocarbons, the primary sector (agriculture/fishing), processing of primary sector produce (ie food products), the banking sector and the drug industry.

 

Today, the voters perceive the unionist movement as part of the old system that brought us here. What is your critique of it and how, in your opinion, should it transform to find answers to today’s questions?

Historically, in all periods of crisis, the unionist movement has found itself on the defensive. This is a direct result of unemployment. At this moment, there are 3.500.000 employed Greeks. 1.400.000 of those work in the private sector. This is the same number as that of the unemployed. This creates a balance of terror, one promoting deregulation of the labour market. If you go to your boss to complain about it, the answer is “there is 1,4 million outside my door waiting to get your job.” This finds unions on the defensive. And this is why, after 2010, in all collective bargaining, their main objective was to keep employment levels from collapsing. To that end, they would accept wages being diminished by 10-15% in exchange for jobs not being cut.

 

I will insist on asking, what is your critique on the unionist movement?

The unionist movement in Greece undoubtedly has endemic problems and we’ve conducted numerous surveys to identify them. First and foremost, its operation cannot be dictated by the executive authorities. The unions must be uncoupled from the political parties. The intertwined relationship between them has languished in the years of the crisis, but it still is not acceptable that on the parties’ charters there are provisions for their very own unionist branches. The second thing that should be done is a merger between the two big umbrella unions (the one for the privately employed and the one for those working in the public sector), into a Confederation of Labour. Third, there has to be a total restructuring of the movement on an organizational, operational and strategic level.

 

Does SYRIZA have the answers the society is looking for?

These are the stakes right now. My experience so far from the pre-election campaign is that people have very specific questions – and they are willing to sit there until midnight to get the answers to them. These questions encompass the need for perspective, for the day after. At the same time, the voters don’t want to hear a single empty promise. They need you to be able to identify the problem, to document it with facts and to offer a valid and specific alternative, down to the last detail of you are going to implement it. I believe that if SYRIZA’s candidates succeed in responding to this need, no traditional polling tool that we have in our disposal right now will be able to explain the results on the night of the elections – there will be surprises, this is the sense I’m getting.

A long-time researcher of Greece's labour and financial issues who is running with SYRIZA for a seat in Brussels, talks to TPPi about misconceptions, botched forecasts and Europe's necessary paradigm shift.

Savvas Robolis is in many ways a special case: he is an academic and a researcher, Professor of Economics at Panteion University and the scientific director of the biggest union’s (GSEE – Union of Privately Employed) Institute of Labour for more than two decades. He has observed, studied and measured the labour, financial and social data of the country like few have. He was one of the first to sound the alarm over the unavoidable collapse of the labour market and production when the country first entered the bailout agreement. Now a SYRIZA candidate for the European elections, he aspires to take all of this data with him to Brussels.

Η Οδύσσεια του Ασφαλιστικού

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