Over the weekend, the government of Antonis Samaras passed a whole host of new austerity measures for Greece – the most controversial of which relate to public sector labour reform. All of these measures were required by the Troika (the EU, the ECB and the IMF) as conditions for the release of the next tranche of bailout money. And genuinely, I think that the economic story/theory here is fascinating.
But before I get there, let’s backtrack to talk about the business of life.
Why We Go To Work
In a perfect world, I would go to work (and work hard) everyday because:
- I like what I do.
- Being productive makes me a more positive person.
- The harder I work now, the better my life can become (through higher future paychecks and chances of promotion, better experience, network-building, etc).
Realistically though, most of us go to work because:
- If I don’t go to work, I’ll get fired, and that would mean months of no pay-check and having to look for more work (what a drag!);
- Even though I don’t like it, it pays well enough – and I like what I can do with that money;
- I can’t afford to live a life of leisure (curse those trust fund babies);
- Ambition, baby. I want that job with that paycheck and all the power;
- My parents said I had to;
- The wife will actually leave me if I become a bum; and/or
- I gots bills and a mortgage to pay, yo.
If we assume that, for most of us, points 1 through 7 are closer to the truth*, then our work attendance is mainly predicated on the following:
- The need for money; and
- The fear of getting fired.
Which if fair enough and quite rational. It’s a bit troubling in some ways – because any good manipulator will tell you that fear and need are the pivots upon which manipulation will hinge**. But it’s all fine until someone actually does play with your fears of getting fired.
Playing With (the Fear of) Fire
Now imagine that you worked in a business where the two majority shareholders were constantly fighting about who would be CEO. And these two shareholders rile everyone up and ask them to take sides, promising promotions and bonuses and gifts to their supporters if they win. So you pick a side. The winning CEO promptly fires anyone that didn’t support him. But at the next AGM, the other guy has been quietly persuading the lower ranks to join his campaign – which they do, because he’s in a bind, so he’s promising them higher positions. And he wins, and immediately fires everyone other than the side-switchers, and rehires all those people that supported him the first time. Thus the cycle continues.
All this – really bad for business. But, more importantly, everyone gets fired at least once, unless they’re a filthy, honour-less rogue of a turncoat. And even then: the turncoats may have jobs, but they don’t have friends.
In today’s world, if the above were happening, you would sue your employer in labour court. In Greece at the turn of the 20th Century, unfortunately, the above business was the Public Sector; and the rival majority shareholders were the political parties.
So in order to prevent this kind of mass hiring/firing, Greece amended her Constitution in 1911***. This amendment was intended to protect jobs in the Civil Service. And it did so by effectively turning your life-employment in the civil service into a civil right.
Which sounds great, right? It’s a world, a life, a socialistic dream where there is no firing process; where your job is for always, and where your financial security is not affected by the quality of your work (after all, not everyone has been blessed by Providence with private schooling, parents that pay for University, good genetics, and self-discipline).
The Unintended Consequences
Let’s draw the story out.
Say that your civil service job, and all your co-workers’ jobs, are now an enshrined Constitutional right. Some thoughts on what might happen next:
- Because your superiors are now employed for life, you can only get promoted to a higher pay-grade when they die, retire or resign. It does not really matter how badly they perform, they’re almost never going to get fired.
- Incidentally, you realise that your work standard matters less as well. If you spend your work-day in the office or in the café on the corner – it makes no difference.
- You therefore begin to take longer coffee breaks – because all your co-workers are taking longer coffee breaks. And leaving the office a little earlier. Because if you don’t, you irritate your colleagues (no one likes a teacher’s pet) and your superiors (you’re showing them up for literally no good reason).
- So collectively, the civil service begins to slow down.
- This irritates the private sector, who begin to make calls for more efficiencies. So the government obliges by hiring more people to cope with the work.
- Concurrently, your friends in the private sector are beginning to envy your free time, and try to get themselves appointed into public sector positions so that they too can have the fun of progressively dwindling working hours.
- With the continuing slow-down of the civil service, private business becomes far more difficult.
- In desperation, one of your relatives offers to pay you a little something extra if you’ll help him get his company registration done.
- You raise an eyebrow at first – but then realise that there is no real consequence for this act. You also realise that this is a way to improve your salary without having to wait for all those troublesome superiors to die. Plus, I mean, with all the extra people that the Government hired, and all these private sector folks trying to get in, what are the realistic chances of promotion anyway?
- Cue: slippery slope. Until at some point, you stop doing your job completely unless someone pays you extra to do it.
- As does everyone in your department. And in the civil service in general.
- Then the civil service realises that every time there’s new licensing legislation, there’s another boost in monthly incomes!
- So they start advocating protectionism for everything. Even bakers require special licenses to bake bread – which they’ll pay a civil servant to organise. And if they get caught without a license, then that means that they’ll have to pay a civil servant to sort out the issue.
- Ultimately, the State becomes dysfunctional, over-staffed, and littered with special interest groups plaiting ribbons with the red tape.
Which sounds a lot like I plagiarised the story of the Greek economy.
It’s why the Troika has been so insistent on labour reform in the civil service. And why yesterday’s measures also included abolishing state-endorsed licensing of (amongst others) butchers and bakers.
I suppose one can’t help but wonder whether the Troika’s requirements won’t have their own unintended consequences.
But still – if the system is broken, it’s broken. New measures can either fix it, or leave it still broken. They have to try something.
*and they must be: my news feeds are a litany of demotivational posters, TGIF trends, and calls for caramel vodka before 12 on a weekday.
**Wife: “Honey, I want that dress….” (manipulation pivot: sexual need); Husband “Darling, remember that pre-nup…” (manipulation pivot: fear of being left).
***Article 103.4: “Civil servants holding posts provided by law shall be permanent so long as these posts exist. Their salaries shall evolve in accordance with the provisions of the law; with the exception of those retiring upon attainment of the age limit or when dismissed by court judgement, civil servants may not be transferred without an opinion or lowered in rank or dismissed without a decision of a service council consisting of at least two-thirds of permanent civil servants”.