Home > Uncategorized > Greece and the ‘paradox of flexibility’. Two graphs.

Greece and the ‘paradox of flexibility’. Two graphs.

Is the Greek economy inflexible and unable to create jobs? Not really. The rebound (and more) of tourism led, in 2014, to one of the highest job growth rates of Europe, demand led of course. Despite this, unemployment did not really come down… talk about flexibility of labour supply! A case can even be made that the Greek labour market, with its unusual high percentage of self-employed (look here, El is Greece), is one of the most ‘flexible’ of Europe. Unemployment benefits are for instance also quite low, not available for the self-employed and for a short time only, a libertarian dream. One of the reasons for the sheer depth of the Greek crisis may exactly be this flexibility and the lack of automatic stabilizers: the paradox of flexibility. Income of employees declined with about 32% during the crisis (graph 1), much more than in other program countries (and mind that disposable income declined even more!). But, even more unusual and contrary to the situation in other program countries, ‘operating surplus (gross profits of companies) and mixed income (of the self-employed)’ declined about as much (28%) as total income of employees, while aside from a temporary dip in Ireland it stayed about level in other program countries (graph 2).

Compensation

Profits

  1. March 19, 2015 at 3:18 am

    There is a tremendous strength in Greece. Germany is the debt scofflaw and should pay reparations to southern Europe for cultural distortions due to war.

  2. March 19, 2015 at 4:19 pm

    It’s harder to fire a German worker than a Greek worker. That being said, the most cynical and fraudulent move that Syriza could make is to “reform” labor laws in line with a Schaublistic wet dream. Give them everything they want. If you talk to Greek business owners, most will admit that 26% unemployment has created a desperate wild west of those seeking jobs. Workers are going weeks and months without getting paid. Many work overtime for part-time money. People are desperate. If there are regulations, they surely are not being enforced. High unemployment tends to create huge flexibility–if that’s what you want. And Greece has it. Any “reform” is not going to improve the Greek economy, but it will aid in highlighting the farce of this entire bailout.

  3. March 19, 2015 at 7:08 pm

    I Germany is going to pay reparations to Greece for the war, how about the French paying reparations to Russia for Napoleon’s invasion? What about all the countries invaded by Brits in the last 200 years. And then there’s Japan’s invasion of China in the 1930s. Plus 90% of German citizens weren’t even alive in the war.

    Ridiculous idea.

    • merijnknibbe
      March 20, 2015 at 12:19 pm

      Dear Ralph,

      it’s not about reparations. It’s about paying back a (forced!) loan from Greece to Germany.

      Merijn Knibbe

      • blocke
        March 20, 2015 at 1:55 pm

        After the Franco-German war of 1870-71, the Germans forced the French to pay Germany 5,000 million war indemnity in gold francs. That was not about reparations but the victor’s booty claimed from the loser. France raised that money as quickly as possible on the bond markets, because the German withdrawal of troops from France was carried out according to the indemnity payment schedule. Nasty bunch of buggers when sitting in the driver’s seat these Germans. Merijn’s right in the case of this austerity loan, it was forced on the Greek people, who did not borrow the money but are being forced to pay for it by those sitting in the driver’s seat. Watching European goverrnments deal with each other and the people’s of Europe in this crisis the financialization of Europe has cooked up looks like deja vue, all over again. That French money was used to fuel an industrial boom in the new German empire.

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