Greeks Work Hard, So Why Is There a Debt Crisis?

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Civil servants occupying the Greek Finance Ministry building wave Greek flags and shout anti-austerity slogans in Athens on October 14, 2011. Greece's finance minister urged trade unions not to 'play with fire' as hundreds of angry taxi owners marched in Athens where strikes crippled transport and piled uncollected garbage in the streets. Public sector staff have regularly taken over state buildings in recent days to protest against a new round of layoffs and pay cuts adopted to trim the country

The size of the public sector isn’t known for certain. For the first time, the government took a census of government workers and estimated the number at 800,000, but not all municipalities provided data. The Athenian Chamber of Commerce puts the number at 1 million.

Downsizing the public sector is going to be enormously difficult, because the mere notion violates a long-held social compact between the government and the Greek people. The Greek Constitution states that once you are an official government worker, you have a job for life. This rule is the result of a well-intentioned labor reform from early last century—at the time government workers were fired every time there was a change in the party in power.

The government's attempts to lay off a mere 30,000 workers out of 800,000 is already meeting stiff, and sometimes violent, resistance.

Wednesday, a massive two-day strike will get under way, in which thousands of government workers and union members are scheduled to descend on Parliament to protest the layoffs, as well as a new law that would effectively eliminate the mimimum wage and reduce the influence of collective bargaining agreements.

For the most part, the public sector has stopped functioning already: Garbage collectors have stopped collecting garbage; tax collectors have stopped collecting taxes; and the permitting office isn’t issuing permits. The city is set to run out of gasoline in a few days because workers are on strike. (These are known as “white strikes,” when employees go to the office but don’t actually do any work.)

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Greek police officers stand on October 17, 2011 in front of the Panathinaiko Stadium during a demonstration in Athens. Greek sailors, customs officials and other government employees went on strike on October 17 and magistrates were to follow suit to protest cutbacks ahead of nationwide strikes this week. Greece's two main unions are staging a two-day general strike on October 19 and 20 to denounce the new government austerity cuts intended to resolve a debt crisis that has shaken the eurozone.

The leader of one of the nation’s Communist parties refutes the notion that the government sector is too large. Alexis Tsipras, leader of the Syriza coalition for the radical left, says the government is just too inefficient.

McKinsey agrees: The report found that northern European countries have even larger governments relative to their sizes—however, they're far more efficient.

In addition to contributing to a lack of efficiency, giving government workers a job for life has led to another tough economic consequence — Greece has the lowest employment turnover rate in Europe, the sign of a stagnant economy.

It contributes directly to high levels of youth unemployment, which minister Chrysochoidis acknowledges: “Imagine that in Greece we have 45 percent of young people unemployed," he said. "It’s a defeat for Greece because the economy could not employ and absorb those people.”