China-isation of Greece

Angel Gurría, the Secretary-General of the Organisation for Economic Co-operation and Development, considers the Greek austerity plan a great success.

Reforms carried out over the past year are impressive. These achievements are not always appreciated at home or abroad. The 2010 fiscal adjustment of over 5 percentage points of GDP was unprecedented. The pension system was revamped and deep-rooted reforms are changing the management of public finances. Substantive improvements in labour and product markets are changing the business environment. It is now easier to start a company with the one-stop shop system. The Medium-Term Financial Strategy (MTFS) announced last June is yet another strong signal of political will by the Government of Prime Minister Papandreou to deliver the needed reforms.

And the results are starting to show. With rising exports and improved competiveness, we are seeing the first signs that the much needed macro-economic adjustment is gradually taking place.

Greeks, however, refer to the austerity plan, especially the so-called labor market reforms, as kinezopeisi, or China-isation.

Greece is already one of the poorest and most unequal societies in Europe, reckons Christos Papatheodorou at the Democritus University of Thrace. Among the few countries that look worse are Romania, Bulgaria and Latvia. So what will Greek society look like after the government’s austerity measures take effect? He pauses, then says: “It will probably look like a developing country.”

That message has not been lost on workers either: one of the new nouns used by trade union members and others who oppose the cuts is kinezopeisi, or China-isation. The claim is that such large drops in wages will lead to a workforce paid barely more than their counterparts in Shenzhen.

I am trying to get hold of a copy of the OCED’s Economic Survey of Greece 2011. If I do, I’ll have more to say in the days ahead.