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Updated: May 8, 2010 18:38 IST

Perks that have cost Greeks dear

GUARDIAN NEWS SERVICE
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A protester gestures to riot police outside the Greek Parliament in central Athens. Protestors tried to storm Greece's parliament and hurled paving stones at police, who responded with tear gas. Tens of thousands of outraged Greeks took to the streets to protest harsh new spending cuts aimed at saving their country from bankruptcy. Photo: AP
ASSOCIATED PRESS
A protester gestures to riot police outside the Greek Parliament in central Athens. Protestors tried to storm Greece's parliament and hurled paving stones at police, who responded with tear gas. Tens of thousands of outraged Greeks took to the streets to protest harsh new spending cuts aimed at saving their country from bankruptcy. Photo: AP

Like most Greeks, Pavlos Georgiou is under no illusion as to why his country is in the eye of the biggest storm to rock Europe since the Second World War. “For too long,” he says, arm outstretched behind a desk stacked high with paper files, “people here have cheated the system. That’s why we have ended up in this sorry state.”

But what Pavlos Georgiou does not say, at least openly, is that as small as it might be, he has also had a bit part in the drama engulfing Greece.

His day job as an accountant is offset by another far more lucrative business: as a tax specialist who fudges and fiddles the books for clients.

“What to do, when everyone is doing it?”

Although widespread, tax evasion is only the tip of the iceberg of Greece’s financial meltdown. The source of the profligacy that has pushed the country to near bankruptcy and at 13.6% earned it Europe's biggest public deficit and debt, is its all-pervasive state - what the embattled prime minister George Papandreou calls “Greece’s big sick man.”

Around one million Greeks are employed in the wider public sector with the vast majority holding jobs from which constitutionally they can never be fired. It is a security that has not only assured the popularity of such positions, but the exponential growth of the public administration in the wake of democracy's return following the collapse of military rule in 1974.

For successive governments, power has been used to dispense patronage and reward voters with jobs. In the shadow of bloody civil war, the state was the great connector.

By the time the modernising socialists were elected last October, the civil service was not only bloated but at bursting point with even the finance minister admitting that he was “clueless” as to the real number of employees.

“Until now the only dream of nearly every Greek has been to get a state job,” says the author Nikos Dimou. “Because they knew that it was not only a job for life but involved little work.”

Most civil servants reasoned that with average monthly salaries being no more than EUR 1,000, the cushiness of state posts also allowed them to hold second jobs (policemen working for security firms, tax inspectors working as accountants, department heads running boutiques) which they invariably never declared. Such jobs account for Greece's huge black economy conservatively estimated at over 30 percent.

“The Greeks have a love-hate relationship with the state,” adds Mr. Dimou. “On the one hand they regard the state as a protector, seeing it as the only institution that will give them security and on the other they feel oppressed by it and think nothing of stealing from it.”

The abundance of perks, benefits and bonuses that pushed profligacy to its limits was nurtured by runaway bureaucracy that gave way to loopholes and abuse. It was a system in which phony invoices and receipts thrived next to phantom committees and working groups that never met. The environment ministry, alone, was discovered to have 31 such organisations, including a committee for a lake that had ceased to exist back in the 1930s when it dried up.

Arcane legislation for special interest groups, including the armed forces and those who held hazardous jobs, meant that pensions could be had as early as 45. The daughters of deceased army officers could claim their father's pension for a lifetime if they remained unmarried; a hairdresser working with “dangerous” chemicals could receive pensions by the age of 50; a policeman on the beat could leave his job all expenses paid at the age of 45.

The EUR 30bn worth of austerity measures that have whipped up such fury are aimed almost entirely at trimming the public sector. But government waste and extravagance such as the EUR25bn spent on the Olympics have helped public debt to balloon.

“It's why Greeks are so angry,” says Panos Garganos, a prominent leftist academic. “Public debt has been accrued on the government bailing out the banks, military expenditure and supporting shipowners and hotels. That has made people really angry and as living standards drop that anger will only get bigger.”

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