Some notes on Greece

So, is the Greek government a massive overspender? Greek government spending as a portion of GDP is 49.5%. This compares to 56.2% for France, 43.8% for Canada, an OECD average of 44.5% and a Euro area average of 50.5%. That’s 2010 numbers. In 2007, Greece was at 46.6, France at 52.4%, Canada at 39.4% and the Euro area and OECD averages at 47% and 41.4%, respectively.

Are the Greeks, as suggested by many commentators, a lazy nation which retires early? Recent numbers from Eurostat on employment rates [direct link, pdf] show that Greek participation in the labour market until age 64 are not lower significantly lower than elsewhere in Europe. The overall employment rate for 20-64 year-olds is 59.6%, compared with a Euro area of 64%. Among 59-64 year-olds, the Greek rate is just over 3% lower than the Euro area’s 46% average. As this data shows, the source of the lower Greek numbers are caused by a lower participation rate for women: the employment rate for men is 1% higher than the 75% reached on average in the Euro area. The gap between Greece and Germany, which currently has a 71% employment rate among 20-64 year-olds would have a more significant impact on competitiveness if it weren’t for the significantly lower GDP per capita in Greece.

So it’s true that Greeks are retiring somewhat earlier than elsewhere in Europe – but one might consider them entitled, considering that they work more hours per year than anyone else in Europe. They work 25% more hours per year than the average European, 200 hours per year – the equivalent of five weeks work – longer than Americans. So, even taking into account the retired and unemployed, Greeks aged 20-64 are still working on average, 1222 hours per year, compared to a European average of 1040 hours per year. Lazy greeks, indeed.

The question then becomes, how did the government get into such dire financial straits? The answer is that the richest and best-paid in Greece don’t pay their taxes: Germany collects 37% of its GDP in taxes, Greece 29.4%. As of 2010, two thirds of Greek doctors self-reported incomes under 12 000 Euros – in a country with a GDP per capita of twice that amount – which entitled them to pay no tax at all. The Greek crisis is not about the average worker; it is about Greeks best-paid, and if they had been paying taxes for the last ten years, Greece would not be in the financial mess it is in right now. No doubt, the failure to collect those taxes falls on the shoulders of the government, but that is no justification for the amount of calumny which is continually heaped upon the Greek people for this mess.

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