Friday, 5 January 2007

A Make-or-Break Year for Reform

Most Greeks don't think 2006 was a year of improvement for the country, and only a third of them expects 2007 to be. That is the broad conclusion of three public opinion polls taken during December and published on the last day of the year.

A reformist government ought to find these gloomy results encouraging. Greeks typically think of the coming year with trepidation. The pessimism over 2007 should be taken with a pinch of salt because through the gloom some figures sparkle. Although two thirds of Greeks appear to oppose the privatisation of OTE, by and large people support privatisation when it is put to them as a broader movement.

That suggests that the name of the public telecom has, through the inevitable game of political soccer, become highly emotional - perhaps in the same way as Olympic - but that the battle for hearts and minds is not unwinnable.

Despite the merciless battering dealt to the idea by the Left, a majority polls in favour of non-state controlled universities. That leaves the 59 percent who said yes to the idea last January essentially unscathed by eight months of political strife. Just to drive the message home, only three percent of people polled by Kapa Research thought 2006 was a good year for Alekos Alavanos, leader of the Left Coalition, which was the protagonist in opposing education reform; and only 2.2 percent of respondents thought he should be prime minister from among the party leaders.

Education reform was the government's greatest failure in 2006 and full privatisation of OTE is probably its biggest gamble in 2007. Both have drawn the opposition's heaviest fire. That public opinion still gives the government this much credit is a victory and leaves it no excuse to postpone reform for another year.

Historically Greeks have championed labour over capital and sought the hand of the state in almost every area of life. Yet creeping favour for the private sector now seems inexorable: 55 percent of those questioned named it as the key to improvement of the economy, while only a quarter thought the public sector was the key.

Even though the state directly or indirectly still controls just under half of the economy, people seem to have understood that in the long term this godfatherhood is ending. The conservative and heavily statist society that is Greece may have begun to turn a corner.

Waning public sector support also appears elsewhere. Sixty percent of those questioned told one poll that they support abolition of tenure in the public sector, a government proposal.

A vote of confidence in the government comes in the overwhelming opposition to early election. Even if Greeks aren't thrilled with the economy under New Democracy, they blame past Pasok governments for their woes more than this one (35 percent versus 19 percent, according to Kapa Research).

Greeks seem ready for less representation and more direct democracy - an area where socialist leader George Papandreou has traditionally made bolder proposals than Prime Minister Costas Karamanlis. Eighty percent declare themselves in favour of a directly elected president and 70% in favour of referenda they could initiate through signatures - both Papandreou proposals. Seven in ten even think the number of MPs chould be reduced by a third.

The economy is always paramount. At the end of 2005, as now, Greeks' main concern was their purchasing power and their ability to find a decent job.
Interviewees list the economy and unemployment as two of the three areas they would like the government to prioritise most this year.

Greeks told one survey that a decent wage is about 1,500 euros, presumably take-home pay, when the average pre-tax wage for 2005 stood at 13,749 euros according to finance ministry tax data.

That means the government has a long way to go - about 400 euros cash-in-hand - to convince Greeks that they are winners in a reforming economy.

Some progress is being made. Non-taxable income rose by 1,000 euros on January 1, meaning an automatic raise for salaried workers and pensioners. Unemployment has fallen to 8.3 percent for the third quarter of 2006. And the government is making good on electoral promises to raise unemployment benefits and additions to low-end pensions.

Inflation could threaten all those gains, however, forecast at above three percent for the year compared to 2.1 percent in the eurozone. 

At the end of the day the course of the economy will be determined by the government's success in liberalising it and shrinking the public share of it, while maintaining decent minimum wages and improving health and education. The main obstacles in its way are a small number of unionists with ties to political parties, and its own timidity.

If it fails to push reform for a second year in a row, New Democracy may still win early elections expected in the autumn but could quickly fall into the paralysis that plagued the Simitis government from 2001 to 2004. If it succeeds, both labour and capital, those eternal foes that are completely necessary to each other, could begin to be openly happy by next December's poll.

Kapa Research Telephone interviews with 1,803 adults nationwide, 18-21 December 2006. Published in Sunday Vima on 31 December 2006.

VPRC Telephone interviews with 599 adults nationwide, 22-23 December 2006. Published in Sunday Kathimerini on 31 December 2006.

Metron Analysis Telephone interviews with 801 adults nationwide, 20-23 December 2006. Published in Proto Thema on 31 December 2006.

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