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| There were a number of other nuggets of lunacy in that report. Let me pick what I thought was the silliest one. QUOTE Actions were not taken to adjust private sector wages. While the program cut wages
and bonuses in the public sector, there were no direct attempts to lower private sector wages.
The EC took the view that forcing reductions in private wages, for example, through abolition of
bonuses, was not critical: industry did not consider labor cost to be excessive and in any case
exports were unlikely to be wage sensitive.15 Instead focus was on increasing the scope for wage
bargaining at the firm level. The Fund agreed with the emphasis on bringing down public sector
wages, noting the strong demonstration effect that this would have for the private sector. A strong demonstration effect on the private sector? Are you mad? Also, note 15 is interesting. QUOTE 15 See European Commission (2010). Also see Papaconstantinou (2010): “Competitiveness is a broader issue than
wages in Greece and also has to do with the oligopolistic nature of markets: wage cost is part of the discussion
but not a main element.” So the IMF appeared to agree with the EC that wages don't matter to competitiveness. But in the public sector, they still argued for the need to demonstrate lowering wages, so Industry can follow that example, and presumably make Greece a more competitive country. Or something like that... Bonkers! |
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