Push to End Job Barriers Rattles Greece and Economy
Angelos Tzortzinis for The New York Times
Long-existing regulations have made pharmacies a lucrative trade in Greece.
By SUZANNE DALEY
Published: October 14, 2010
ATHENS — Antonios Avgerinos, 59, a retired army pharmacist, always wanted his own pharmacy here. And why not? Greek law ensures that pharmacists get a 35 percent profit on all drugs sold, even over-the-counter medications.
Tzortzinis for The New York Times
Truck owners displayed black flags from their vehicles to protest Greek government reforms of the regulation of their profession.
“It is an absurd system,” Mr. Avgerinos said recently. “But it has been that way my whole life.”
Maybe not for much longer.
As the government of Prime Minster George Papandreou struggles to get the nation’s financial house in order — reducing the size of its bloated civil service, chasing after tax evaders and overhauling its pension system — it has also begun to tackle a much less talked about problem: the cozy system of “closed professions” that has existed here for decades, costing the economy billions of dollars a year.
These efforts have prompted almost weekly strikes in the last few months from interest groups firmly opposed to breaking down the barriers to entry in lucrative professional niches. But experts say that much is at stake: Greece’s ability to service its tremendous debt to other European countries and avoid default rests on the government’s ability to inject more competition and dynamism into its sclerotic economy.
“Greece is the last Soviet-style economy in Europe,” said Yannis Stournaras, an economist and the director of the Foundation for Economic and Industrial Research, known as IOBE Athens, who has studied the issue. “Other countries have some closed professions. But nothing like Greece. Every stone you turn here, there are regulations.”
For selling a cancer drug for $4,200, Mr. Stournaras said, a pharmacist makes a profit of around $1,400. “That’s a movement of the elbow that is more expensive than one of Roger Federer’s.”
Experts say there are about 70 closed professions here, including those of lawyers, engineers, taxi drivers, speech therapists, welders, notaries, street market vendors, newsstand operators and architects. Each is protected from competition by a byzantine tangle of regulations and licensing requirements that result in high prices for consumers and a reliable living for insiders.
No use shopping around for a less expensive lawyer or notary, for instance. They all charge fixed fees, as do many other professions. There are numerous restrictions on licenses, too. Some are not even available to some classes of citizens. For instance, newsstand licenses are reserved for war veterans, the disabled and those with large families to support. Others are limited, like the number of long-haul trucking licenses, which has been frozen for 25 years.
A study carried out by IOBE in 2006 estimated that opening these professions would increase gross domestic product by about $35 billion, or 10 percent, in five years.
But nobody expects change to be easy. Already, austerity measures in Europe have prompted unrest here and elsewhere. Thursday saw strikes by civil servants protesting cutbacks in Athens and in France. Many believe that tackling closed professions will mean even more groups taking to the streets.
That is what happened this summer when the government took on the trucking industry. Greece has issued only a few new licenses for truckers since 1970, though Greece’s economy has more than tripled in that time. This created a hot market for the licenses, which have sold at prices approaching $500,000. Not surprisingly, experts say, trucking costs in Greece are far higher than anywhere else in the European Union.
The IOBE report found it was more expensive to truck something from Athens to Thebes, about 45 miles, than from Athens to Rome, a distance of more than 600 miles. Businessmen say it is cheaper to ship goods here from China than it is to move them from Athens to the island of Rhodes, 285 miles away.
But when the government announced that it would begin issuing new licenses over the next three years, the truckers blocked the borders for weeks, creating shortages of all kinds, including fuel. Mr. Papandreou invoked an emergency regulation to force the truckers back to work.
Within a few weeks, however, work stoppages began again. The truckers did not cease their occasional blockades until Parliament passed a new law that could see them lose their licenses altogether.
For their part, the truckers say they should not be stripped unilaterally of their investment.
“All of a sudden you have nothing,” said Vassilis Sachinidis, the president of one of the truckers’ unions, representing about 3,000 owners of trucks with cranes. “That is not right.”
After tackling the truckers, the government plans to dismantle the remainder of the closed professions. It is likely, however, that it will wait until after local elections in November.
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