Greek Unemployment - The Solution
27 April 2012
There are currently about 1,000,000 unemployed people in Greece (21%) and, listening to Greek politicians, it is obvious that, between them, the politicians are incapable of coming up with a single practical and immediate solution to solve this devastating problem.
Greek politicians are ready to amaze their potential voters with CVs decorated with graduate degrees from impressive universities, including Boston, Yale, MIT, Oxford and Cambridge, to name only foreign great learning institutions they can lay claim to. Yet they are living proof of the theory of an unknown philosopher who said:
“An illiterate fool can be a useful fool. He can wash floors. But a fool with a PhD can be lethal.”
Having got that off my chest, I shall place here a few ideas of how to solve the Greek unemployment problem in a practical and immediate manner, so that politicians will never be able to claim that they did ‘everything possible’. Why do I not send the ideas directly to the politicians, you may well ask? The answer is that I have tried, but they are so preoccupied with themselves that they do not listen.
This article is a continuation of a previous article I wrote with the heading “Greek Financial Crisis - The Solution” which, in the unlikely event that a Greek politician might actually be interested in doing something for his people, can be found here: http://degreek.hubpages.com/hub/Greek-Financial-Crisis-The-Solution
The above article deals with: creating growth, creating jobs, creating wealth and reducing the cost of living for the Greek people, without costing the Greek State a single Euro. I am extremely proud that a well-known and respected economist has called this proposal “original and innovative” and I thank him deeply for his encouragement. And, besides boasting, I say this to forestall any Greek politician who might embarrass himself by saying that the ideas are not feasible.
Now, let us solve the Greek unemployment problem.
Basic (approximate) information which leads to this proposal:
· 1,000,000 unemployed
· 4,000,000 currently in employment (excluding public servants)
· I do not have necessary important information to make this proposal accurate, but the ‘Athens Chamber of Commerce and Industry’ lists about 75,500 members. From this number I hope that my guestimate - that there must be at least 500,000 large and small businesses in Greece, employing at least one employee – is correct.
· Company Tax is 25%
· Both main political parties propose reducing this to 15%, in order to create growth.
The Political Left, which currently numbers collectively up to 40% of voters, are against this because they want to “tax the rich”. This resistance from the Left will make reducing the tax a somewhat difficult exercise.
What I propose is that
1. They leave the tax as it is currently.
2. Offer up to 50% Company Tax reduction to all employers, provided they spend the reduction on the employment of new staff.
The benefits from this simple idea will mean that:
· The employers will be able to improve their production and their services by adding additional employees, WITHOUT COSTING THEM A SINGLE EURO.
· At the same time, the State will quietly and practically reduce Company Tax to 12.5%, WITHOUT ANY OBJECTIONS FROM THE LEFT.
· Even if each company adds just one new employee to its work force on average, unemployment will be reduced by 500,000 within year 2012.
· The state will save all the relevant unemployment benefits.
· People will be able to feed themselves and their families with dignity.
· The newly employed will begin the purchase of goods, which will mean in turn that the various businesses (who have invested without cost in the employment of new workers), will increase their sales to each other’s workers.
· Because of increased sales, the State will benefit from VAT it would not otherwise have.
· The new employees will pay personal income tax and will support the State’s coffers, instead of weakening those coffers through the unemployment benefits they would otherwise receive.
I do not have a way of collecting the correct company figures and consequently the results might differ. It just might be possible to end up with zero unemployment, or it might be that only just 100,000 might receive employment through this method. Whatever the final number, the State cannot lose, because the tax reduction will be directly connected to the number of employees a company can afford to employ and the Company Tax that company will benefit from.
I have no doubt that some politicians will become involved in nit-picking this proposal, such as that the Company Tax might be 23% instead of 25%, or that the number of companies is not 500,000 but some lesser number and so on. But any intelligent person of good will gets the idea.
Through tax evasion and outright thievery, some Greeks have managed to collectively accumulate billions, which they currently keep abroad in foreign banks. With the recent arrest of an ex-minister and his family on suspicion of money laundering of unjustified funds (illegal bribes), the Greek government gives the impression that, at last, it is now serious about finding the crooks that have milked this country dry over the years. Once the political decision is made to find out who these thieves are, nothing is easier than finding them.
The thieves now suspect that their time has come. And because of the immunity they have been enjoying over the last 40 years, they have felt safe enough to acquire a lot of assets in Greece, which will now be at risk of confiscation by the Government, even if they escape to foreign lands to enjoy their ill-gotten gains outside Europe, in countries like Brazil.
Because of the slow moving cogs of the Greek bureaucracy, it might take years until all of them are found.
What I propose is that all these thieves be given immunity from prosecution or taxation, provided:
1. They repatriate ALL of their ill-gotten gains to Greece IMMEDIATELY.
2. Should they, at any time in the future, be found to have kept hidden funds abroad, their immunity will become null and void.
3. They INVEST all their repatriated funds in any productive venture within Greece they might choose. (See “Greek Financial Crisis - The Solution”).
4. They employ (say) 10 people for every €1,000,000 for which they shall receive immunity, within the venture they will be obliged to start up within Greece. Anyone dismissed for cause, must be replaced by someone else.
5. They will pay all legal liabilities and obligations for property they already have in Greece and for which such payments have been avoided.
I understand that there are currently in foreign banks €170 billion belonging to Greeks. Even if only a fraction of this is repatriated, the resulting wealth for Greece will be a huge contribution to growth and to employment.
A temporary solution:
My wife and I spent two weeks in Zakynthos last summer and I have noticed a number of oddities.
· 95% of those working there were foreigners, particularly Albanians
· At the time Greece was reporting unemployment at 16% !!!
· Some Albanians I spoke to claimed that none of them paid Social Insurance Contributions (IKA)
· One Albanian told me that 2000 Albanians paid the local responsible Greek official €2000 EACH for a work permit.
· There were so many Albanians in Zakynthos, that an Albanian bus company (not Greek) operated a regular bus service to Albania on a daily basis!
· Overall €750 million were sent by foreign workers officially through banks to their home countries.
· Meat prices in Zakynthos were higher than in the UK, which has a higher per capita income. Chicken prices were almost DOUBLE!
According to the Greek press:
a. There are 2,000 homeless sleeping in the streets of Athens.
b. 50% of the unemployed are between the ages of 16 and 24
What I propose is that
1. The military provides a number of their barracks in Zakynthos, to house young people and those of the homeless who might be able and want to accept a job on the island during this summer.
2. If there are not enough barracks, the State to provide the land and some of the unemployed to be used to help build new ones.
3. The police to ensure that no permits are given to non-Europeans at penalty of prosecution
4. The law must be modified to the effect that those employers, who employ ANYONE without paying Social Insurance Contributions (IKA), will face personal imprisonment.
5. The military to provide free daily transportation to and from work.
6. State land to be provided by the State next to these military barracks for those of the homeless who are unable to do heavy work, or unable to work an 8 hour day, to raise vegetables and chickens which they will sell to those living in the camps at agreed prices.
By repeating this project in all the islands with tourists, like Zakynthos, a large number of unemployed will be accommodated and the savings they will be able to make over the summer period will see them through the winter.
What I propose is that
· Allow the creation of private universities. This in itself will create thousands of new jobs on all levels of social strata.
· At the same time it will encourage foreign investment in universities
· There will be much needed new universities which will teach in foreign languages.
· This in turn will save the current export of funds for Greek students studying abroad.
· At the same time, it will encourage foreign students to study in Greece, providing a huge favourable boost to Greece’s economy and balance of payments.
· Of particular interest should be university hospitals, which will take over the installations of hospitals currently planned for closures. This will also help medical research within Greece.
Primarily, though, literally thousands of new jobs will be created within a relatively short period of time.
Finally, Proposal 5
The military are by definition men and women of patriotism. Yet the Greek military are not utilized during this crisis. During the recent ferry boat strikes in Greece, Cretan vegetable producers and exporters were in danger of losing their livelihood, because they could not take their products to the mainland.
The Greek Navy has the landing craft to help these people and prevent them from being ruined by the insane, destructive strikes of the few.
In addition, the Greek Air Force has suitable transport aircraft which can be used to solve the same problem.
No doubt the politicians will refer to the cost involved. My answer is simple: The military uses these ships and these aircraft for military training exercises. Let them use their ships and aircraft in combined exercises which will involve the transportation of these goods, to save the livelihood of their taxpaying countrymen. No doubt the vegetable growers/exporters will be happy to pay to the State whatever they were going to pay to the ferry boats in any case. Any such payments can be used to cover the military’s fuel expenses.
All of the above are simple thought processes which should be obvious to any reasonable person interested to help alleviate the pain and suffering of the Greek people at this time of crisis. Regrettably their politicians are usually the ‘sons’ of other previous politicians who appear to consider it a right to be elected, irrespective of their actual capabilities.
It is my hope than some Greeks might read this and take the trouble to translate it and to circulate this document through the Internet, in the hope of helping their long suffering countrymen.
If any of you find this document to be of some interest, favourable or otherwise, please leave a comment below and tell me what you think of it. Even if you do not agree with my ideas. :-)
PS: The active and serious fight against corruption and tax evasion is a self-evident necessity and I do not parrot this as all politicians simply pay lip service to.