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, The New York Times reported.
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. Read more.
