Greece facts (?) of the day

The figure of 53 years old as an average retirement age is being bandied about. So much, in fact, that it is being seen as fact. The figure actually originates from a lazy comment on the NY Times website. It was then repeated by Fox News and printed on other publications. Greek civil servants have the option to retire after 17.5 years of service, but this is on half benefits. The figure of 53 is a misinformed conflation of the number of people who choose to do this (in most cases to go on to different careers) and those who stay in public service until their full entitlement becomes available. Looking at Eurostat’s data from 2005 the average age of exit from the labour force in Greece (indicated in the graph below as EL for Ellas) was 61.7; higher than Germany, France or Italy and higher than the EU27 average. Since then Greece have had to raise the minimum age of retirement twice under bail-out conditions and so this figure is likely to rise further.

The graph is at the link.  That analysis seems more plausible than the competing accounts, but if you believe it to be wrong, please enlighten us in the comments.

Hat tip goes to Guy LaRoche.  Guy also recommends this post:

And if the lending of money wasn’t enough, the paranoia that Turkey (also a member of NATO) will invade Greece has led to an arms race. Think of what was going on: France was lending money to Greece, to buy French arms. Let alone that most (all?) of the 12 Phantoms Greece bought in 1988 have crashed since during exercises (second grade quality?), killing most of their pilots. Not to mention that because of bribery to civil servants from foreign medical companies, Greece pays 3x the amount of money for medicines and medical instruments than any other European country.

In other words, the problems are more cultural than we might think and less susceptible to direct fiscal management than we might think.  All of the posts are interesting throughout.

Comments

Thank you.
You can find more information in this Spiegel article ("The Myth of a Lazy Southern Europe"):
http://www.spiegel.de/international/europe/0,1518,763618,00.html
Now they're raising the retirement age to 65 and you have to contribute 40 years to it.
And this is for debts, that, like you said, always go straight back to the foreign countries and banks and never, ever to the people.
We work really hard and get nothing in return. Average holiday is 2 weeks. Minimum salary is around 700 euros per month.
It is literally impossible to save money at such low salaries and huge reductions, let alone raise a family and now it will get even worse.
So it really adds insult to injury when all foreigners call us lazy and ungrateful.

Sounds exactly like American work hours. Greece is probably not lazy in comparison to its history, but to the rest of the world, if you want German living standards, you have to work like Germans.

If you're not willing to work hard and provide value, there's someone in East Asia or Sub-Saharan Africa just waiting to take your job.

The DS article seems questionable. Average retirement age is affected by the propensity to save. The real question is the age at which they receive pensions.

It's nice they're cutting the insane public sector bonuses and not hiring any MORE people, but they don't appear to have laid anyone off yet, on net.

Greece's main problem, though, is corruption.

It's easier to blame Greeks, and Irish, and Spanish, and Portuguese, and Estonians, and Latvians, and Lithuanians, and everyone else for flaws real and imaginary, than to force haircuts on bond holders to fix debt problem and force ECB to print enough money to restore NGDP to what it was supposed to be.

careful the average age of exit from the labour force does not = the average age of commencement of retirement or pension. Have you never heard of someone collecting a pension while still working? Reform of pension age is about fixing the unsustainable situation of contributions vs. obligations. also the data cited even though it was reported by the EU is not collected or verified by the EU (you may recall how erroneous the Greek fiscal information turned out to be)

"Now they’re raising the retirement age to 65 and you have to contribute 40 years to it." Cruel bastards. Mind you, those were the terms I worked under for the whole of my career.

I started working at 17. I expect by the time I retire the retirement age will be 70. Having to work 52+ years, that's almost slavery!

well that's the thing. Looks like you live only to work. You should be in the streets too. All of you who complain about the Greeks should demand a better life and a fairer system rather than get outraged with those who do.
How absurd is it that, for you, working from kid to old man is the normality. How absurd that everyone has to live with the lowest standards because that's "fair"...
How absurd that we turn against each other instead of fixing a broken system everywhere, where an elite steals everything, lives above the law and the rest we fight for the crumbles they leave behind.
We should all be ashamed.

Live to work, or work to live?

I don't find working from "kid to old man" to be absurd at all. I work to support myself. Whether that is at a subsistence level, at the beginning of my career(s), or to support as lavish a lifestyle as I choose to live and am able to afford, the person who is responsible for supporting me... is me!

I have no problem with any person retiring at whatever age they choose. I just ask that their standard of living is commensurate with what they earn/have saved from earning. Should I choose to work until I drop dead it should be to add to my family's standard of living, not that of someone who thinks supporting himself is too hard.

I'm sorry, I'm American and seriously doubt I will be able to retire before 70, but I still don't see why we should view that as a good thing.

It is all a matter of how much money you spend. Some families in the USA live on less than $20,000 per year. Make of 40K and live on 20k and you can surely retire young.

and people in Indonesia or Ghana don't work hard? Hard work alone is no reason to demand pensions way in excess of what most people in the world EARN whilst working 10h/day shifts.

If, as we expected, Greece end in default, all this effort and sacrifice will be a waste of time and life of the greek people. Argentina experienced it almost 10 years ago... In the end, they were forced to go for the "can't pay my debts". Of course, as usual, people with more resources and information can use this extra time to minimize losses and even make some profit from it. But that's business as usual.

*expect, not expected...

My heart is with the Greeks. But it is their inability and unwillingness to face reality that is at the core of their problems. That is wny they lied to the EU to get into the euro, and kept on lying to the ECB, and ultimately to themselves.

Yes, Greeks work long hours. But that is not the relevant comparison. They are not very productive during those long work hours, generating on average only 18.50euro per hour worked, while Dutch workers for example generate 39.50euro per hour worked in 2009. Since the euro introduction they have become even more unproductive.

Edward Hugh saw all of this coming in 2007
http://greekeconomy.blogspot.com/2007/09/greece-under-microscope.html
in his as usual excellent analysis based on the numbers.

Demography is largely destiny for Greece, as show in this age histogram:
http://seekingalpha.com/article/179669-greece-why-the-ratings-agencies-are-right-and-george-papaconstantinou-is-wrong

Again, my heart is with the Greeks, and at least they face reality with respect to the Turks. Calling their fear of Turkey 'paranoia' is absurd, given the 400 year occupation by the Turkish muslims, the ethnic cleansing of Greeks from Asia Minor in the jihad in the 1920's, and up to a million dead as a result of that.

Analysis of their fate is highly relevant to Americans.

Happy 4th.

Excellent summary.

Afaik Greece has the second lowest rate of participation in the work force of the oecd countries (after Malta). That's probably skewing the "hours worked" statistic.

The article does not address the failure of the Greeks to have a sound tax system. With a high degree of non-enforcement and artful evasion, it is very difficult to have a sound fiscal system because everyone believes everyone else is evading, and therefore, why shouldn't I. It is one thing to have laws, it is another to enforce them. They got what they deserved and what could be expected.

The only problem: are the two "they"s in your last sentence the same?

Yes, they are the same group: the Greeks.

This comment makes total sense assuming that Greece is a hive mind superorganism instead of a country with complex demographics, culture, and economical institutions composed of individual human beings making decisions based on the information they have at hand.

That should be "economic." They're demonstrably not "economical."

That should be "economic institutions." They are demonstrably not "economical institutions."

Well, the idea that you can retire from a government job and keep getting that money no matter how old you are is absurd. Time of service should be only one component of the equation. I started working when I was 17 and it would be ridiculous if I started to receive retirement money when I was in my 30s or 40s. That is not exclusive to Greece of course but it has to be part of the problem and eventually all countries will have to address this.

I suspect that the problem in Greece is somewhat different. Yes, they work hard. Yes, they have fairly generous welfare arrangements (although not outrageous compared to other European countries). Yes, their official wages are low, although not outrageously so for a country that really hasn't left its third world status all that long ago. Yes, they have an ultra-wealthy ueberclass that invests and spends a lot of its money outside of the country (again a very normal thing for a developing country).
I think that the main problem is that the Greek "black" economy (the "unofficial" one) is vast. Tax evasion is part of this, but a lot is simply the result of a societal and physical infrastructure that is a century behind the core of the euro area. Other European countries struggle with this too, notably Spain, Italy and Belgium: all of them on the shortlist (or soon to be) for default. With a large unofficial economy, there's less tax income, but also less local investment (you have to hide the "black" assets, so you don't invest locally unless it can be done off the books as well). Money and talent leaves the country in droves.
As this requires societal change, it cannot happen overnight. In a couple of decades, things may be different. Greece may be a part of the eurozone on its own merits by then. But if it goes off on its own, it will remain a sleepy backwater, competing with FYR states, Italy, Egypt, Morocco and Turkey for tourist euros, and fighting an imaginary military competition with Turkey, which is progressing much faster towards modernity and will therefor leave Greece in its dust.
For the eurozone, the departure of Greece could be cathartic. Not in the least because it makes it possible that Turkey could be accepted into the EU and even the eurozone. I don't think that the core European states can really lose in the long run. Right now, the only thing that keeps the euro from appraising against the dollar is the Greek debt "crisis". This is why the crisis keeps dragging on: the eurozone cannot afford to fix Greece, it NEEDS this insecurity.

BTW I think that Greece and rest if developed nations are in trouble mostly because our monetary systems are badly flawed. I think that the Euro made things worse.

All,

Check out http://www.oecd.org/dataoecd/30/58/47384613.pdf

Public pensions in Greece are running over 12% of GDP. That's not the highest in Europe, but it is close. The Netherlands is around 7% of GDP and the U.S. is under 5%.

Greece is a relatively poor country with a very lavish pension system. That's not sustainable without a permanent Northern European feeding tube. Either the rest of Europe embraces permanent fiscal transfers to Greece or Greece changes.

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