Flexibility and security: an asymmetrical relationship?
Although the Greek economy has made significant progress following its accession to the EEC
in 1981 and recorded high annual growth rates that ranged between 3%-5.5% (well above the EU av-
erage), it still suffers from a number of structural weaknesses such as: a government gross debt which
reached 95% in 2007; soaring general government and current accounts deficits (3.5% and 13.4%
of GDP in 2007 respectively), low labour productivity -despite long working hours and low average
wages-31, very low R&D spending (0.6% of GDP in 2005), constantly declining foreign investment,
an ineffective and over-sized public sector, and high unemployment rates (7.7% in 2008). Not surpris-
ingly, the economy’s international competitiveness has been dramatically deteriorating over the past
few years, reflected in a steep fall from the 37th position in the world economy in 2004 to the 67th place
in 2008. 32 The comparison with the other 26 EU countries is not any more encouraging, as Greece
ranks in just the 23rd position among the EU countries regarding its overall performance.33 Moreover,
the underground economy is still thriving, having been fuelled since the early 1990s by mass immigra-
tion flows, and is estimated to account for as much as 35% of GDP. The road to modernisation and
the full convergence of Greece with the more developed EU countries is also seriously hampered by
a deeply rooted system of political exchange and patronage, whose foundations have remained intact
over the years, regardless of the political party that was in power.
Spain also opted for the same low-road to competitiveness after the re-establishment of democ-
racy in the mid-1970s. But in the mid-1990s, the social actors realised that the declining international
competitiveness of the Spanish economy and the dislocations generated by the European integration
process made necessary a shift away from labour-intensive and low-qualified production towards
more capital-intensive industries, based on innovation, quality, value-added and productivity (Royo,
2007). These developments triggered off a period of impressive economic performance, with high
annual growth rates close to 4% of GDP, until the onset of the present global financial and economic
crisis. However, in many respects, long-standing structural weaknesses have not been successfully
addressed: GDP growth is falling rapidly (whilst the EU forecast for 2009 is very bleak, -6.2%), un-
31 Greece has the highest annual contractual working time in the EU-27: 1820 hours, compared to 1760 in the EU-27
and 1690 in the EU-15, as well as a lot of overtime work: 32% of employees work more than 48 hours/week (Kouzis,
2008).
32 See the “Global Competitiveness Report” issued by the World Economic Forum in 2004 and 2008, and the respective
GCI rankings. Available on line: www.weforum.org/gcr
33 See the World Economic Forum Lisbon Review 2008. Available on: www.weforum.org/gcr
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