During the Eurozone debt crisis, between 2010 and 2014, Greece and many of its corruption scandals were constantly in the news. In this post we will review some of the most illustrative examples of corruption in Greece.
- Retirement pensions for the dead
- Retirement age for dangerous professions
- 45 Gardeners for a hospital without a garden
- Military expenditure
- More Porsches Cayenne in Larisa than in London or New York
- Cheaper by taxi than by train
- Official cars for all parliamentarians
- Non-existing swimming pools in Athens
- Perpetual pensions for daughters of dead civil servants
- Expenditure on civil servants
Greece is the second country in the world the highest public debt relative to the size of its economy. It stood at 252% as of 2020. It was once the most indebted nation on the global. However, a portion was written off during the bailout process that saw a partial restructuring of Greek sovereign debt.
Despite the painful measures that were implemented many years ago, Greek public finances remain in very bad shape. Corruption is seen as one of Greece’s biggest problems.
In this post we will discuss some examples of the high level of corruption that affected Greece in the past and led to its bankruptcy. Not all of these stories are strictly about corruption, as some of them have to do with absurd laws.
1) Retirement pensions for the dead
In 2012, the Greek Ministry of Labour announced that it would stop paying benefits to 200,000 inhabitants. The reason given was that all these people were suspected of abusing the pension system and might not be entitled to these benefits. Keep in mind that Greece is a country of 11 million people, so 2% of the population was supposedly taking advantage of that.
Some of the people abusing the pension system were dead retirees. Although we do not know the exact figure of dead people receiving pension payments, we do know there were over 9,000 Greek retirees aged 100 or older.
That would make Greece the country with the highest rate of centenarians in the world. However, according to the census, not more than 1,700 citizens were 100 years of age or older.
Data from the Ministry of Labour also indicated that there were more than 500 Greeks over the age of 110. Most of them, obviously, had died many years before.
2) Retirement age for dangerous professions
Although the standard retirement age in Greece was 65 for men and 60 for women when the country was bailed out (today it is 67 for both sexes), some professions enjoyed better treatment as they were considered “dangerous”.
These “dangerous professions” were allowed early retirement. To be exact, they put the retirement age at 55 for men and 50 for women.
If you think that these dangerous professions were limited to those working in mines, away at sea, defusing bombs or who had actively fought in the army, you would be wrong.
The truth is that hairdressers, musicians, masseurs and even TV and radio presenters enjoyed those benefits. In the case of TV and radio presenters, the justification was that they should not be exposed to the bacteria in microphones for so many years.
3) 45 Gardeners in a hospital without a garden
The hospital Evangelismos in Athens had 45 gardeners on its staff before the crisis. It is nice for a hospital to have a beautiful garden. But the most curious fact was that this hospital has no garden.
In fact, the hospital only has a few bushes at the entrance. In their favor we can say that those bushes looked well cared for.
4) Military expenditure
Greece and Turkey have had a less than optimal relationship. This is due to historical, religious, economic and, of course, geopolitical issues. There are many islands in the sea that separates both countries, so the situation has been tense for many decades.
In such circumstances, a high level of military spending may be justified, but let us not forget that both Greece and Turkey are members of NATO. Hence, although a conflict is not impossible, it probably is unlikely.
What is very likely is that politicians will use the tensions with Turkey as an excuse to extract money from Greek taxpayers.
Thus, Greece has historically been the European country with the largest military spending relative to its GDP. And, as you might expect, there are plenty of stories about deals with the military industry where huge kickbacks were involved.
It should be noted that many foreign corporations, including several German and French ones, have benefited from corruption in Greece. It helped them sell weapons in large quantities and at exorbitant prices.
5) More Porsches Cayenne in Larissa than in London or New York
Let us move on to the automotive history. Larissa is a city of about 150,000 inhabitants, the capital of Theslia, an agricultural region that ranks among the poorest in Greece. Its GDP per capita barely exceeds €12,000 per year. And, as a result, it is one of the regions that has received the most European Union funds.
As a comparison, the GDP per capita in London is close to €55,000 and in New York more than€ 60,000. Nevertheless, Larissa had 5 times as many Porsches Cayenne per capita than either of those cities. How can that be? Again, that seems to come down to the generosity of those EU funds.
While this may seem like just an anecdote, it gives us a clue about how Greece has managed the billions of euros it has received from Brussels over the past few decades.
6) Cheaper by taxi than by train
In 1992, the Greek finance minister said that public spending had to be reduced. His goal was for the country to meet the Maastricht criteria in order to join the eurozone.
To illustrate how public resources were being squandered, he gave the example of the country’s rail network, stating that “it would be cheaper to transport passengers between Athens and Thessaloniki by taxi than by train.”
The famous Michael Lewis, in his 2011 book Boomerang, spoke of this very same topic.
Shortly after, Panos Prevedouros, a professor at the University of Hawaii, set out to analyze those statements. According to his calculations, each kilometre travelled by each passenger by train had a cost of €0.60.
On the other hand, the average cost of each kilometer traveled by taxi in either Athens or Thessaloniki was € 1.20. But keep in mind that a taxi has room for 4 passengers.
Therefore, the overall cost of travelling by train is as high as two people travelling by taxi. Or twice as expensive as if 4 people decided to travel together by taxi.
7) Official cars for MPs
The Greek parliament has a total of 300 members, or MPs. The Greek constitution stipulates how many members of parliament the country must have: between 200 and 300. It comes as no surprise that Greek politicians have chosen the highest possible number.
Greek MPs have little to complain about. His monthly base salary, not including extra pay or bonuses for participating in parliamentary committees, is the same as that of the country’s highest-paid official: the chief judge. That base salary is close to €9,000 per month.
But they also have a multitude of perks. One of them is an official car. And the cost of such a benefit is enormous.
When Alexis Tsipras came to power in 2015, he called on MPs to give up their official cars. Only 50 of the 300 MPs did so. And we must emphasize that many members of his own party, who had campaigned against austerity and spending cuts, did not give up their official car.
Although, if think about it, those who did not give up their official car were consistent in their words and actions. They said they were against austerity. If they did not want austerity for the people, why would they want austerity for themselves?
8) Non-existing swimming pools in Athens
This one is about tax fraud. For those citizens who have a pool of more than 25 meters, there is a special tax. It is known as the tax on swimming pools. And it works in quite a strange way.
By owning a pool of that size, tax authorities assume that your annual income, on which income tax is calculated, is €20,000 more than it was.
Therefore, if you pay a 40% marginal income tax rate, owning that pool will cost you €8,000 every year (40% of 20€,000). Consequently, people try to avoid paying that tax. That was never an issue until someone started to look into it.
When the economy started to go down, the Greek tax authorities began to use Google Maps to identify which houses had a pool of more than 25 meters. The results were surprising. In a suburb on the outskirts of Athens there were 324 registered swimming pools of that size.
But, according to Google Maps, the total number of pools in that suburb amounted to 16,974! That means 98% of those pools did not exist…at least for tax purposes.
Another interesting fact related to this topic is that, since authorities began to investigate this issue, the free market started to offer solutions. Such solutions consisted of a removable floor, so that owners could cover their pools completely or partially, if they wanted to.
9) Perpetual pensions for daughters of dead civil servants
Up until 2016, the daughters of dead (male) civil servants received a pension from the state… until they got married. And regardless of their income level. For that reason, most of those women, many of them over the age of 50 and with a partner, had never married. They were not going to give up their pension.
When this pension was scrapped, more than 35,000 adult women stopped receiving it. It should be noted that this pension was paid irrespective of when the father had died.
Moreover, if these women were married at the time of the father’s death, there was a solution to claim the pension: divorce. When they divorced, they became entitled to the pension for as long as they did not marry again.
Interestingly, just before this pension was about to be eliminated, a high Greek court was ready to grant male children of dead civil servants the same benefit. After all, they were being discriminated against for being men. Had that happened, these men would have been to claim back all payments they would have been entitled to receive since their father’s death.
10) Expenditure on civil servants
The last piece of information we will see about Greece is the disproportionate amount of money that the country spends on public workers. Public workers are necessary to make certain things run.
The question is how many the state should employ and at what salaries. Something that may conflict with politicians’ interests to make promises to certain portions of the public in order to collect more votes.
For this reason, it should come as no surprise to learn that Greece is the country in Europe that pays the highest salaries to its public workers.
According to a 2017 France Stratégie report, the average salary of a public worker in Greece is 1.9 times the country’s GDP per capita. Italy, Spain and Portugal come right behind. And, interestingly, the countries that pay the least to their public workers are the Nordics.
To put it in perspective, public workers represent 18% of the employed population in Greece. However, they receive 37% of all wages. And these data are from 2017, several years after Greece had implemented several spending cuts, including lower wages for public workers.
I hoped to combine information with humor to talk about corruption in Greece. Some readers may think this was all was just a bunch of anecdotes. But they speak volumes about why the country ended up with such debt levels.
This information should also be taken as a warning. The cost of corruption and squandering of public resources is immense.
Greece is one of the countries in Europe with the largest number of young people emigrating to other places. Those who remain suffer one of the highest youth unemployment rates in the world. And there are no real plans to turn things around in the long term. Politicians have only been concerned with doing the bare minimum and focusing on the next election.
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And it you are interested in reading about a country who has done things well, check out this post about the Czech Republic:
Economy of the Czech Republic