Public Sector Shock

Public Sector Shock

The Impact of Policy Retrenchment in Europe

Edited by Daniel Vaughan-Whitehead

The goal of this volume is to study this ‘public sector shock’. While budgetary reforms seek to ensure a more balanced and sound economic policy, they may generate new work inequalities among public sector employees, most particularly among women, who account for a considerable proportion of public sector employment. Cuts in education and training may also have an impact on the quality of human capital in both the public and private sectors, despite the fact that the recent crisis has shown the value of education as employees with better skills and training are more likely to maintain their jobs and incomes.

Chapter 7: Public sector adjustment amidst structural adjustment in Greece: Subordinate, spasmodic and sporadic

Zafiris Tzannatos and Yannis Monogios

Subjects: economics and finance, labour economics, public sector economics, social policy and sociology, economics of social policy, labour policy


This chapter reviews the post-2009 public sector adjustment measures in Greece. Unlike many public sector reforms in democratic countries, where checks and balances in the system lead to adjustment before dysfunctionality reaches alarming proportions, the ongoing and planned public sector adjustment in Greece is subordinate to a massive fiscal and structural adjustment programme driven by the public debt crisis: public debt was 126 per cent of GDP in 2009 and has now (June 2012) reached approximately 170 per cent. Although Greek debt accounts for merely 1 per cent of global debt, the possibility of a sovereign default has endangered the survival of the euro and with it the world economy due to the interconnectivity of the global financial system. If this were to happen, it would be the first such default for a high-income economy in more than 60 years. Under these conditions a quick response to avoid a disorderly default and save the global economy in the short term was deemed by the lenders to carry more weight than an orderly adjustment that would put Greece on a sustainable course in the long term with lower social costs.

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