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Tuesday, June 07, 2005 

Platinum Parachutes

It looks as if Karamanlis has finally found a scheme to rid the country of several thousand unneccessary public sector employees. Last week, the Greek telecom monstronsity, OTE, with the approval of the union and the government, announced that it was going to give 6,000 of its employee an early retirement package. But before the applause starts, let me tell you how much it's going to cost...1.537 BILLION EUROS!! That's more than most western countries' aid packages to Africa! To put this number in perspective, this means that each employee, on average, will receive 250,000 euros in the form of a lump sum bonus, pension fund contributions and their yearly salary had they stayed till retirement. Other public sector employees around the world have been the beneficiaries of Early Retirement Incentive Programs, but to my knowledge, none as lucrative as this one. In 1995, the federal government of Canada planned to lay off 45,000 federal employees at a cost of about $1 billionCDN.

And this country, already up to its ears in debt, saw fit to give a platinum parachute to 6,000 employees who were never needed in the first place. That's about 30% of OTE's 16,000 member workforce. According to some sources, 1.2 billion of this sum will come straight out of...you guessed it...taxpayers' pockets. No matter how OTE tries to spin this one, using the flawed logic of cost savings amortized over time from lower salary overhead, the brunt of the payout will primarily be borne out by the good citizens of Greece. I'm sure I'll be blogging the acquisition of 6,000 new jobs to be available to recent graduates of IT colleges and computer studies in the not-too-distant future since OTE's success rate at getting Greeks online is abysmal at best.

What are the chances any of this money will find its way back into the local economies? Next to none. These employees will most likely buy new retirement homes and/or settle their outstanding debts. A few might want to start new businesses but given the fact that they basically did nothing at their jobs when they showed up for work at OTE, I don't hold out much hope for them to be able to run viable businesses employing others.

The ONLY up-side to this is that the days of jobs-for-life are over and all new hirings will be subject to private sector labour standards. There is also the possibility that next up on the chopping block will be civil service jobs. If the price tag will be as high as the OTE deal, Greece may very well find itself on the auction block.