Striking Greek Taxis Demand Government Pay for Illegal Licenses
June Samaras
July 28, 2011, 7:37 PM EDT
By Natalie Weeks
July 29 (Bloomberg) -- When Giorgos became a taxi driver in Athens two
years ago, he did it the only way he could: by breaking the law.
Unable to inherit a family business, he borrowed from the bank and
paid 100,000 euros ($143,010) for a license on the black market. Now
he says he may fail to meet his loan obligations as the Greek
government deregulates the taxi industry and opens the door to new
cars taking fares as part of its commitment to a free market.
Thousands of drivers like 31-year-old Giorgos blocked approaches to
airports and disrupted ferry services in recent strikes while
demanding to be reimbursed for their illegal licenses.
“People that bought licenses recently, which was the only way to enter
the profession unless it was passed on to you, will lose their money,”
said Giorgos, who asked that his last name be withheld because of how
he obtained his permit. “If they want to do it this way, they should
say the state is buying all licenses for 50,000 euros.”
Greece has until this month shielded everyone from taxi drivers and
hairdressers to pharmacists and lawyers from competition and falling
prices. That protection is now giving way to the social and economic
changes in new laws promised in return for the debt relief by the
European Union so Greece won’t lose the euro as a shared currency.
‘Soviet-Style’
The list of more than 150 occupations that were closed to new entrants
until the legislation went into effect on July 2 also included antique
dealers, locksmiths, real estate agents and print media delivery
services.
“It’s a Soviet-style economy without the benefits of the coordination
and planning,” Yannis Stournaras, director general of the Foundation
for Economic and Industrial Research in Athens, said by telephone.
“Right now, the Greek economy operates under a number of limitations
that don’t exist in other euro region countries or exist at a much
lower level.”
More than 8,000 taxi drivers from across Greece gathered outside
parliament on July 26 to protest. Scuffles broke out yesterday with
officers at Piraeus, Greece’s biggest port, when about 3,000 taxi
owners tried to block access to some piers, police spokesman Takis
Papapetropoulos said.
Truck drivers led the frontline last year, staging blockades on
national highways for more than a week, preventing delivery of raw
materials and fuel to factories.
Lifting Restrictions
About 1,200 print media distributors went on strike across Greece on
July 2, causing a weeklong newspaper blackout. At the end of the week,
distributors agreed to cut their net profit margin by 5 percentage
points to 14.1 percent.
The law lifts restrictions on things such as how licenses are issued
and minimum prices. Licenses were often passed on to family members or
sold with a cash premium paid on top of the regular transaction fee,
while other professions were also protected by the qualifications
needed.
Opening up the economy was among the commitments made by Greek Prime
Minister George Papandreou to secure 110 billion euros in emergency
loans from the EU and International Monetary Fund in May 2010.
Papandreou is changing a system that was designed to protect groups
including unions, traditional supporters of the Pasok party that was
founded by his father and that he led to power in October 2009
elections.
Greece secured a second aid package last week of 159 billion euros,
which includes 50 billion euros from bondholders, as yields on Greek
10-year notes rose to a euro-era record of 18.21 percent on July 18
and investors bet on a default.
Papandreou’s Plea
“Our position on opening up professions, with certain rules, is clear
and the same goes for the specific issue of taxis,” Papandreou said in
a July 27 speech to party lawmakers. “I call on taxi drivers to
cooperate, to consider the consequences of strikes during the crucial
tourism period.”
Tourism, Greece’s biggest industry, accounts for almost 16 percent of
gross domestic product and almost one in five jobs in the country,
according to the World Travel and Tourism Council in London.
About 14,000 of Greece’s 28,000 taxis operate in Athens, which has a
population of 3.7 million. That equates to roughly one taxi for every
264 inhabitants, compared with about one black cab for every 350
people in London, based on data from Transport for London in the U.K.
capital.
The Greek Taxi Federation, the group representing the drivers, opposes
opening the market and says the previous system was designed to ensure
drivers operated in the right places.
Not Closed
“Taxis service specific areas,” said Paris Kissas, the organization’s
general secretary, by telephone from Thessaloniki on July 26.
“Regulating licenses based on factors like population or tourists that
visit the area in our view doesn’t constitute a closed profession.”
The federation is considering whether to lobby the government for
compensation for drivers who bought licenses and won’t be able to
cover their costs, Kissas said.
The government charges 3,000 euros to transfer a license to another
driver, Kissas said. On top of that, there’s the off- the-books price
to acquire the permit that reached as high as 200,000 euros in the
past four years, he said.
“The current system in which you buy and sell taxi licenses on the
black market means tax evasion, which works against everyone,” Yiannis
Ragousis, the minister in charge of transport, said in an e-mail from
his office on July 25. “Tax evasion is a big scourge for Greeks and to
not open this profession is like putting a government seal of approval
on the black economy. We are decided on these changes.”
Meeting Drivers
Ragousis is scheduled to meet representatives from the taxi federation
today, his office said yesterday.
Greece’s budget deficit widened 28 percent in the first half of 2011,
with spending exceeding targets and revenue falling short, according
to government data published on July 20. The economy is forecast to
shrink 3.8 percent this year after a 4.5 percent contraction last
year, the European Commission in Brussels said on July 4.
Deregulating professions can help combat unemployment, which stood at
15.8 percent in April, the government said.
Jose Manuel Barroso, president of the commission, created a taskforce
this month to direct funds to help Greece become more competitive,
tackle unemployment and boost growth.
Greece ranked 83rd among 139 countries in competitiveness, down 12
places from last year and just below Egypt, whose president was
overthrown this year, according to the World Economic Forum’s
2010-2011 Global Competitiveness Report.
‘Chaotic, Sudden’
Some workers formerly protected by regulation agree that change needed
to happen, though they say the government hasn’t done enough to
cushion the impact on livelihoods as people adapt to Papandreou’s
austerity measures to win new international aid.
“Eliminating closed professions isn’t bad, that’s not what we are
against,” said Nikolaos Giannopoulos, who has run a newspaper and
magazine stand in Athens’s main Syntagma Square since 1983. “The way
the changes were carried through was just completely chaotic and
sudden. We are not against change but there is no clarity on anything
being done.”
Giorgos, speaking from his taxi in Athens, said he’s been working at
least 10 hours a day to cover the cost of purchasing his license. He’s
now bracing for an influx of more vehicles on the road, operating with
permits bought directly from the state.
More than 1,000 people have applied for taxi permits since the law
change because the business is lucrative, Stournaras at the IOBE
foundation said. Buying a license on the black market was the same as
any business taking a risk, he said.
“Instead of lowering the number of taxis, the government is opening
the gateway to a flood of new taxi drivers,” said Giorgos. “It’s
wrong. There are already too many.”
--Editors: Rodney Jefferson, Tim Quinson
To contact the reporter on this story: Natalie Weeks in Athens at
nwe...@bloomberg.net.
To contact the editor responsible for this story: Angela Cullen at
acul...@bloomberg.net.
--
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