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Wednesday, 22 June 2011

MEN AT WORK


In recent days a number of blogs are reposting a well-conceived but incomplete mythbusting exercise about Greece. I've most recently come across it in @panos101 's blog here, but the original source is Alex Andreou's celebrated post in sturdyblog. What follows is an elaboration on my comments in response. See also my post on the retirement statistics here.

The point of the exercise I take it is to disprove pejorative stereotypes of a siesta nation by demonstrating just how hard the Greeks actually work. The money shot is the OECD working hours statistics: at 2,120 hours per person, the Greeks blow everyone but the Koreans out of the water, working our knuckles to the bone. Take that, Merkel!

...except, there are several catches. But first, let us enjoy the music:


The first catch has to do with the contribution of the self-employed.

Toggle from total employed to dependent workers only (i.e. employees), and the average goes down to 1,777, which is still a very decent amount of work but hardly the triumphant show-stopper some might have hoped for. And it actually says pretty much what we knew; that in Greece the employed have it a hell of a lot better than the self-employed (that's business owners and freelancers, but also our small army of 'contractors' who are simply the thralls of rogue employers). Now these guys work like f***ing dogs. Consider that at the end of 2009 they made up about 36% of the workforce and yet adding them to the total increases the average working day by about a quarter. A calculation based on Q4 2009 figures tells me the average self-employed person worked over 2,700 hours a year or 53.5% more hours than the average employed person; these people account for 46% of all the hours worked in Greece. Adjust for this and you'll find that, instead of working 53% more than the Germans our proletariat end up working 35% more. Still a lot by the way. But it goes to show that the real graft in Greece takes place outside the cushy reality of employment regulation and that's nothing to brag about.

The second catch has to do with part-time employment, which our unions have declared war on from the get-go. You see the OECD figures actually lump part-time and full time employees together without any adjustment so countries with a larger percentage of part-time employees will tend to have fewer average hours to show for it. As this OECD table will show you, part-time employment is very rare in Greece. To take the example most likely to raise eyebrows, 22% of German workers work part-time against 8% in Greece, based on a common definition of part-time work to ensure comparability. Bearing in mind on top of this that according to Eurostat the average part time worker works 48% of the hours of a full time worker in Greece and 44% in Germany (source), the discrepancy between German and Greek part-time employment artificially adds about 8% to the working hours of the average Greek vis a vis the average German.

The third and biggest catch is that the data reported by the OECD are simply not comparable between countries even with our little adjustments in place. The OECD warns, in its metadata:
The data are intended for comparisons of trends over time; they are unsuitable for comparisons of the level of average annual hours of work for a given year, because of differences in their sources.
So the OECD are not happy for people to cite comparisons. But surely, you may object, the differences can't be that vast! Well, elsewhere the OECD says:
For several EU countries, the estimates are made by the OECD using results from the Spring European Labour Force Survey. The results reflect a single observation in the year and the survey data have to be supplemented by information from other sources for hours not worked due to public holidays and annual paid leave. Annual working hours reported for the remaining countries are provided by national statistical offices and are estimated using the best available sources. The data are intended for comparisons of trends over time and are not fully suitable for inter-country comparisons because of differences in their sources and other uncertainties about their international comparability. 
I think we're all getting the gist of this by now. But there is more: an international review of labour statistics by the US Bureau of Labor Statistics found that LFS-based measures of hours worked, like the one we use, tend to provide consistently higher estimates of hours worked than other measures, probably because they are more accurate. How do they put it...
Data series of average annual hours actually worked based on normal and contractual hours concepts from administrative sources yield low measures of hours worked, whereas series based on establishment and labor force surveys provide relatively higher measures. The highest levels of hours worked are estimated directly from labor force surveys.
We've established by now that either the methodologies used by many other countries to measure hours worked tends to artificially deflate the actual number of hours worked. To this I should add that ELSTAT does not, as some people might think, have an *incentive* to inflate the number of hours worked to make us Greeks look more industrious.

You see data on hours worked are rarely published on a standalone basis (and few people actually notice them when they are) but are rather used to inform labour productivity estimates at the European and international levels. If anything, ELSTAT has an incentive to present the Greek economy as an ever more productive one in order to attract FDI and so on, so the thing to do is to deflate rather than inflate the number of hours worked in order to make it look like we're working smarter, not harder. Whether they have enough latitude to do so I don’t know but there’s certainly no incentive to inflate the figures.

This last point also explains why people like the OECD and Eurostat actually tolerate such large discrepancies in the measurement of data; in model-driven productivity estimates that single out Total Factor Productivity from other inputs, all that matters is the rate at which hours worked increase, not their absolute number. So as long as our hours total is internally consistent, the OECD and Eurostat are not too bothered about reinventing the wheel of Greek labour statistics.

Perhaps a better way of approaching this is to check whether hours worked increased or decreased in Greece over the last decade. I think most people's intuition is that they increased sharply but actually they did not, because productivity has grown instead. Hours are down 2.3% for employees (see below) but flat for the total workforce, which means the self-employed have been working harder. Simply put, the employment relationship, whose rules we the Greek people control through the law, is not much less favourable in terms of hours worked than in other countries, and it's getting better. It is what happens outside of the world of regulated work that increases our collective working hours.






Mind you, going by these figures alone the numbers still say in the clearest of ways that, say what you want of the country, the Greek people are not lazy. Good. That will come in handy when we default. They're not very productive either because, let's face it, if you bust your ass making products and services people won't pay for you can work your hands to the bone and it still won't make a difference. But that's another day's blogging, isn't it?

2 comments:

  1. Thanks for this, I too fell prey to the fallacy (to the point of almost emailing the author of a finance newsletter over some comments to the opposite effect). Still, as you said, this shows Greeks are not lazy per se, which will be a good incentive to actually get things running properly in the country once we ring the bell...

    Evlogison,
    TheoC

    ReplyDelete
  2. Yoy really need to do your homework on productivity. Take an example: In a company a worker on his own initiative and free time builds a system that performs 10 functions, is 10 times better than anything on the market and his boss kills it because he only wants "systems bought from the market, not some employee's cration". The company ends up buyig a system with 1/10 the capabilities and performance at a cost of 1 million euros plus 15% yearly maintenance contract and of course because the company has subsidiaries in other countries, buys it again and again for each of their subsidiaries instead of marketing it abroad. There is a ceiling on how much money the employee can get(no more than a one-time only monthly salary), NO MATTER how much money he brings in or saves for the company.
    Now in countries with the will to move ahead the company would have marketed the product, not just for itself and its subsidiaries, but also for the rest of the world. The employee would be offered a percentage of the profits, which would have ensured him getting involved in the further development and forced him to work like a dog. Last, his initiative would be showcases as a positive example. So the junk about reduced productivity is just that-junk.
    Especially in the public sector, noone can get more than the president of the supreme court(a body which has no problem is courts rule that pigs can fly, and just check the formalities), even if that guy would bring in 1 billion a day. Which says something about your priorities:
    Checking formalities is more important than bringing in a billion a day. So people deciding on a carrer have a choice: Become say engineers and earn 700 euros a month IF they can find a job, or just check formalities and get 10K a month, while having no responsibility?
    So, do your homework instead of doing lies, damn lies and statistics.

    ReplyDelete

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