Hard-working Greeks

January 11, 2012

At the epicenter of Europe’s financial crisis, Greece has taken a lot of heat for setting off the panic that now threatens to engulf the rest of the continent. One common story line is that inefficient Southern European states are dragging down a more industrious North, a theme we have previously questioned on this blog.

A research note from Marc Chandler, head of currency strategy at Brown Brothers Harriman, highlights the disconnect between a negative perception of Greek workers with actual readings of hours worked from the Organization for Economic Cooperation and Development.

We’ll start with the picture, which pretty much tells the story:

Chandler suggests prejudice has gotten in the way of sound economic analysis:

The conventional narrative about the European debt crisis largely accepts the contention that the periphery of Europe have different work habits and these account to a large extent the economic and financial problems. Yet often time the discussion takes on such ethnocentric dimensions that sometimes it is difficult to see what is real.

The most recent data from the OECD covers 2008 and shows that in that year, Greek workers on average worked 48% more than their industrious German neighbors. The OECD data shows the average Greek worker spent 2120 hours at work compared with 1429 hours in Germany. Moreover, Greece is one of the only OECD countries in which workers were working longer in 2008 than in 1998. With 1802 hours at work, the average Italian employee spent more than 25% more time at work than the average German worker.

While many will be initially surprised by the data, on reflection it makes intuitive sense.   In crude terms, wealthier countries typically work smarter–more capital intensively–than poor countries, not longer. Contrary to conventional wisdom, the lack of Greek competitiveness, for example, does not seem to lie in hours working but with the combination of productivity and wages/benefits (unit labor costs).

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