Home > Opinion > Editorials

Learning from Greece’s choice

Published: 24 May. 2023, 20:06

The New Democracy party led by Prime Minister Kyriakos Mitsotakis in Greece notched a landslide victory in a national election held on Sunday. The center-right party won 41 percent of the votes over the Syriza party, a coalition of the radical left, who won 20 percent. The governing party fell just short of gaining 151 seats needed to form a government on its own. But it is expected to pass the threshold in a second election to be held next month.

The results of the election suggest a lot to many countries where populism is in full swing, Korea is no exception. Greece, a “sick child” in Europe, had to receive 326 billion euros ($351.4 billion) in rescue funds from the International Monetary Fund, the European Union and other lenders. The populist government offered free education, free medical services, and drastically raised the minimum wage.

Austerity programs and the restructuring of the public sector demanded by the lenders in return for the bailout were inexorable. The government had to slash pension payouts and lifted the retirement age to 67 from 65. Nearly one million civil servants in 2009 decreased to 670,000 in 2016. Average pay for government employees shrank 38 percent.

After taking office in 2019, Prime Minister Mitsotakis pushed monetary tightening and medical and pension reforms. His government even cut medical benefits if people didn’t pay insurance premiums for just three months. The country’s current minimum wage is 28 percent less than in 2009. As a result, Greece’s national debt-to-GDP ratio fell to 171 percent last year from 206 percent in 2020. The government lowered corporate tax rate to 24 percent from 28 percent, eased regulations, and privatized public companies. As export increased and foreigners started investing in Greece, the economy began to rebound.

The election results owe much to the people’s support for their prime minister’s crusade to cure the Greek disease. But more importantly, the Greeks were not cheated by populist promises by the Syriza party during the campaign — for instance, a 14 percent increase in the minimum wage and a 7.5 percent hike in pension payouts. The voters didn’t want to return to the days of the populist nation.

In an interview with the Korea Development Institute, 31 former deputy prime ministers for economic affairs and other senior government officials unanimously underscored the need for pension, labor, fiscal and education reforms. A former interior minister urged President Yoon Suk Yeol to learn from French President Emmanuel Macron who staked his political life on pension reform. To save the Korean economy stuck in low birth and growth rates, the government must depart with populist policy. Otherwise, the collapse of the Korean economy is just a matter of time.