Going for Growth - Greece

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Greece GDP per capita is recovering from a deep and extended recession, but remains around half of that of the upper half of OECD countries. The gap in labour productivity is substantial. The employment rate is improving and a larger share of new jobs are full-time, but it remains low especially among the youth.

High poverty rates have declined slightly in recent years but income inequality remains above the OECD average. Greenhouse gas emissions per capita are below the OECD average and they have decreased since the crisis. Exposure to air pollution and poor waste management practices harm well-being.

Progress has been significant over the past two years across many reform priorities, notably in expanding and improving the effectiveness of the social protection system, strengthening revenue collection and public financial management, and easing product market regulations. A National Growth Strategy frames ongoing reforms to improve judicial processes, education quality, the public administration, management of state assets and reducing the regulatory burden.

Continuing to reduce regulatory burdens and improve administrative processes would address major impediments to investing and doing business in Greece. Improving the quality of all levels of education and better linking curricula with workplace needs would raise skills. Better support for poor households, while ensuring that new requirements that beneficiaries engage in effective active labour market programmes are implemented, would relieve Greece’s high poverty rates and avoid poverty traps.

Growth performance, inequality and environment indicators: Greece A. Growth Average annual growth rates (%) GDP per capita Labour utilisation of which: Labour force participation rate Employment rate1 Employment coefficient2 Labour productivity of which: Capital deepening Total factor productivity Dependency ratio

2002-08 3.0 1.6 0.9 0.5 0.2 1.7 0.5 1.2 -0.4

2012-18 0.5 0.9 -0.1 1.1 -0.1 -0.4 -0.5 0.0 0.0

C. The gap in GDP per capita has stopped widening Gap to the upper half of OECD countries5 Per cent 0 -5 -10 -15 -20

B. Inequality and environment

Gini coefficient3 Share of national disposable income held by the poorest 20%

GHG emissions per capita4 (tonnes of CO2 equivalent) GHG emissions per unit of GDP4 (kg of CO2 equivalent per USD) Share in global GHG emissions4 (%) * OECD simple average (weighted average for emissions data)

Level

Annual variation (percentage points)

2016 33.3 (31.7)*

2013-16 -0.3 (0)*

6.7 (7.6)*

0.1 (0)*

2016 8.2 (10.9)* 0.3 (0.3)* 0.2

Average of levels 2010-16 9.3 (11.3)* 0.4 (0.3)* 0.2

-25 -30 -35 -40 GDP per capita -45

GDP per hour worked -50

Source: Panel A: OECD, Economic Outlook Database; Panel B: OECD, Income Distribution and National Accounts Databases; United Nations Framework Convention on Climate Change (UNFCCC) Database and International Energy Agency (IEA), Energy Database; Panel C: OECD, National Accounts and Productivity Databases.

StatLink 2 https://doi.org/10.1787/888933954933

150 

Policy indicators: Greece A. Value-added tax collection is low

B. Adults have lower skills than in other advanced economies

VAT revenue ratio,¹ 2016

Percentage of adults scoring at proficiency levels,2 2012 0.6

Middle (level 3)

High (level 4/5)

60

0.5

50

0.4

40

0.3

30

0.2

20

0.1

10

0

GREECE

Advanced economies

0

EU GREECE

Advanced economies

EU

Source: Panel A: OECD (2018), Consumption Tax Trends 2018: VAT/GST and Excise Rates, Trends and Policy Issues, Consumption Tax Trends; Panel B: OECD (2013), OECD Skills Outlook 2013: First Results from the Survey of Adult Skills and OECD (2016), Skills Matter: Further Results from the Survey of Adult Skills, OECD Skills Studies.

StatLink 2 https://doi.org/10.1787/888933955807

Beyond GDP per capita: Greece A. Inequality has decreased but remains higher than in most advanced economies Gini coefficient, 2016 or last available year¹ SVK, 24.1

GREECE, 33.3

ZAF, 63.0

Advanced economies median, 29.7

Emerging economies median, 46.2

B. Exposure to fine particulate matter is high Percentage of population exposed to PM2.5, 20172 % GREECE

Advanced economies

< 10 μg/m³ 10-35 μg/m³

Emerging economies

> 35 μg/m³

World 0

10

20

30

40

50

60

70

80

90

100

Source: Panel A: OECD, Income Distribution Database, World Bank, World Development Indicators Database and China National Bureau of Statistics; Panel B: OECD, Environment Database.

Note: For the explanation of the sets of indicators above, please go to the metadata annex at the end of this chapter.

StatLink 2 https://doi.org/10.1787/888933956681

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Greece: Going for Growth 2019 priorities Continue to improve social protection targeting and administration. Poverty remains very high following the crisis and is becoming more entrenched, especially among families with children and those without work. 

Actions taken: Family benefits were reformed at the start of 2018 to better target lower income households. In 2018, a pilot school meal programme was rolled out and further expansion has been funded. A new housing support system targeted at lower income households was legislated in mid-2018 to start operating in 2019. Administration of disability allowances is being streamlined and pilot studies are trailing new assessment approaches, towards improving the accessibility and consistency of support. A new agency is coordinating social support and protection and labour market integration for refugees.



Recommendations: Continue to rebalance social protection spending towards targeted programmes, while ensuring that eligibility criteria avoid creating poverty traps. Effectively link access to the social solidarity income support to participation in active labour market programmes.

Develop in-work benefits to support low-income households that are in employment but earn very low incomes. Improve social protection administration by harmonising programme design and administration and the delivery of benefits. Consolidate smaller in-kind benefit programmes.

Enhance public administration efficiency. Inefficiencies in public administration and the justice system and the heavy regulatory burden hold back investment and the business environment. 

Actions taken: Administrative processes have been simplified in some areas, such as insolvency procedures, business creation and licensing. Assets in default are now auctioned electronically.

Reforms of personnel management are progressing (e.g. new systems for staff mobility, for appointments, for performance management, and to limit political interference in senior staffing). A strategy to codify legislation is in place. The creation of a dedicated state asset management agency strengthened SOEs corporate governance.



Recommendations: Simplify regulatory assessments and build a network of civil servants with regulatory quality expertise. Expand the scope of the silence is consent rule, ex post monitoring and one-stop shops. Ensure that one-stop shops have adequate resources to operate effectively.

Launch a review of existing regulations to simplify processes and improve consistency. Establish a mechanism to systematically implement the recommendations of regulatory reviews. Expand the use of electronic platforms and tools in the justice system. Complete the land registry.

*

Strengthening active labour market programmes. Unemployment is declining from very high levels but is becoming increasingly long-term, while a large share of youth are inactive. Job-skill mismatch is high. 

Recommendations: Evaluate training programmes. Expand successful and cost-effective active labour market programmes, while reallocating resources from programmes that are less effective as part of the new framework for active labour market programmes. Certify the quality of professional and adult skill development courses and support their linking with labour market needs. Continue recent strengthening in the capacity of the public employment service to match jobseekers with positions through enhanced profiling tools and well-trained counsellors.

Enhance the efficiency and fairness of the tax system. Tax collections have improved and the tax-to-GDP ratio has increased. However, high tax rates are not matched by revenues, burdening activity and discouraging formalisation.

*

New policy priorities identified in Going for Growth 2019 (with respect to Going for Growth 2017). No action can be reported for new priorities.

152  

Actions taken: The 2018 budget eliminated some VAT exemptions over 2018. Efficiency and equity of business tax exemptions were reviewed in 2018. Audit fine rates were adjusted in January 2018. Property tax values are being aligned with market prices. New IT systems are automating debt collection.



Recommendations: Improve revenue collection further ahead of implementing the rate cuts legislated for 2019 and 2020, by extending the use of risk analysis, targeted tax audits and strengthening the incentives for voluntary tax compliance. To continue increasing the share of non-cash transactions, extend and enforce the obligation of having an electronic cash register to all self-employed and introduce e-invoicing.

Improve the quality of education system. Average educational outcomes as measured by international tests are disappointing. Participation in vocational education and training (VET) remains modest, and tertiary education brings fewer benefits than in most other OECD countries. 

Actions taken: Legislation to extend compulsory early childhood education and care to 4 year olds was approved in January 2018. Legislation was adopted in 2018 for the evaluation of senior ministry of education staff, head teachers, and for school self-evaluations. VET and apprenticeship programmes are being upgraded.



Recommendations: Continue to introduce assessment frameworks and professional development schemes; gradually give schools and teachers greater pedagogical and managerial autonomy, supported by professional development programmes. Develop regular and broad assessments of students’ learning, supplemented by general aptitude tests that, in the mediumterm, can replace the current university entrance exam. Regularise the supplementary teacher workforce in a manner that is fiscally sustainable and encourages effective teaching. Better connect vocational education with labour market needs and certify the quality of courses. Improve universities’ institutional autonomy and incentives to improve teaching quality and to adapt courses to students’ demands and workplaces’ needs.