OECD ECONOMIC SURVEY OF GREECE 2018
Achieving an inclusive and sustained recovery 30 April 2018, Athens http://www.oecd.org/eco/surveys/economic-survey-greece.htm @OECDeconomy @OECD
The economy is finally recovering Real GDP Annual % change
Annual % change
8
8
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
-6
-8
-8
-10
-10
2001
2003
2005
2007
2009
2011
2013
Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
2015
2017
2019
2
Unemployment is falling Unemployment rate % 30 27
24 21 18
15 12 9
6 3 0
2001
2003
2005
2007
2009
2011
2013
Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
2015
2017
2019 3
Competitiveness has improved Relative unit labour costs Index, 2010=100 120 Greece Euro area
110
100
90
80
70
2000
2002
2004
2006
2008
2010
2012
Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
2014
2016 4
The fiscal situation is strengthening % of GDP 6 4
Primary budget surplus Government primary balance
ESM programme target
2 0 -2
-4 -6 -8 -10 -12
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Note: The primary balance definition is different from that used in the ESM Support Stability Programme. Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database) and EC (2018) Compliance Report ESM Stability Support Programme for Greece
5
Structural reforms have been extensive Reforms implemented
Ongoing reforms
Reforms to do
Spending reviews
Public administration and financial management
Further product market liberalisation
Corporate law
Anti-corruption
Insolvency procedures
Judiciary
Public administration and judiciary for rule of law
E-auctions, loan servicing bodies and secondary market
Capital controls
Tax compliance
Out-of-court workout Opening protected markets Targeted social protection for low income families State asset management and concessions
Regulation impact assessments
Complete land registry Logistics and transport plan
Pensions
Arrangements for agreeing pay and work conditions
Rationalise social benefits and administration
Minimum wage commission
Housing and disability allowances
Active labour market programmes for re-training and job matching School management
In-work benefits for low wages Certify professional education
Expand active labour market and family programmes Raise effective retirement age 6
Productivity continues to decline Labour productivity
Index, 2010=100 115 Greece Euro area
110
OECD 105 100 95 90
85
2000
2002
2004
2006
2008
2010
2012
Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
2014
2016 7
Investment fell sharply during the crisis Real investment Index, 2017=100 120
Index, 2017=100 120 Greece
Euro area
100
100
80
80
60
60
40
40
20
20
2007
2008
2009
2010
2011
2012
2013
2014
Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
2015
2016
2017
8
Poverty is very high, especially among the young % 30
Severe material deprivation rate Greece, 2016
EU, 2016
2009
% 30
25
25
20
20
15
15
10
10
5
5
0
0
Total
Under 18
Source: Eurostat (2018), EU Statistics on Income and Living Conditions (database).
9
Boosting inclusive and sustainable growth
10
Deeper reforms would boost growth Impact of structural reforms on level of GDP Index, 2017=100 240 Legislated and ongoing reforms Deeper reforms to product markets and public administration
Index, 2017=100 240
200
200
160
160
120
120
80
80
2000
2005
2010
Source: OECD calculations
2015
2020
2025
2030
2035
2040
2045
2050
2055
2060 11
Additional reforms and debt restructuring would reduce public debt General government debt
% of GDP 220
% of GDP 220
Legislated and ongoing reforms Deeper reforms to product markets and public administration Deeper reforms + debt restructuring*
200 180
200 180
160
160
140
140
120
120
100
100
80
80
60
60
40
40
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
* Official creditor interest rates fixed at 2% from 2020 and ESFS repayments postponed until 2031. Source: Calculations based on OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
2060
12
Tax collection is improving but remains low VAT revenue ratio 100
%
% 2015
100
2013 80
60
60
40
40
20
20
0
0
MEX ITA GRC TUR ESP POL GBR BEL FRA IRL CAN PRT AUS NLD SVK LVA ISL FIN OECD DEU NOR DNK SWE CZE AUT SVN HUN ISR KOR CHL CHE JPN EST LUX NZL
80
Source: OECD (2016), Consumption Tax Trends 2016: VAT/GST and Excise Rates, Trends and Policy Issues, OECD (2018), OECD Revenue Statistics (database) and OECD National Accounts Statistics (database).
13
Spending efficiency can improve Use of performance budgeting 0.7
0.6
0 to 1 (highest), central government 2016
2011
0.7
0.6 0.5
0.4
0.4
0.3
0.3
0.2
0.2
0.1
0.1
0
0.0
ESP SVK ISL HUN PRT ISR LUX ITA USA TUR LVA JPN NOR NZL DEU POL GRC AUS CZE BEL CHL OECD IRL SVN DNK FRA EST NLD CAN FIN SWE CHE AUT GBR MEX KOR
0.5
Source: OECD (2016), Survey of Performance Budgeting and OECD (2017), Government at a Glance 2017.
14
Disposing less waste in landfills would improve well-being Municipal waste treatment % of treated 100
80
Recycling and composting
Incineration
Recycling and composting
60
\ 40
Landfill Landfill
20
0
Greece
Source: OECD (2017), Green Growth Indicators (database).
OECD 15
Main recommendations Boosting inclusive and sustainable growth Maintain the reform momentum focusing on implementation, enhancing public administration efficiency and continuing to fight corruption Maintain the primary surplus agreed with official creditors and facilitate debt restructuring as needed. Reduce tax evasion by extending the use of risk analysis, targeted tax audits and strengthening incentives for voluntary tax compliance. Extend the obligation of having an electronic cash register to all self-employed and introduce e-invoicing.
Undertake regular spending reviews and extensive use of performance budgeting. Enforce EU standards for waste disposal and urban waste-water treatment.
More in the Assessment & Recommendations 16
Expanding employment, reducing poverty and improving skills
17
Wages are moving in line with productivity Index, 2014Q1 = 100 150 Real wages
140
Productivity
130 120 110 100 90
Main labour market reforms 2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Source: OECD (2018), OECD National Accounts Statistics (database) and Eurostat (2017), Labour Market Statistics (database).
18
The minimum wage is near the OECD average Ratio of full-time minimum wage to median wages 2016 or latest 0.8
0.6
0.4
0.0
USA MEX ESP CZE JPN EST NLD IRL CAN DEU SVK GRC GBR BEL KOR LVA HUN AUS POL LUX ISR PRT SVN FRA NZL CHL TUR
0.2
Source: OECD (2018), Labour Statistics (database)
19
Many employees earn below the minimum wage Number of employees earning different wages September 2017
Employees, thousands 200
Employees, thousands
652
200
Poverty line for a single adult (EUR 313)
160
160
Full-time gross monthly minimum wage (EUR 586)
120
120
Median salary
10 000+
6000-7000
2950-3000
2750-2800
2550-2600
2350-2400
2150-2200
1950-2000
1750-1800
1550-1600
1350-1400
0
1150-1200
0
950-1000
40
750-800
40
550-600
80
1-400
80
Gross monthly wage, EUR Source: OECD calculations based on the ERGANI database from the Greek Ministry of Labour, Social Insurance and Social Solidarity, and Eurostat (2017), EU Statistics on Income and Living Conditions (database).
20
Poverty is highest among the unemployed Population at risk of poverty or social exclusion 18 year-olds and over
%
%
80
2016
2008
80
60
60
40
40
20
20
0
0
Total
Employed
Retired
Source: Eurostat (2018), EU Statistics on Income and Living Conditions (database).
Unemployed
21
Pensions dominates social protection spending Social protection spending by function 2015 or latest
% of GDP 40 Pensions
% of GDP 40
Family, healthcare and other 32
24
24
16
16
8
8
0
0
IRL TUR ISL LUX EST LVA SVK CZE HUN DEU POL NOR ESP SVN BEL CHE NLD DNK GBR SWE FIN PRT AUT FRA ITA GRC
32
Source: Eurostat (2018), Social Protection Statistics (database).
22
Recent reforms raise poor households’ income Income of an unemployed couple with children % median disposable income 60 Social assistance Housing allowances 50 Poverty threshold (50 % of median) 40
% median disposable income 60 Family benefits Taxes 50 40
30
30
20
20
10
10
0
0
-10
Pre-reforms
Social Solidarity Family benefits Income & tax reforms introduced introduced
Source: OECD calculations based on the OECD tax-benefit model.
Proposed housing allowance
OECD average
-10
23
Graduation rates are high Upper secondary graduation rates Under 25 years old, 2015 100
Vocational programmes General programmes
%
80 60 40 20 0
Greece
Source: OECD (2017), OECD Education at a Glance 2017: OECD indicators
OECD 24
School students’ performance lags Mean PISA score 2015
510 Greece
OECD
500 490 480
470 460 450 Source: OECD, PISA 2015 databases.
Reading
Mathematics
Science 25
Few adults re-skill through life-long learning Participation in education and training % 25-64 year olds 35
2017
% 25-64 year olds 35 30
25
25
20
20
15
15
10
10
5
5
0
0
Slovakia Poland Greece Turkey Ireland Hungary Latvia Belgium Italy Germany Czech Rep. Spain Portugal EU Slovenia United Kingdon Austria Estonia Luxembourg France Netherlands Norway Iceland Finland Denmark Sweden Switzerland
30
Source: Eurostat (2017), Education and training (database).
26
Skill mismatch is high Share of workers whose skills do not match their job 45 40
%
%
2015 Over-skilling
Under-skilling
45 40
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
POL CAN BEL SWE USA FRA NLD DNK JPN FIN EST KOR GBR SVN NOR SVK TUR OECD AUS DEU ISR AUT NZL IRL CZE ESP ITA GRC CHL
35
Source: Adalet McGowan, and Andrews (2017), "Skills Mismatch, Productivity and Policies in New Zealand: Evidence from the second wave of PIAAC", OECD Economics Department Working Papers. OECD calculations based on Survey of Adult Skills (PIAAC).
27
Main recommendations Expanding employment, reducing poverty and improving skills Introduce collective-wage bargaining covering broad working conditions and without automatic extensions Ensure collective agreements are sufficiently flexible so that they can be adapted to specific firm level conditions Establish a commission of social partners and independent experts to recommend minimum wage adjustments Introduce assessment frameworks and professional development schemes; gradually give schools and teachers greater pedagogical and managerial autonomy Scale up post-secondary vocational education and adult education, linking them with labour market needs, and certify the quality of courses Evaluate reskilling programmes, expand successful and cost-effective approaches and cancel those that are not. Continue spending reviews to reallocate resources to targeted social programmes. Further rationalise remaining non-targeted programmes.
Consider introducing in-work benefits. More in Chapter 2: Generating employment, raising incomes and addressing poverty
28
Boosting investment and tackling nonperforming loans
29
Banks’ non-performing loans are high Non-performing loans relative to total gross loans and advances
Source: European Banking Authority (2018),"Risk Dashboard, Data as of Q3 2017".
GRC
PRT
SVN
0
ITA
0
IRL
10
ESP
10
EU
20
AUT
20
SVK
30
FRA
30
BEL
40
LVA
40
DNK
50
NLD
50
GBR
%
EST
%
30
Lending to businesses remains weak Bank credit to non-financial corporations EUR billion 140
EUR billion 140
120
120
100
100
80
80
60
60
40
40
20
20
0
0
2006
2007
2008
2009
Source: ECB Bank Lending Survey.
2010
2011
2012
2013
2014
2015
2016
2017
31
Capital is trapped in zombie firms Share of capital in zombie firms 30
%
2013
%
30
25
25
20
20
15
15
10
10
5
5
0
0
SVN FRA JPN FIN GBR AUT KOR SWE DEU LUX PRT BEL ESP ITA GRC
Note: “Zombie” firms are 10 years or older with three consecutive years of interest expenses exceeding earnings before interest and taxes. Source: Adalet McGowan, Andrews and Millot (2017), "Insolvency regimes, zombie firms and capital reallocation", OECD Economics Department Working Papers.
32
Insolvency processes are improving
0.8
Index
Insolvency indicator 2016
Index 0.8 2010 0.6
0.4
0.4
0.2
0.2
0
0.0
GBR JPN DEU PRT ESP USA CHE FRA ISR IRL GRC CHL FIN SVN NZL ITA CZE POL MEX LVA AUT NOR SVK TUR SWE AUS CAN BEL NLD HUN EST
0.6
Source: Adalet McGowan, Andrews and Millot (2017), "Insolvency regimes, zombie firms and capital reallocation", OECD Economics Department Working Papers.
33
Contract enforcement is weak Enforcing contracts 100
Relative to the top performer, 2018
80 60 40
0
GRC SVN CAN ITA IRL ISR CZE SVK NLD CHL POL BEL JPN FIN CHE OECD MEX SWE DNK GBR TUR ISL ESP DEU NZL LVA PRT USA FRA LUX HUN EST AUT NOR AUS KOR
20
Source: World Bank (2018), Doing Business 2018 (database).
34
The business environment can improve further Product market regulation index Index 0 to 6, from least to most restrictive 3.0 2013 2.5
3.0 2008
2017 (preliminary) 2.5 2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
0.0
NLD GBR AUT DNK NZL AUS DEU SVK ITA EST FIN PRT HUN BEL CZE JPN CAN ESP IRL LUX NOR FRA OECD ISL CHE CHL SWE USA LVA POL SVN GRC KOR MEX ISR TUR
2.0
Source: OECD (2017), Product Market Regulation database and OECD calculations.
35
Regulatory impact assessments are underused Ex-post evaluation of primary laws Composite index 4.0
2014
Composite index 4.0 3.5
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
0.0
GRC TUR IRL SVK USA FIN CZE JPN ESP FRA PRT CHL SVN NOR HUN ISL ITA NLD OECD LUX DNK POL ISR KOR NZL AUT EST SWE CHE CAN BEL DEU MEX GBR AUS
3.5
Source: OECD (2015), OECD Regulatory Policy Outlook 2015.
36
Barriers to FDI are low FDI regulatory restrictiveness index 0.30
0 (open) to 1 (closed) 2016
2006
0.30 0.25
0.20
0.20
0.15
0.15
0.10
0.10
0.05
0.05
0.00
0.00
LUX PRT SVN CZE NLD EST FIN ESP DEU HUN LVA GRC DNK BEL GBR IRL FRA SVK ITA JPN CHL SWE TUR OECD POL CHE NOR USA AUT ISR KOR AUS CAN ISL MEX NZL
0.25
Source: OECD (2017), "FDI statistics according to Benchmark Definition 4th Edition (BMD4): Foreign direct investment: main aggregates", OECD Globalisation Statistics (database).
37
Inwards FDI stocks are low but improving FDI inward stocks
% of GDP 60
Greece
OECD
% of GDP 60
EU
50
50
40
40
30
30
20
20
10
10
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Source: OECD (2017), "FDI statistics according to Benchmark Definition 4th Edition (BMD4): Foreign direct investment: main aggregates", OECD Globalisation Statistics (database).
0 38
Participation in global value chains can be strengthened Foreign value added in exports 60
%
%
60 50
40
40
30
30
20
20
10
10
0
0
Australia New Zealand Norway Chile Switzerland Turkey Israel Greece Spain Austria Sweden Denmark Estonia Portugal Netherlands Poland Mexico Slovenia Iceland Finland Belgium Korea Czech Rep. Hungary Slovakia Ireland Luxembourg
50
Source: OECD (2017), "TiVA Nowcast Estimates“, OECD International Trade and Balance of Payments Statistics database
39
Transport infrastructure hampers Greece’s participation in global trade Global Competitiveness Index 2017-18 Ports Railroads 0 to 7 (best) 7
6
6
5
5
4
4
3
3
2
2
1
1
0
0
HUN CZE AUT ITA GRC CHE AUS OECD FRA IRL PRT JPN CAN DEU ESP SWE GBR DNK USA BEL NLD
7
GRC HUN IRL AUS ITA PRT CZE OECD DNK SWE GBR BEL CAN AUT DEU ESP USA FRA NLD JPN CHE
0 to 7 (best)
Source: World Economic Forum, "The Global Competitiveness Report 2017-2018".
40
Main recommendations Boosting investment Simplify regulatory impact assessments and build a network of civil servants with regulatory-quality expertise.
Expand the scope of the “silence is consent” rule, ex-post compliance monitoring and one-stop shops; ensure that they have the resources to operate effectively Fully implement the legislated insolvency reforms Ensure a sufficient number of well-trained insolvency professionals start operating soon Fully implement out-of-court workout procedures and e-auctions. Continue to align banks’ governance standards with international best practices Align tax incentives for disposing of non-performing loans with those of previous legislation and make them temporary Finalise and implement the state asset management strategy and link it with the privatisation programme. Complete the land registry
More in Chapter 1: Boosting investment
41
For more information: Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
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