SPECIAL FEATURE: STRUCTURAL REFORMS OECD …

1 August 2011 OECD economic SurveysGREECESPECIAL feature : STRUCTURAL REFORMSMost recent editionsISBN 978-92-64-09347-810 2011 14 1 PISSN 0376-64382011 SUBSCRIPTION (18 ISSUES)ISSN 1995-3224 SUBSCRIPTION BY COUNTRY-:HSTCQE=U^XY\]: Volume 2011/14 GREECEOECD economic SurveysVolume 2011/14 August 2011 Please cite this publication as:OECD (2011), OECD economic Surveys: Greece 2011, OECD work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases. Visit , and do not hesitate to contact us for more economic SurveysGREECEAUGUST 2011 Australia, November 2010 Austria, July 2011 Belgium, July 2011 Brazil, July 2009 Canada, September 2010 Chile, January 2010 China, February 2010 Czech Republic, April 2010 Denmark, November 2009 Estonia, April 2011 Euro area, December 2010 European Union, September 2009 Federal Republic of Yugoslavia, January 2003 Finland, April 2010 France, March 2011 Germany, March 2010 Greece, August 2011 Hungary, February 2010 Iceland, June 2011 India, June 2011 Indonesia, November 2010 Ireland, November 2009 Israel, January 2010 italy , May 2011 Japan, April 2011 Korea, June 2010 Luxembourg, May 2010 Mexico, May 2011 Netherlands, June 2010 New Zealand, April 2011 Norway, March 2010 Poland, April 2010 Portugal, September 2010 Romania, October 2002 Russian Federation, July 2009 Slovak Republic, November 2010 Slovenia, February 2011 South Africa, July 2010 Spain, December 2010 Sweden, January 2011 Switzerland.

2 December 2009 Turkey, September 2010 Ukraine, September 2007 United Kingdom, March 2011 United States, September 2010 OECD economic Surveys: Greece2011 ISBN 978-92-64-09347-8 (print)ISBN 978-92-64-09349-2 (PDF)Series: OECD economic SurveysISSN 0376-6438 (print)ISSN 1609-7513 (online)OECD economic Surveys: Greece 2011 ISSN 1995-3224 (print)ISSN 1999-0286 (online)Photo credits: Cover to OECD publications may be found on line at: OECD 2011 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases andmultimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitableacknowledgment of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights shouldbe submitted to Requests for permission to photocopy portions of this material for public or commercial use shall beaddressed directly to the Copyright Clearance Center (CCC) at or the Centre fran ais d exploitation du droit de copie (CFC)at cite this publication as:OECD (2011), OECD economic Surveys: Greece 2011, OECD E O F C O N T E N T SOECD economic SURVEYS: GREECE OECD 20113 Table of contentsExecutive summary.

3 8 Assessment and recommendations.. 11 Chapter 1. Restoring fiscal sustainability and promoting sound and solid growth.. 23 Greece needs to restore conditions for sustainable and robust growth .. 24 Returning to fiscal sustainability .. 59 Notes.. 72 Bibliography.. 73 Annex Progress in STRUCTURAL reform .. 75 Chapter 2. Sustainability cannot be achieved without STRUCTURAL fiscal REFORMS .. 81 The budget adjustment strategy will have to rely on STRUCTURAL fiscal REFORMS going forward .. 82 Long-term fiscal sustainability needs REFORMS in key public services .. 95 Notes.. 104 Bibliography.. 105 Chapter 3. STRUCTURAL REFORMS to support growth .. 107 The potential benefits of labour and product market REFORMS are impressive .. 108 Getting people back to work and boosting longer term growth .. 108 reform of product market will boost growth .. 125 Notes.. 152 Bibliography.. of the Greek statistical system.. features of deficit-reducing measures adopted for 2010.

4 Fiscal adjustment measures are needed in 2011 .. the macroeconomic impact of the fiscal consolidation plan in 2010 and 2011.. Financial Stability Fund .. is the potential growth rate of Greece? .. large might be the output gains of STRUCTURAL REFORMS ? .. determination of sovereign solvency is not straightforward .. for restoring fiscal sustainability and promoting sound and solid growth .. 2010 Pension reform .. to improve the efficiency of the public sector .. 103 TABLE OF CONTENTSOECD economic SURVEYS: GREECE OECD REFORMS in the collective bargaining and arbitration systems .. REFORMS in EPL .. measures to increase the flexibility of working arrangements .. legislative framework for the competition authority has been amended frequently .. new investment law and other initiatives to support business investment .. freight reform : main features.. the railways and urban transport sectors .. the 3rd EU Energy Package .. for supporting growth with STRUCTURAL REFORMS .

5 Growth and prospects.. fiscal deficits and initial outcomes .. measures for 2010 .. measures for 2011 initially included in the budget .. macroeconomic impact of the 2010 and 2011 fiscal adjustment programmes .. sovereign debt exposure, end-2009 .. sector debt development since the mid-90s .. output estimate .. of long-term debt dynamic .. of tax collection .. parameters of public pension schemes in selected countries .. developments since 2000.. and external imbalances .. macroeconomic developments in the aftermath of the global economic crisis.. macroeconomic developments.. and inflation .. and investment .. growth and debt developments in the private sector.. , interest rates, competitiveness and export performance indicators coverage and export share development of Greece in the EU and non-EU markets .. fiscal development in Greece in the international perspective .. to the 2009 budget deficit estimates over time and interest rate spread.

6 , productivity and product market regulations .. indicators of resource allocation .. stock and FDI product market regulations .. of self employed and enterprise size .. deficit reduction targets, detailed objectives and outcomes for 2010.. growth and non performing loans.. 51 TABL E O F C O N T E N T SOECD economic SURVEYS: GREECE OECD , interest rates and liquidity provided by the ECB .. indicators and public guarantees of the banking sector .. sector development .. characteristics of the banking sector .. debt sustainability: baseline scenario .. debt sustainability: alternative scenarios .. of statutory tax rates in selected OECD countries .. and remuneration in the government sector .. development .. expenditure for old age and survivors pensions .. indicators of health expenditure .. trends: an international comparison .. crisis hit severely the labour market .. unemployment benefit replacement rates, OECD countries, 2009.

7 Labour market functioning indicators .. features of the collective bargaining system .. labour costs grew fast .. wages: an international comparison .. tax wedge on low-wage earners .. protection legislation in OECD countries .. protection legislation for blue- and white-collar workers .. are relatively high .. to business remain .. ranks low on the basis of Global Competition Review .. average size of enterprises is small.. barriers to entrepreneurship have eased .. barriers in retail sector .. growth of international tourism receipts has slowed down but the potential of the sector is large .. services have been deregulated .. control could be reduced further .. in transport were eased .. regulatory stance in the electricity and gas sectors .. 148 This survey is published on the responsibility of the economic andDevelopment Review Committee of the OECD, which is charged with theexamination of the economic situation of member economic situation and policies of Greece were reviewed by the Committeeon 28 June 2011.

8 The draft report was then revised in the light of the discussionsand given final approval as the agreed report of the whole Committee on7 July Secretariat s draft report was prepared for the Committee by Claude Giorno,Vassiliki Koutsogeorgopoulou under the supervision of Piritta Sorsa. Researchassistance was provided by J r me Br zillon and Ane Kathrine previous survey of Greece was issued in June book service that delivers Excel files from the printed page!Look for the StatLinks at the bottom right-hand corner of the tables or graphs in this book. To download the matching Excel spreadsheet, just type the link into your Internet browser, starting with the prefix. If you re reading the PDF e-book edition, and your PC is connected to the Internet, simply click on the link. You ll find StatLinks appearing in more OECD STATISTICS OF GREECE (2010)THE LANDArea (1 000 km2)Major urban areas (2001 census, thousand inhabitants)To t a Athens (including Piraeus)3895 Agricultural (2007) Thessaloniki1084 THE PEOPLEP opulationTotal labour force (thousands)5017 Thousands11 305 Civilian employment (% of total)Increase 2005-10 (annual average, %) , forestry and fishing of inhabitants per km286 Industry and domestic productGross fixed capital investmentIn billion EUR230In % of head (USD)26 998 Per head (USD)3970 THE GOVERNMENTP ublic consumption (% of GDP) of Parliament (seats)300 General government (% of GDP)New Democracy91 Current Socialist Movement160 Current Party of Greece21 Maastricht of the Radical Left13 Popular Orthodox Rally15 Last general elections.

9 4 October 2009 FOREIGN TRADEE xports of goods and services (% of GDP) of goods and services (% of GDP) commodity exports (% of total)Main commodity imports (% of total)Manufactured and transport and live fuels, lubricants, related and related and related manufactured CURRENCYM onetary unit: euroCurrency unit per EUR, average of daily figuresYear SUMMARYOECD economic SURVEYS: GREECE OECD 20118 Executive summaryGreece has embarked on an ambitious adjustment programme to deal with the deepeconomic crisis by restoring sustainable public finances, competitiveness and the foundations forhealthy and solid long-term growth. The economic adjustment plan is being implemented with thetechnical and financial support of the IMF, the European Union and the ECB, and as announced on21 July 2011 the participation of Greece s private creditors. It aims at tackling the root causesrather than the symptoms of the programme can succeed. Under conservative assumptions regarding growth andinterest rates, and if fiscal and STRUCTURAL REFORMS are fully implemented, the debt-GDP ratio couldpeak in 2013 and fall below 60% of GDP in the next two decades.

10 The package announced on21 July 2011 should ensure reasonable interest rates on Greek debt, contains measures to enhanceinvestment and growth, and will give Greece the time needed to implement REFORMS which will boostcompetitiveness and export performance. Despite the short term costs, the REFORMS that have beenimplemented or planned will benefit Greece for many years to come, as they will raise growth, livingstandards and equity. A key prerequisite of success is that the burden and benefits of reform be, andbe seen to be, broadly and fairly shared. Clearly, the key to success will be in the implementation,which will have to be REFORMS carried out over the past year are impressive. The cuts in the public deficitwere unprecedented. Deep-rooted fiscal REFORMS have been launched to strengthen the managementof the public finances and to revamp the pension system. The statistical system is being improvedsignificantly. Labour market REFORMS will increase employment and help to restore internationalcompetitiveness.