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 2015 2017 2019

2
Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
 Unemployment is falling

Unemployment rate
%
30
27
24
21
18
15
12
9
6
3
0
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
3
Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
 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 2014 2016
4
Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
 The fiscal situation is strengthening

% of GDP Primary budget surplus

6
Government primary balance ESM programme target
4

-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 5
Report ESM Stability Support Programme for Greece
 Structural reforms have been extensive

Reforms implemented Ongoing reforms Reforms to do

Tax compliance Public administration and Further product market
Spending reviews financial management liberalisation

Corporate law Anti-corruption Public administration and

judiciary for rule of law
Insolvency procedures Judiciary
Complete land registry
E-auctions, loan servicing Capital controls
bodies and secondary Logistics and transport plan
Regulation impact assessments
market Arrangements for agreeing
Pensions
Out-of-court workout pay and work conditions
Rationalise social benefits and
Opening protected Minimum wage commission
administration
markets In-work benefits for low wages
Housing and disability
Targeted social protection allowances Certify professional education
for low income families
Active labour market Expand active labour market
State asset management programmes for re-training and and family programmes
and concessions job matching
Raise effective retirement age
School management 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 2014 2016
7
Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
 Investment fell sharply during the crisis

Real investment
Index, 2017=100 Index, 2017=100
120 120
Greece Euro area

100 100

80 80

60 60

40 40

20 20
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
8
Source: OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
 Poverty is very high,
especially among the young
% Severe material deprivation rate %
30 30
Greece, 2016 EU, 2016 2009

25 25

20 20

15 15

10 10

5 5

0 0
Total Under 18

9
Source: Eurostat (2018), EU Statistics on Income and Living Conditions (database).
Boosting inclusive and
sustainable growth

10
 Deeper reforms would boost growth

Impact of structural reforms on level of GDP

Index, 2017=100 Index, 2017=100
240 240
Legislated and ongoing reforms
Deeper reforms to product markets and public administration

200 200

160 160

120 120

80 80
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060
11
Source: OECD calculations
 Additional reforms and debt restructuring
would reduce public debt
% of GDP General government debt % of GDP
220 220
Legislated and ongoing reforms
200 Deeper reforms to product markets and public administration 200
Deeper reforms + debt restructuring*
180 180

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 2060
* Official creditor interest rates fixed at 2% from 2020 and ESFS repayments postponed until 2031. 12
Source: Calculations based on OECD (2018), OECD Economic Outlook: Statistics and Projections (database).
 Tax collection is improving but remains low
VAT revenue ratio
% %
100 100
2015 2013

80 80

60 60

40 40

20 20

0 0
ESP

CAN

AUS

SVK

DEU

DNK

SVN
HUN

CHE
JPN
TUR

BEL
FRA

PRT

NLD

LVA

CZE
AUT

CHL

EST
LUX
NZL
MEX

GRC

GBR

OECD

NOR
ITA

IRL

ISL
FIN

ISR
SWE

KOR
POL

Source: OECD (2016), Consumption Tax Trends 2016: VAT/GST and Excise Rates, Trends and Policy Issues, OECD 13
(2018), OECD Revenue Statistics (database) and OECD National Accounts Statistics (database).
 Spending efficiency can improve

Use of performance budgeting

0 to 1 (highest), central government
0.7 0.7
2016 2011
0.6 0.6

0.5 0.5

0.4 0.4

0.3 0.3

0.2 0.2

0.1 0.1

0 0.0
ESP
SVK
HUN

USA

NZL
DEU

AUS

SVN
DNK

CAN

CHE
AUT
PRT
LUX

TUR
LVA
JPN

CZE
BEL
CHL

FRA
EST
NLD
NOR

GRC

OECD

SWE

MEX
GBR
KOR
ISL

ISR
ITA

POL

IRL

FIN
14
Source: OECD (2016), Survey of Performance Budgeting and OECD (2017), Government at a Glance 2017.
 Disposing less waste in landfills would
improve well-being
Municipal waste treatment
% of treated
100
Recycling
and Incineration
composting
80

Recycling
60 and
composting
\
40 Landfill

20 Landfill

0
Greece OECD
15
Source: OECD (2017), Green Growth Indicators (database).
 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
Main labour
market reforms
90
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: OECD (2018), OECD National Accounts Statistics (database) and Eurostat (2017), Labour Market Statistics 18
(database).
 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

0.2

0.0
USA

CZE
JPN

NLD

BEL

LVA

LUX

FRA
ESP

EST

CAN
DEU
SVK

HUN
AUS

PRT

CHL
TUR
SVN

NZL
MEX

GRC
GBR

KOR

ISR
IRL

POL

19
Source: OECD (2018), Labour Statistics (database)
 Many employees earn below the minimum
wage
Number of employees earning different wages
Employees, thousands September 2017 Employees, thousands
652
200 200
Poverty line for a single adult (EUR 313)

160 160
Full-time gross monthly minimum wage (EUR 586)

120 120
Median salary

80 80

40 40

0 0
1-400

10 000+
550-600

750-800

1150-1200

1350-1400

1550-1600

1750-1800

1950-2000

2150-2200

2350-2400

2550-2600

2750-2800

2950-3000

6000-7000
950-1000

Gross monthly wage, EUR

Source: OECD calculations based on the ERGANI database from the Greek Ministry of Labour, Social Insurance and 20
Social Solidarity, and Eurostat (2017), EU Statistics on Income and Living Conditions (database).
 Poverty is highest among the unemployed

Population at risk of poverty or social exclusion

18 year-olds and over
% %
80 80
2016 2008

60 60

40 40

20 20

0 0
Total Employed Retired Unemployed

21
Source: Eurostat (2018), EU Statistics on Income and Living Conditions (database).
 Pensions dominates social protection spending

Social protection spending by function

% of GDP
2015 or latest % of GDP
40 40
Pensions Family, healthcare and other

32 32

24 24

16 16

8 8

0 0
TUR

LUX
EST
LVA

CZE

BEL

NLD

FRA
SVK

HUN
DEU

ESP
SVN

CHE

DNK

PRT
AUT
NOR

GBR
IRL

ISL

POL

SWE

GRC
FIN

ITA
22
Source: Eurostat (2018), Social Protection Statistics (database).
 Recent reforms raise poor households’ income

Income of an unemployed couple with children

% median disposable income % median disposable income
60 60
Social assistance Housing allowances Family benefits Taxes
50 50
Poverty threshold (50 % of median)
40 40

30 30

20 20

10 10

0 0

-10 -10
Pre-reforms Social Solidarity Family benefits Proposed OECD average
Income & tax reforms housing
introduced introduced allowance
23
Source: OECD calculations based on the OECD tax-benefit model.
 Graduation rates are high

Upper secondary graduation rates

Under 25 years old, 2015
% Vocational programmes
100
General programmes

80

60

40

20

0
Greece OECD

24
Source: OECD (2017), OECD Education at a Glance 2017: OECD indicators
 School students’ performance lags
Mean PISA score
2015
510

Greece OECD
500

490

480

470

460

450
Reading Mathematics Science
25
Source: OECD, PISA 2015 databases.
 Few adults re-skill through life-long learning

Participation in education and training

% 25-64 year olds 2017 % 25-64 year olds
35 35

30 30

25 25

20 20

15 15

10 10

5 5

0 0
Italy
Hungary
Slovakia

Turkey

EU

France
Slovenia
Latvia

Spain

Estonia
Austria

Denmark
Poland

Ireland

Sweden
Greece

Czech Rep.

Portugal
Belgium

Netherlands
Norway
Iceland
Finland
Luxembourg

Switzerland
Germany

United Kingdon

26
Source: Eurostat (2017), Education and training (database).
 Skill mismatch is high

Share of workers whose skills do not match their job

% 2015 %
45 45
Over-skilling Under-skilling
40 40
35 35
30 30
25 25
20 20
15 15
10 10
5 5
0 0

AUT

CHL
BEL

JPN
CAN

USA
FRA
NLD

EST
DNK

SVN

SVK
TUR

AUS
DEU

NZL

CZE
ESP
KOR
GBR

NOR

OECD

GRC
POL

FIN

ISR

IRL

ITA
SWE

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 27
of Adult Skills (PIAAC).
 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, 28
raising incomes and addressing poverty
Boosting investment and tackling non-
performing loans

29
 Banks’ non-performing loans are high

Non-performing loans relative to total gross loans and advances

% %
50 50

40 40

30 30

20 20

10 10

0 0
EST

NLD

LVA

BEL

FRA

AUT

EU
DNK

SVK

ESP

SVN

PRT
GBR

GRC
IRL

ITA
30
Source: European Banking Authority (2018),"Risk Dashboard, Data as of Q3 2017".
 Lending to businesses remains weak

Bank credit to non-financial corporations

EUR billion EUR billion
140 140

120 120

100 100

80 80

60 60

40 40

20 20

0 0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

31
Source: ECB Bank Lending Survey.
 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", 32
OECD Economics Department Working Papers.
 Insolvency processes are improving

Insolvency indicator
Index Index
0.8 0.8
2016 2010

0.6 0.6

0.4 0.4

0.2 0.2

0 0.0
JPN

NZL

BEL
DEU
PRT

FRA
ESP
USA
CHE

CHL

CZE

MEX
LVA
AUT

TUR

NLD

EST
FIN
SVN

SVK

AUS
CAN

HUN
POL
GBR

ISR

GRC

NOR
IRL

ITA

SWE
Source: Adalet McGowan, Andrews and Millot (2017), "Insolvency regimes, zombie firms and capital reallocation", 33
OECD Economics Department Working Papers.
 Contract enforcement is weak

Enforcing contracts
Relative to the top performer, 2018
100

80

60

40

20

0
CZE

NLD
CHL

BEL
JPN
SVN
CAN

SVK

CHE
OECD

TUR

FRA
LUX
DNK

ESP
DEU
NZL
LVA
PRT
USA

EST
AUT
HUN

AUS
FIN
GRC

ISR

MEX
ITA
IRL

POL

SWE

GBR

NOR

KOR
ISL

34
Source: World Bank (2018), Doing Business 2018 (database).
 The business environment can improve further

Product market regulation index

Index 0 to 6, from least to most restrictive
3.0 3.0
2013 2008 2017 (preliminary)
2.5 2.5

2.0 2.0

1.5 1.5

1.0 1.0

0.5 0.5

0.0 0.0
NLD
AUT
DNK

PRT
BEL
CZE
JPN

LUX
FRA

LVA

TUR
NZL
AUS
DEU

EST
SVK

HUN

CAN
ESP

OECD
CHE
CHL
USA

SVN
FIN
GBR

NOR

GRC
KOR
MEX
ISR
ITA

IRL

ISL

SWE

POL
35
Source: OECD (2017), Product Market Regulation database and OECD calculations.
 Regulatory impact assessments are
underused
Ex-post evaluation of primary laws
2014
Composite index Composite index
4.0 4.0

3.5 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
TUR

USA
CZE
JPN
FRA

NLD
SVK

ESP
PRT
CHL

AUT
EST

BEL
SVN
HUN

OECD
LUX
DNK

NZL

CHE
CAN
DEU

AUS
GRC

NOR

ISR
KOR

GBR
MEX
IRL

FIN

ISL
ITA

POL

SWE
36
Source: OECD (2015), OECD Regulatory Policy Outlook 2015.
 Barriers to FDI are low

FDI regulatory restrictiveness index

0 (open) to 1 (closed)
0.30 0.30
2016 2006
0.25 0.25

0.20 0.20

0.15 0.15

0.10 0.10

0.05 0.05

0.00 0.00
SVN

ESP
DEU
HUN

DNK
BEL

SVK

CHE
USA

AUS
CAN
LUX

NZL
PRT
CZE
NLD
EST

LVA

FRA

JPN
CHL
TUR

AUT
GRC

GBR

SWE
OECD

NOR

KOR

MEX
FIN

IRL

ITA

POL

ISL
ISR
Source: OECD (2017), "FDI statistics according to Benchmark Definition 4th Edition (BMD4): Foreign direct investment: 37
main aggregates", OECD Globalisation Statistics (database).
 Inwards FDI stocks are low but improving

% of GDP
FDI inward stocks % of GDP
60 60
Greece OECD EU

50 50

40 40

30 30

20 20

10 10

0 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: 38
main aggregates", OECD Globalisation Statistics (database).
 Participation in global value chains can be
strengthened
Foreign value added in exports
% %
60 60

50 50

40 40

30 30

20 20

10 10

0 0

Slovenia
Australia

Hungary
Slovakia
New Zealand

Chile

Turkey

Spain

Estonia
Norway

Poland

Ireland
Israel

Austria
Sweden
Denmark
Greece

Portugal

Mexico
Netherlands

Korea
Czech Rep.

Luxembourg
Switzerland

Iceland

Belgium
Finland
39
Source: OECD (2017), "TiVA Nowcast Estimates“, OECD International Trade and Balance of Payments Statistics database
 Transport infrastructure hampers Greece’s
participation in global trade
Global Competitiveness Index
Ports 2017-18 Railroads
0 to 7 (best) 0 to 7 (best)
7 7

6 6

5 5

4 4

3 3

2 2

1 1

0 0
HUN
AUS

DNK

BEL
CAN
DEU
ESP
USA

CHE
IRL

PRT
CZE

AUT

FRA
NLD
JPN
GRC

OECD

GBR
ITA
CZE
AUT

FRA

DEU

DNK
BEL
NLD

SWE
HUN

CHE
AUS

PRT
JPN
CAN
ESP

USA
GRC

OECD

GBR
ITA

IRL

SWE

40
Source: World Economic Forum, "The Global Competitiveness Report 2017-2018".
 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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