greece: post-crisis legacies and post-programme challenges€¦ · greece 2010 greece now eu-28 now...

Greece: Post-crisis Legacies

and Post-Programme Challenges

Akis SkertsosSEV Director General

21/02/2018

How it compares with pre-crisis Greece

How it compares with today’s Europe

Post-crisis Legacies

Post-Programme Challenges

Greece in numbers

Weak structure impedes growth

Greece 2009 Greece Now EU-28 Now

General government primary

balance (% of GDP)-10.1 +2.6 +0.8

General government fiscal

balance (% of GDP)-15.1 -1.2 -1.2

Gross public debt

(% of GDP)126.7 178.2 83.5

Source: AMECO, Ministry of Finance

Substantial fiscal adjustment with

unsustainable high debt levels


Self-employed to population 14.2% 12.4% 7.8%

Employment share

- In very small companies

(<10 employees)

- In large companies

(>250 employees)

56%

13%

57%

13%

30%

33%

Source: ELSTAT, Eurostat

Business size remains inadequate

Weak institutions hold back

business growth

* Reflects perceptions of the ability of the government to formulate and implement sound policies and regulations

that permit and promote private sector development.

Source: EU Justice Scoreboard 2017, World Bank, World Economic Forum


Time needed to resolve

administrative cases through

the justice system (days)

2000 990 <500

World Bank Doing Business

(overall rank)

96

(181 countries)

67

(190 countries)

31

(France)

WEF Global Competitiveness

Institutions sub-index score

(1=worst, 7=best)

3.8 3.7 4.6

World Bank Governance

Indicators: Index of

regulatory quality*

74.6 59.1 83.7

Heavy reliance on consumption

and limited presence in tradables


Private consumption (% of GDP) 68.1 69.9 56.1

Public consumption (% of GDP) 23.3 20.2 20.4

External trade balance

(€ bn)

(% of GDP)

-34.4

-14.5

-18.7

-10.8

+32.0

+0.2

* External trade of Greece vs the rest of the world, including EU.

** External trade of EU-28 vs the rest of the world, excluding EU.

Source: Eurostat

Post-Crisis Legacies

Cost of doing business prohibitive

Source: Schneider / IAW Institute, Eurostat, ECB


Wage tax wedge

• Average tax wedge on employer cost

(employee with net annual earnings €50,000)

• Average tax wedge on employer cost

(employee with net annual earnings €20,000)

52%

47%

58%

45%

51% (Germany)

41% (Spain)

48% (Germany)

40% (Spain)

Excise taxes

• Fuel (€ per 1000 lt)

• Tobacco (% of retail price)

• Alcohol (€ per hectoliter)

• Communication (mobile telephony, internet etc., rate)

359

73%

1308

25%

700

90%

2450

40%

654 (Germany)

74% (Germany)

1303 (Germany)

19% (Germany)

Indirect taxes / direct taxes (ratio) 1.3 1.7 1.0

Shadow economy (% of GDP) 24 21.513.3

(13 countries)

Number of transactions per capita, per year 8 28 117

Source: ECB


Non-performing loans (NLPs) (%

of total exposures)8.0 46.6 5.2

Interest rates

(%, Up to and including €1 mil.) 4.70 4.69 2.11

Banks’ NPLs limit bank financing

Inadequate savings and investment –

Investment does not cover capital replacement

Source: Eurostat, AMECO


Households’ saving ratio

(gross saving as % of gross

disposable income)

6.6 -9.4 10.3

Gross fixed investment,

private non-residential

(% of GDP)

8.5 7.912.3

(15 countries)

Net investment, total

(% of GDP)4.9 -7.8 3.1

Unemployment still high though

coming down gradually



Unemployment rate

(% of labour force) 9.6 20.3 7.3

Long term unemployment

(unemployed for 4 years or over as % of

total unemployed)

12.3 32.9 14.7

Youth unemployment

(unemployed aged 15-24 years as % of

labour force of the same age)

25.7 47.3 18.7

Post-Programme Challenges

Weak tradables sector limits

transformation of economy

* Exports of Greece vs the rest of the world, including EU.

** Exports of EU-28 vs the rest of the world, including EU.



Employment in Manufacturing /

Employment in Trade (ratio)0.3 0.2 0.6

Non-oil good exports

(% of GDP)6.0* 10.6* 31.1**

Non-oil good imports / exports

(ratio)3.1 1.9 0.9

Source: Eurostat


Unit labour cost

competitiveness

(2009 = 100, fall = improvement)

100 79.4 93.6

Labour productivity

(Real GDP per person employed,

2009 = 100)

100 91.3 107.7

Compensation per employee

(€ thousand)26.6 21.6 35.8

Cost competitiveness improves but

productivity and incomes lag behind

Poor quality education limits

skills development

Source: OECD


PISA score

Science

Reading

Mathematics

470

483

466

455

467

454

(OECD average)

493

493

490

Performance in science, reading and

mathematics

(share of low achievers in all three subjects)

… 20.713

(OECD average)

Lifelong learning

(Participation rate in education and training for

adults aged 18-64 years)

9.8 10.6 16.6

Skills for employment

(proportion of workers who are well matched)65.4 64.3

69.0(22 countries)

Lagging behind in economic and transformation

prospects leads to brain drain

Source: Eurostat, World Economic Forum


Ability to save

(% of households stating that they are

unlikely to save over the next 12 months)

81% 90% 44%

Digital economy and society index

(DESI)

(performance 0 = worst, 1 = best)

0.30 0.38 0.52

Brain drain score

(1 = worst, 7 = best)

(capacity of country to retain talent)

3 2.5 3.7

Ageing burden puts pressure

on growth and public finances

Source: Eurostat


Labour force participation ratio

(Active population as % of population aged

15-64 years)

68.6 69.3 74.6

Dependency ratio

(Population aged 0-14 or over 65 years as %

of population aged 15-64 years)

50.2 55.5 53.2

Pension expenditure

(% of GDP)14.3 17.8 13.0

No back-tracking in labour market reforms

Reduction of non-wage costs

Introduction of fiscally-neutral investment incentives

Design and implement a strategy for the digital transformation

of the economy

Strengthening of education/labour market interface

Speed-up of justice delivery times

Application of electronic transactions and e-invoicing

to deter tax evasion

Acceleration of bank NPLs cleanup to strengthen balance

sheets and resume financing

Towards sustainable growth

Thank you!

greece: post-crisis legacies and post-programme challenges€¦ · greece 2010 greece now eu-28 now...

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