OECD Economic Surveys: Greece 2018

Annex. Progress in structural reforms

 

Recommendations	Action taken since the previous Survey
Fiscal issues
Broaden the tax base and strengthen the tax administration by giving it more autonomy and freeing its resources for audits and enforcement.	The new Independent Authority for Public Revenues started operating in Jan 2017. Actions taken to spread the use of electronic payments include: requiring firms to pay salaries electronically for the cost to be deductible from the corporate tax base; requiring households to demonstrate minimum levels of purchases made by electronic means to be eligible for family tax credits; a monthly lottery based on the number of electronic transactions. Tax-free thresholds have been lowered. Further adjustments have been legislated to be implemented in 2020. In 2017, several social security agencies responsible also for collecting contributions were merged into a new social security agency (Unified Social Security Fund, EFKA). Also, the Centre for the Collection of Social Security Debt (KEAO) became part of EFKA.
Ensure gross financing needs for public debt are sustainable by continuing to credibly implement the ESM reform programme, and thus, if necessary, facilitate reaching an agreement on additional measures with creditors, such as, for example, extended grace and repayment periods	Progress on the ESM Stability Support Programme. Mid-2017 tranche approved. Standby agreement approved in principle by the IMF.
Undertake an expenditure review to create fiscal space for providing a comprehensive social safety net and expanding active labour market policies.	Expenditure review completed in October 2017 and informed the 2018 budget proposal. Dedicated unit established within the Ministry of Finance to conduct regular spending assessments.
Boost investment by frontloading the use of European structural funds, and better exploit available public land through concessions to support logistics investment.	The public investment programme continues to rely heavily on the European Structural Fund. The sale of 14 airports, agreed in 2015, was finalised in March 2017. Sale of the operating licence for the second largest port was agreed in April 2017. The train operator has been privatised. Structural funds have been allocated to expanding the cadastre. Approval of Law 4399/2016 (“Regulatory framework for the establishment of state aid schemes for private investments for the regional and economic growth of the country”) providing a wide range of tax incentives to boost private-sector investment.
Financial stability policies
Continue improving the bankruptcy framework to speed-up resolution of non-performing loans. Introduce effective incentives and performance targets for banks to monitor their progress in reducing non-performing loans.	Introduction of NPL reduction targets. Out-of-court restructuring procedures established. Licence regime for facilitating entry into the loan services industry introduced and additional licences being issued. Procedures for SME bankruptcies simplified and accelerated, expediting sales of movable and immovable property. Electronic auctions commenced. Legal protection of bank and public sector executives involved in write-offs of private debt.
Labour markets
Reform labour market institutions and review the minimum wage taking into account fairness and efficiency considerations. Simplify the labour code.	Collective dismissal processes and approvals have become more transparent. No reforms made to minimum wage levels or setting processes. No reforms made to broader processes for agreeing workplace condition. Experts Group on Greek labour market institutions reviewed and submitted report in September 2016. Project to review and simplify labour code launched.
Education
Increase the supply of childcare services and encourage flexible work arrangements.	Programme being developed for compulsory enrolment of 4 year old children in ECEC, under the supervision of MoERRA. Recipients of SSI, rolled out in February 2017, have prioritised access to childcare places.
Labour market programmes
Condition access to unemployment benefits on stricter obligations for participation in training and employment service programmes. Extend this principle to active job search as the economy improves. Strengthen sanctions for non-compliance.	Eligibility and job search requirements for unemployment benefits were tightened for most cases, and extended to those in employment disputes. Guaranteed minimum income programme designed to include obligatory engagement with labour market programmes among recipients able to work..
Bring forward to the extent possible the implementation of the restructuring plan of the public employment service (OAED). Monitor closely the post-programme outcomes (such as job characteristics and earnings) of the activation programmes, and focus spending on those that prove successful.	Re-engineering of OAED is underway, including improved communications with employers to identify skill needs, and improved IT systems to allow staff to take a more active role in job matching. Labour and social security IT systems now allow better tracking of outcomes, but are yet to be used for performance assessments.
Consider over the longer term and the fiscal situation allowing, increasing the duration of unemployment insurance benefits by another year, but tapering the benefits over time. The net replacement rate of unemployment insurance benefits could also be brought closer to the international average.	No action. National roll-out of SSI may support the unemployed.
Social protection
Make economic growth more inclusive by urgently adopting policies to reduce poverty and inequality and boost employment in the short run.	Pension spending continues to be curtailed, with benefit and contribution rules made more equitable. Social Solidarity Income (SSI) programme, transferring funds to low income households and improving their access to other social benefits, rolled out nationally in February 2017.
Implement the guaranteed minimum income, and introduce a targeted school meal programme and a housing assistance programme targeted at the poor.	Guaranteed minimum income, SSI, rolled-out nationally in February 2017 following pilots and trials. Take-up has been rapid. Service delivery components are being strengthened. A school meal programme targeting poor regions was trailed in the 2016-17 school year, and is legislated to expand during the 2017-19 school years. Various programmes to redesign housing assistance are being explored, to be implemented from 2019 subject to macroeconomic conditions. A modest rent relief targeted at very low income households expired at the end of 2016.
Conclude the reform of the pension system including a review of special regimes and introducing a basic pension in a fiscally sustainable way.	Pension reforms have progressed and continue as 2016 legislation is progressively implemented, including the ongoing consolidation of programmes and administration and adjustment of allowances rates. . Reforms in 2016: Integrated all public main pension funds into one Single Agency of Social Insurance (EFKA) and integrated all public supplementary pension and lump sum benefit funds; introduced a common 20% contribution rate for old-age pensions and 6.95% for health insurance; introduced a social solidarity allowance of EUR 360 for uninsured elderly persons; introduced a state-funded guaranteed national pension equal to the annual poverty threshold for a single person for 20 years of contributions; established a contributory pension; introduced a rule for increases in pension allowances linked with growth and inflation, to apply from 2022; decreased the upper ceiling for pensions; tightened eligibility rules for survivors’ pensions; gradually phase-out the means-tested Social Solidarity Allowance (EKAS). EFKA also has responsibility for collecting all social security contributions and debt. Consolidating the debts should improve collection rates, which rose to EUR 1 billion in 2017, and lead to uncollectible debt being written off. May 2017 legislation introduced reforms to be implemented in January 2019: curtailing early retirement and unifying benefit formula; rationalising current pensions; increasing and harmonising contribution rates; and, retaining the guaranteed basic pension.
Introduce a well-targeted housing benefit.	Tentative progress. A modest rent relief targeted at very low income households expired at the end of 2016. A replacement, more generous programme is legislated to be implemented from January 2019 subject to macroeconomic conditions, but the programme design is still being determined.
Intensify controls on recipients of welfare benefits by increasing the frequency of re-assessments, as envisaged, and by ensuring effective monitoring and timely data.	Improvements to information systems and monitoring of labour income improve the tracking of beneficiaries’ eligibility and receipts. No changes to the practical assessments for eligibility of various disability allowances, which are generally fragmented and vary across regions.
Strengthen the management of social welfare benefits by exerting more central control of earmarked grants to local authorities. Increase the accountability of local governments for the allocation of social spending through a more rigorous auditing system and by enhancing transparency with regard to the use of the grants.	Municipalities are now required to hold all funds in a consolidated treasury account. No action on auditing, or on broader consolidation of social protection systems managed by municipalities with central systems.
Intensify controls on recipients of welfare benefits, especially of disability benefits, by increasing the frequency of re-assessments, as envisaged, and by ensuring effective monitoring and timely data.	Strengthened database systems across labour and social welfare ministries, accompanied by broader push to electronic payments, improving ability to monitor beneficiaries’ eligibility. Local one-stop service centres being established, to improve contact with beneficiaries.
Product markets
Ease regulations in network industries and strengthen the capacity and independence of regulatory agencies.	Easing of regulation to facilitate entry is in progress for the electricity and gas sectors (see below); the train operator has been privatised; horizontal review of independent agencies is ongoing which should lead to changes in primary and secondary legislation.
Swiftly implement the planned creation and privatisation of new competitors in the electricity market. Further promote competition in the gas supply sector.	The market share of the incumbent in the electricity sector for lignite-fired generation sets to decrease to below 50% through disinvestment and increase of auctions for electricity generation by the incumbent; in the gas market the liberalisation process continues to be implemented; customers will be able to choose their supplier from Jan 2018.
Fully operationalise the national single window for exports as foreseen by the National Trade Facilitation Strategy.	Not yet fully implemented; the upgrading of the “Agora” information portal into a unified platform to help exporters link with foreign markets is facing delays; the upgrading of helpdesk service is in progress; training programmes for exporters started in March 2017; workshops have spread information about export promotion activities and existing financial measures; new incentives and financial tools in co-operation with EIB have been introduced to help SMEs to export;
Liberalise cabotage and eliminate discriminatory port charges to reduce times for export.	Law 3872/2010 as amended by 4072/2012 eliminated cabotage for cruise ships.
Strengthen the Hellenic Competition Commission’s advocacy work by allocating more resources to its work outside the area of law enforcement.	Some progress. The HCC opened a call centre in November 2016, staffed by competition law and economics experts.
Reduce restrictions to competition in sectors such as manufacturing, construction and wholesale.	Ongoing progress. 365 out of the 366 OECD Competition Assessment (Toolkit 3) recommendations on reducing restrictions to competition were adopted up to January 2018. Inconsistencies in regulations have been addressed.
Facilitate licensing by implementing a one-stop shop for operating a business and reduce regulatory burdens by using regulatory impact assessments and policies such as “one-in-two-out” more systematically.	One-stop shops for starting a business are operating and their mandate has been expanded to tax- and insurance-related procedures, under law 4441/2016. Law 4442/2016 has simplified the licensing procedure and, by the end of 2018, most non-financial sectors will fall under the simplified procedure, allowing businesses to operate via electronic start-up notification. A new law was introduced in January 2018 to set common rules on inspections for all sectors of the economy. The framework for regulatory impact assessments is in place, but the process is complex and human resources are lacking.
Ease the remaining barriers to trade and investment that prevent Greece from expanding its exports, such as limitation on foreign equity participation in maritime services or airport regulations.	No specific progress but 14 regional airports have been privatised and a terms of reference for a general transport master plan has been approved (covering road, railways, maritime, air and multi-modal, including logistics aspects) which will form the basis for establishing a long-term strategy for the transport sector.
Fully implement the new export promotion action plan to promote exports and help SMEs reach international markets.	Ongoing progress. The upgrading of helpdesk services is in progress. The upgrading of the “Agora” information portal into a unified platform to support exporters’ links with foreign markets is facing difficulties related to co-operation between Greek authorities. Training programmes for exporters started in March 2017. Entrepreneurship guides have been prepared. Workshops have disseminated information about export promotion activities and existing financial tools. SMEs are financially supported through a range of options covering EU structural funds, new investment incentives (set in the 2016 Investment Law) and financial tools in co-operation with EIB i.e. Equifund.
Further reduce regulatory procedures and administrative burdens on start-ups to enhance productivity and investment.	Limited progress. Web platform “StartupGreece” established, to provide information and networking for entrepreneurs.
Plan an assessment of the recent Hellenic Competition Commission’s reform over the next two-to-three years to assess whether HCC’s capacity for determining its case priorities is working.	Some progress. Classification System for the prioritisation of pending cases upgraded by Directorate-General for Competition (GDD) at the HCC. Electronic filing of cases established.
Innovation
Enhance access to ICT networks and enable SMEs to engage in e-commerce to allow small firms to participate in global trade.	No progress.
Promote a venture capital system with important direct links to university research and innovation to boost entrepreneurship.	Access to venture capital is being developed in co-operation with external partners.
Public sector efficiency and government reforms
Adopt key structural reforms to boost growth and enhance administrative capacity to improve overall reform implementation.	Public administration reforms have continued in different areas such as introducing mobility of civil servants and performance evaluation system, and the depoliticisation of secretary generals.
Speed up the modernisation of the public employment service.	A law to introduce a mobility scheme of civil servants across the public administration was approved in 2016 (Law 440/2016) and is being implemented. A law to rationalise specialised wage grids following the methodology of the unified wage grid has been approved. A new system has been introduced for the selection of public sector managers based on clear job descriptions, recognition of private sector experience and structured interviews. A performance evaluation scheme is being implemented, and is planned to be digitalised in 2018.
Reduce delays and backload of cases in the judiciary by using more e-justice tools, training judges, expanding out-of-court settlements, model cases and specialised competition courts.	Out-of-court settlements have been developed; priority is being given to develop specialised judges rather than specialised courts.
Increase reform ownership by quantifying and communicating the benefits of reforms. Improve data collection and dissemination to better monitor implementation and outcomes of structural reforms.	The General Secretariat for Coordination has been established. Website www.opengov.gr provides updated information on different government initiatives including recruitment, almost all legislation and policy initiative by the government but not quantification of reforms. Improved data collection through the labour and social security IT systems is ongoing.
Build capacity to assess the impact of reforms and reinforce co-ordination across line ministries.	Individual ministries and agencies are quantifying the effects of specific reforms, but not in a consistent or co-ordinated manner.
Empower the General Secretariat responsible for steering the reforms within the Prime Minister’s office, with adequate resources to arbitrate, co-ordinate and supervise implementation of the reforms.	General Secretariat for Co-ordination is intended to fulfil this role.
Improving spending effectiveness in health care
Target medical spending cuts. Further promote use of generics and cut excessive hospital administration costs. The rule imposing the replacement of only one in every five retiring civil servants should be relaxed in the case of nurses. If needed, the negative budget consequence can be offset by imposing a more stringent replacement rule for retiring doctors, given their high number.	Centralised health care procurement system; combat excess spending; hospital cost effectiveness and financial management; training of GP’s; Health Technology Assessment Centre; workforce contact. To be implemented in January 2018.
To the extent fiscally sustainable, continue to extend measures to ensure health care access for unprotected and vulnerable groups.	Social solidarity income recipients are eligible for access to free healthcare and pharmaceuticals.