Greek public enterprises- Challenges for reform
Economics Department working paper 214. By Paul Mylonas and Isabelle Joumard.
A successful reform of public enterprises would improve productivity in key sectors of the Greek economy, and thus provide essential inputs at lower cost to the economy as a whole. Reforms would need to address the factors that are responsible for the poor performance of Greek public enterprises. First, labour costs are high and productivity low in international comparisons. Second, there are wide technology gaps between Greece and other OECD countries. Third, Greece's public enterprises fulfil heavy public service commitments without matching compensation. As a result, prices are often out of line with prices elsewhere. In recognition of the large drag on the economy, as well as the burden on the budget, the Government has embarked on a programme to revitalise inefficient public enterprises. The objective of this paper is to analyse the main issues concerning the public enterprise sector and assess the current policy framework, as well as planned changes to it. First, the key features of the public enterprise sector are outlined, including their impact on the public finances and product and labour markets. Second, recent changes in government policy are reviewed. Third, the economic conditions of the main sectors are examined (e.g. pricing policy, employment and compensation policies, investment programmes and technology lags, and the potential for enhancing competition). Fourth, an attempt is made to quantify the reduction in prices and the potential gains in output and employment for restructuring public enteprises and raising competition in their respective sectors. The paper concludes with a set of recommendations based on OECD member country experience.
Long abstract
