Economic surveys and country surveillance

Economic survey of Greece 2007: Executive summary

 

Contents | How to obtain this publication |   Additional information

The following is the Executive summary of the OECD assessment and recommendations, taken from the Economic survey of Greece, published on 30 May 2007.

Contents                                                                                                                           

Growth performance over the last decade has been among the best in the OECD, though a precise calibration is not yet possible following the recent revisions to GDP data. High growth has been driven by a range of factors, some of which are transitory. It is particularly encouraging that growth has been sustained over the last two years, despite substantial fiscal consolidation, mainly being driven by investment and exports. However, significant further reforms are needed to ensure that good performance is sustained in the years to come. It is imperative to use this period of strong performance to tackle remaining weaknesses in product and labour markets and move fiscal policy further towards a sustainable position by vigorous continued consolidation and pension reform. The key challenge, in terms of political economy, is to manage the required reforms in a context where society may be unduly complacent because the “good times” appear to be continuing.

Fiscal consolidation has been substantial and should continue. Government debt and estimates of the prospective increase in fiscal costs from ageing are among the highest in the OECD. There is considerable scope for fiscal savings from reducing the high cost of public administration, raising efficiency in state-owned enterprises and further efforts to tackle tax evasion. But ensuring long-run fiscal sustainability will also require a fundamental overhaul of the pension system. There are substantial benefits from taking action early: debt service costs would be lowered; the tax burden would be much less skewed towards later generations; there will be more time for people to adapt; and fiscal policy would have scope to play a counter-cyclical role.

Labour market flexibility needs to be raised. While overall labour utilisation is quite high, overly rigid labour market institutions contribute to a low employment rate among the old, young and women. In particular the retirement income system provides strong disincentives to continue working, and the setting of minimum wages and strict employment protection legislation makes it difficult for first time entrants (mainly the young) and re-entrants (mainly women) to join the job market.

Human capital needs to be increased through improvements to the education system. A particular priority is reform of tertiary education where Greece currently has one of the most centralised and least flexible systems in the OECD. The recent reform is a clear and essential move in the right direction.

Product market regulation which hinders competition needs to be further improved. It has inhibited inward foreign investment in the past and has contributed towards a poor innovation performance. A particular priority is to further raise competition in network industries.

How to obtain this publication                                                                                      

The Policy Brief (pdf format) can be downloaded. It contains the OECD assessment and recommendations but not all of the charts included on the above pages.

The complete edition of the Economic survey of Greece 2007 is available from:

Additional information                                                                                                  

 

For further information please contact the Greece Desk at the OECD Economics Department at eco.survey@oecd.org.  The OECD Secretariat's report was prepared by Dave Turner, Vassiliki Koutsogeorgopoulou and Pamfili Antipa under the supervision of Peter Hoeller.

 

 

 

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