Regional Policy for Greece Post‑2020

1. Assessment and recommendations

Assessment

The OECD Territorial Review: Regional policy for Greece post-2020 provides comprehensive diagnosis and tailored policy recommendations on how to make the most of regional development policy in Greece after 2020.

After a deep crisis, started in 2008-09, the Greek economy initiated its recovery only in 2017, bouncing back in 2018 with a 1.9% growth rate, estimated to reach up to 2.3% in 2019. Unemployment – although still high – has edged down to around 17.3% in 2019 (from 27.5% in 2013 and 19.6% in 2018), with new jobs being created every day. The minimum wage was raised (by 11%) in 2019 for the first time since 2012, positioning Greece near the average of OECD member countries. Despite these positive developments, the current COVID-19 outbreak is slowing down Greece’s recovery efforts. For instance, the OECD estimates the COVID-19 outbreak to yield a 45% decline in international tourism in 2020; which will likely have a significant effect on the Greek economy as tourism accounts directly for 6.8% of the gross domestic product (GDP) and 10.0% of total employment in the country. OECD economic estimates anticipate a sharp decline in global GDP in 2020. The Greek Fiscal Council, a member of the European Union’s independent fiscal institutions network, estimated in March 2020 that for every 1 percentage point decrease in eurozone GDP, Greece’s GDP would slow by about 0.8%.

The 2008 global financial crisis had sizable consequences for Greece’s economy. GDP today is one-fourth smaller than it was in 2007, while GDP per capita is the third-lowest among OECD countries. In contrast, GDP in OECD countries recovered to pre-crisis levels by 2011 and, in 2017, it was 15% larger than in 2007. The crisis has not come equally across Greek regions. Greece now has the 9^th highest level of regional disparities in GDP per capita among 30 OECD countries. The greatest declines in productivity occurred in remote islands but also Western Greece and Attica. The latter, which contributes to 48% of national GDP and 43% employment by 2017, suffered disproportionally during the crisis, losing around 10% of its total population. Together with Central Macedonia, it experienced more than half (58%) of the total job losses in Greece, which amount to nearly 700 000. This economic shock was so sharp that Greek “lagging” regions have converged to Attica’s current productivity level – which remains below its potential. This may be considered the “wrong kind” of regional convergence.

Estimates in this review show that, at a growth rate of around 2%, Greece would recover to its pre-crisis level in 15 years. In contrast, if growth is restored to 3% in Attica, the recovery period in Greece would be halved to around 8 years. Thus, revamping the productivity of Athens is key to foster Greece’s national growth, especially under the current circumstances of a global slowdown due to COVID-19. The recovery in Attica could, therefore, have a very strong impact on the aggregate growth figures but it should not be isolated. Balanced and widespread growth in all Greek regions is needed. To that aim, a nationwide regional development strategy that can prioritise different policy responses, taking into account the different needs and characteristics of Greek regions can be an effective tool to restore inclusive growth across the territory.

European Union (EU) funds have played an important role during the recovery process: they represent more than 80% of Greek public investment and analysis in the review estimates that between 2009 and 2018 each euro of Structural Funds in Greece generated an extra 64 cents of GDP.

Greece has already undertaken an impressive number of nationwide structural reforms since the global financial crisis (from pension and tax reforms to justice, labour market, public investment, social, energy and environmental policies). Greece is also facing new development priorities from fostering digitalisation, improving entrepreneurial and business ecosystems, and addressing environmental challenges. At the same time, these new priorities must also tackle existing social challenges and mitigate rising inequalities.

This ambitious national strategy can be complemented by a place-based development strategy. Regions, cities, rural communities and municipalities should align objectives and all have an active role in meeting the economy-wide objectives while tailoring public investments and service delivery to local needs.

To fulfil this task, Greece will need to continue advancing the reform of its institutional and fiscal multi-level governance (MLG) system. Since 2010, Greece has established, a new architecture of the MLG system to deliver regional and local development policies. A number of improvements have been made and the shift towards a greater place-based approach to regional development policy is taking place, notably through: i) a decentralisation agenda, in particular regionalisation; and ii) a more strategic approach to EU funds management, including a greater regional approach in the 2014-20 programming period compared to the previous one.

These two agendas should not be seen in isolation given their strong connections: the process of decentralisation unavoidably has a significant impact on regional development policy and the management of EU funds. The priorities in the short and medium terms should be the consolidation of the changes that have been introduced by the decentralisation agenda and the new architecture of the management and control system of the EU funds for the current programming period. Indeed, more effective investments for regional development require:

1. Better functioning of framework conditions, in particular the decentralisation system (clarification in the assignment of responsibilities, greater subnational fiscal autonomy, greater differentiation in the assignment of responsibilities to reflect varying capacities of subnational governments).

2. Sustaining the progress in the governance of EU funds in the 2021-27 programming period, with a particular focus on regional operational programmes more targeted to local needs; and a more integrated/co-ordinated multi-level system as a whole. Improvements in the governance of EU funds may be used as a leverage to improve the whole multi-level governance system. A more strategic and reinforced partnership between the central, regional and municipal levels is not only important for the management of EU funds but for the public investment system as a whole.

Recommendations

The current COVID-19 outbreak is slowing down Greece’s recovery efforts. While the medium- and long-term impacts of COVID-19 remain uncertain and will vary between countries and industries, the Greek government will need to take co-ordinated policy action at the local, regional and national levels to minimise job losses and business closures in the immediate and medium terms.

To sustain Greece’s economic recovery from the global financial and COVID-19 crisis, this review identifies actions in five main areas for Greek regions to seize long-term development opportunities. These include:

1. Strengthening regional policies.

2. Fostering productivity, competitiveness and local job creation in all regions.

3. Fostering quality employment and social inclusion in all regions.

4. Enhancing connectivity and sustainable development in all regions.

5. Strengthening multilevel governance for regional development.

Strengthening regional policies

Strengthen the place-based approach to regional development

• Create a national place-based policy with a long-term vision. Regional policy supports job creation, competitiveness, economic growth, improved quality of life and sustainable development. Greece’s National Development Strategy is focused on delivering growth to all regions. Territorial policies are central to achieving a wide number of the policy goals in the strategy, and regional and local governments are critical to their implementation. However, these territorial dynamics are not fully elaborated in the strategy, which does not offer a comprehensive view on regional development; it does not discuss the policy mechanisms that can be used to implement regional policies and presents a wide range of sectoral policies for which a territorial lens is absent. Beyond the National Growth Strategy, well-defined territorial development policy should be explicitly stated at the national level, mainstreaming regional, urban and rural development with economy-wide structural and sectoral policies to better target and implement public investments.

• Prioritise place-based policies across different types of Greek regions and adapt structural policies to their needs and opportunities. OECD analysis shows four types of regions in Greece, each with specific strengths and weaknesses that require different policy responses. They are:

  • Metropolitan regions with developed research and technology capabilities and a potential to further diversify knowledge-intensive manufacturing and services (Attica, Central Macedonia).

  • Regions with a manufacturing base, gathering traditional industry sectors with a low level of innovation capabilities (East Macedonia-Thrace, West Macedonia, Continental Greece); these resource-rich regions face the challenge of modernising their industrial base, in order to generate higher-value activities and diversifying their economies.

  • Rural regions with local services and primary activities, and potential for innovation in the agro-food industry, also linked to tourism (Epirus, Peloponnese, Thessaly and Western Greece).

  • Insular regions with strengths in quality tourism and specialised agricultural products (Crete, Ionian Islands, North Aegean, South Aegean).

    Greece’s development strategies would benefit from a place-based approach where sectoral policies (support for private investment, infrastructure and human capital policies) meet and interact in each place, generating multiplier effects. Place-based policies also help to ensure that growth benefits reach different population groups and places – from continental, mountainous and island localities.

• Long-term evidence-based and integrated development strategies need to be elaborated at the regional and local levels. The capacity of regions and other local actors to identify their strengths and opportunities and to build on them is fundamental to the success of regional policies. In Greece, the current regional and local policies are mainly shaped by EU policies and are often delivered through the sum of many (often small-scale) projects which leads to duplication, high administrative costs and weak co‑ordination – including between local and regional governments. This is because subnational governments have struggled to think of policies in an integrated way that is connected to medium- and long-term development visions. This vision is needed to galvanise local development and involve a broad array of local actors across the public, private and tertiary sectors.

• Place-based policy intervention needs to be supported by quality data and public consultations. Despite efforts at different levels of government to improve the quality and relevance of public data, there is still a need to raise their quality to inform decision-making on local and regional issues. For instance, the Hellenic statistical authority should harmonise territorial, firm-level and employee-level data sets and improve both quality and accessibility so that disaggregated data can be statistically processed, data can be matched across sources and metadata is available to guide interpretation. The thematic coverage, currently focused mostly on economic and financial information, should also be improved to inform regional policies more widely. To improve relevance, a review of the definition of regions, rural and urban areas in Greek statistics would also be required as currently there is a mismatch between functional spatial units and what is represented in the data, e.g. for the region around Athens

Make better use of spatial planning and develop integrated perspectives at the regional level

• Facilitate and speed up regions’ transition to the new integrated approach to regional spatial planning. In 2016, Greece has set the framework (Law 4447/16) for a new approach to integrated regional spatial planning, which foresees a four-level top-down hierarchy where the two first levels (national-regional) have a strategic role and the third and fourth one (local) have a regulatory character. These strategic documents set development ambitions and help to co-ordinate and prioritise public investments. All regions must transition to this system in a timely manner and adopt plans. It is equally important that they are implemented through concrete actions and monitored on an ongoing basis. These plans should be elaborated by regions themselves through a strong process of public consultation. Spatial planning (including maritime spatial planning) should become an integral part of a region’s economic and social development across policy areas and should meaningfully engage a wide range of public and private local stakeholders, including the broader public.

• Align regional spatial plans and Regional Operational Programmes (OPs). Fostering co‑ordination among land use, sectoral and regional development policies including Regional OPs to facilitate the promotion and implementation of eligible projects and avoid unjustified hurdles linked to land use permissions. For example, this co-ordination could involve leveraging property taxes to ensure more desirable types of land use and avoid unintended outcomes. A better alignment of spatial planning with national and regional tourism policies should also be prioritised to lower the administrative burden on the tourism industry. Such spatial planning issues concern both urban and rural areas.

Develop an explicit national urban policy

• Strengthen the governance systems of the metropolitan areas of Athens and Thessaloniki. A more effective integrated governance and planning of Athens’ and Thessaloniki’s metropolitan areas is needed in order to deliver multi-sectoral strategies for economic development and better management of negative agglomeration effects. This could be done by:

  • developing specific partnership agreements or contracts between the largest metropolitan areas and the government (as in the United Kingdom, for example).

  • reforming the allocation of financial resources for metropolitan areas as, in order to be successful, metropolitan institutional structures should also enjoy a degree of decision-making authority over resources and own revenues. To start, specific tax regimes for inter-municipal groupings or metropolitan areas could be promoted without taking resources away from the municipalities.

  • developing comprehensive planning for metropolitan areas to connect spatial planning considerations with broader economic, social and environmental goals and objectives. In Attica, this could, for instance, be realised by integrating the multiple bodies dealing with metropolitan issues into the Region of Attica’s metropolitan committees. This could also serve to strengthen their role as an interface with the national and EU levels.

• Strengthen inter-municipal co‑operation to foster the role of cities and municipalities as economic development actors. In general, urban areas’ economic potential should be strengthened and linkages to surrounding regions should be improved for positive spill-over effects. Beyond metropolitan areas, there is a need to strengthen inter-municipal co‑operation more generally across Greece, including between small- and medium-sized municipalities and rural areas. Networks of small- and medium-sized cities should be encouraged to increase their ability to deliver services and economic development as well as to enhance rural-urban linkages. Inter-municipal co-operation can help address shared challenges such as population decline and the delivery of services for the ageing population. To ensure that instruments like inter-municipal contracts or co-operation agreements are indeed used, regional and national authorities should create financial incentives for municipalities to establish joint projects and services. Such institutionalised practices can complement the support to inter-municipal co‑operation and rural-urban partnerships provided through EU-funded investments, such as LEADER, Community-Led Local Development (CLLD) and Integrated Territorial Investments (ITIs) and render it more sustainable in the medium to long term.

Strengthen the co-ordination of rural development with sectoral policies

• Develop an integrated medium- to long-term overarching rural development strategy. Rural development is shaped by a range of additional policy areas, from transportation and ports to the provision and accessibility of education and health services. A rural lens on these policies from a range of national ministries is important. Consistency and co-ordination are needed between the central and sub-national governments and at the local level to integrate sectoral approaches, involve private partners and achieve the appropriate geographic scale. The need for a more integrated approach also applies to policies for different types of regions. Greece has no overarching rural development strategy apart from the European Structural and Investment Funds (ESIF) intervention; thus, it is important to develop enhanced co‑ordination of rural, regional, agricultural, fisheries and maritime policies to consider different development needs across regions and draw on their specific resources. Various co-ordination options may include special high-level units, integrated ministries, “policy proofing” and inter-ministerial co-ordination via working groups and formal contracts. Some OECD member countries have established a specific Council of Ministers with a rural mandate in order to address this issue. Beyond governance structures, the inherent silos between these policy domains can be also addressed at an organisational level. For example, relationships and knowledge sharing between ministries can be strengthened through opportunities for short-term secondments and co-ordinating professional development opportunities and staff training.

Foster rural economic diversification

• Support bottom-up initiatives beyond agriculture and traditional sectors. While this is also a goal of the Rural Development Programme, the diversity of Greece’s rural economies calls for a wider policy intervention by the national and regional governments to target these objectives more effectively. At the regional and local levels, the EU LEADER programme has played a critical role in reorienting rural development beyond agricultural policies in many EU countries and should be strengthened in Greece alongside CLLD while reducing the administrative burdens and financial requirements associated with those programmes. In the forthcoming EU Cohesion policy period, LEADER’s local action groups (LAGs) and CLLD should be used in Greece to more greatly involve private sector partners in determining local development priorities and shaping initiatives that can:

  • strengthen the tradeable sector in rural areas through value-added activities and linking up to export markets.

  • support the development of rural tourism in key rural destinations through quality tourism products and by linking up to local food and handicraft industries.

  • strengthen the valorisation of rural amenities and ecosystem services.

  • anticipate and adopt strategies to manage population decline in rural areas with respect to how services and infrastructure are delivered.

• Favour the digital transformation of the rural economy. The performance of Greece in the digital infrastructure is uneven and underdeveloped, especially in rural and remote areas. In terms of connectivity, small- and medium-sized enterprises (SMEs) lag in their high-speed broadband connections compared to large firms. Overall digital infrastructure needs to be strengthened and digital transformation of the economy sped up and sustained with dedicated legislative measures, financial support and incentives at the national and regional levels. Support should be given for developing smart cities and territories, extending coverage with high-speed broadband, addressing concerns about digital illiteracy and using technology to improve services for citizens’ well-being.

• Sustain the development of a broader view of innovation – beyond the traditional science and technology-based model through better-tuned regional smart specialisation strategies. A large share of the firms in rural, regional economies are small and micro enterprises with no formal research and development (R&D) activity but in some cases with the ability to develop non-standard forms of innovation, for example in the delivery of services or in processes or goods that are not export-oriented but that can lead to increased productivity and improved well-being in the areas concerned. In a rural context, smart specialisation strategies can become a way to facilitate a stronger growth process if the scope of the opportunities for support is expanded beyond the usual format of export-oriented high-technology products and formal research. Thus, smart specialisation should not be seen as being about technologies as such but about knowledge and its application and this applies to all sectors, including agriculture and craft-based industries.

Strengthen the competitiveness of the agro‑food sector from the bottom up

• Enhance the competitiveness of the agro-food sector. Targeted policy actions are needed from the national and regional governments to raise skill levels in the sector, strengthen the existing larger farms where it is possible to increase economies of scale and develop the potential of smaller- to medium-sized ones to produce high-quality or niche products. Specific goals should include quality export promotion strategies and local connections to the supply chains catering to tourism and the local economy. Strategies to strengthen Greece’s regional agriculture-aquaculture and agro-food competitiveness are threefold:

  • Develop new and more focused measures to preserve and consolidate agricultural land. Land consolidation can help to improve the spatial configuration of dwellings and service structures, reducing the number of small-scale inefficient farms, offering the opportunity to create diverse landscapes with conditions for multifunctional development of rural areas, including recreation and tourism. Greece has had several policies to prevent the abandonment of rural areas and to improve land consolidation. Despite this, progress in land consolidation has been slow and should be reinforced.

  • Strengthen demand-driven farm advisory and extension services. Agricultural advisory and extension services share research and innovative practices and create sets of farming practices tailored to the needs and abilities of farms in a particular region. Such services are all the more important in Greece’s regions because of the low innovation and productivity of Greek agriculture. There are several options to strengthen agricultural advisory and extension services across public, private and hybrid models. However, the Greek situation with a large share of very small low-income farms makes paying for private advisory services challenging. Greece also urgently needs to strengthen the connections between advisory and extension services and scientific academic and research institutions – this could form a hybrid model with some fee-paying services. Public policies should promote collaborative schemes involving digital technologies.

  • Modernise producer groups and co‑operative enterprises to promote value-added processing, production and marketing and to capitalise on Greece’s rich agricultural diversity and regional identity. One possible solution is for farmers to form a production and marketing co-operative that provides advice on production methods to assure uniform and high-quality products, and pools production to facilitate sales to distributors and processors. The public sector can play an important role in both strengthening the attractiveness and efficiency of collective initiatives and co‑operatives through targeted tax policies and a favourable legislative environment.

Fostering productivity, competitiveness and local job creation in all regions

Focus support to regions’ key economic specialisations

• Further differentiate Smart Specialisation Strategies among groups of regions in Greece. Through reinforced and differentiated Smart Specialisation Strategies, regional productivity and competitiveness could be improved by focusing on areas of competitive advantage including tourism, manufacturing and logistics, and food production amongst others. Regions with more developed research and technology capabilities and a potential to diversify towards knowledge-intensive manufacturing and services should be sustained with ad hoc measures. For example, the metropolitan regions of Athens and Thessaloniki should be supported in further developing research and technology capabilities and foster the potential to produce knowledge-intensive manufacturing and high-value tradeable services for the EU. Regions with a traditional manufacturing base should prioritise support for the regional innovation ecosystem, reskilling of workforce and SME services and incubators. Rural and remote regions (including islands) should invest in digital infrastructures and upscaling local services. Not all regions in Greece have strong science- and technology-based innovation systems, for instance, when universities are absent. This would require an approach to smart specialisation that takes a broader perspective on innovation as well as co-ordination of smart specialisation strategies across regions.

Strengthen support to SMEs for local employment generation

• Mobilise regional networks of entrepreneurs and researchers to better link research and businesses, through:

  • strengthening the role of Regional Councils for Research and Innovation. The Entrepreneurial Discovery Process in each region and the role of Regional Councils for Research and Innovation can be a relevant step to better support the design and implementation of regions’ smart specialisation strategies. With sufficient resources, these councils could also determine areas of focus for collecting and analysing diverse information held by entrepreneurs or embedded in firms and public institutions, foster co-operation across regions and better connect academia and businesses to encourage investments in “home-grown” innovation instead of purchasing it.

  • consolidating the knowledge triangle of education, research and innovation by place-based policies that promote locally research, technology diffusion, entrepreneurship and fostering closer ties between businesses, research centres and universities. This is key to support SMEs and businesses generation in all the regions. While Regional Councils for Research and Innovation can become an important mechanism to strengthen the connections between research centres, universities, enterprises and start-ups, other structures such as digital hubs, innovation districts etc. are also needed and should be set up on regional and inter-regional bases. To do so, Greece should establish a comprehensive programme providing targeted and continuous measures, for instance using the Hellenic Foundation for Support and Innovation to put out revolving calls aligned with smart specialisation and including incentives for research-enterprise partnerships.

• Strengthen and expand business services for SMEs in all Greek regions. Greece should move towards a new and more flexible approach to supporting SMEs (and industry), with greater regional-level involvement. The country currently does not have a well-developed system of business advisory services and there is a strong need for one-stop-shop services that can help local businesses navigate regulations, access finance and connect to the relevant networks and expertise. Support instruments should consider the demand side, for instance targeting start-ups or lagging companies and exploring both competitive and co-operative mechanisms for supporting innovation. Concrete measures should be considered according to regions’ needs and include: establishing incubators for small firms, expanding e-services for firms, SMEs’ export capacities (e.g. through subsidising the hiring of temporary export managers), supporting the establishment of entrepreneurial networks for knowledge and practice sharing and further developing social enterprises.

Develop integrated national and regional tourism strategies for the medium to long term

• The national and regional governments should use tourism as a catalyst for regional development. The current COVID-19 pandemic is an unprecedented crisis for the tourism economy. OECD estimates on the COVID-19 impact point to 60% decline in international tourism if recovery starts in July 2020. This could rise to 75% if recovery is delayed until September and up to 80% if recovery starts in December 2020. Domestic tourism will restart more quickly but will not be able to fully compensate for the decline in international tourism. In Greece, the consequences can be severely negative, especially for regions such as Attica, Crete, the Ionian Islands, Khalkidhiki and the South Aegean,. Nevertheless, tourism has the potential to contribute to a quick recovery and to be a catalyst for regional development. The COVID-19 crisis can be seen as an opportunity to accelerate the transformation of the tourism economy. Developing a policy targeted to spread the economic benefits of tourism further afield should be considered a priority for Greece and its regions. Such a policy can help spread the benefits of tourism away from major destinations such as cities, historical sites and coastal areas to lesser developed, often rural, areas where the opportunities for the development of other industries may be limited. The development of tourism in these less developed areas should be based on their tourism potential and take an integrated policy perspective. This is seen as an effective way of focusing resources (including infrastructure investments) and harnessing stakeholder engagement. Destinations, in turn, require their own policies and plans to achieve successful, well-supported and integrated tourism development. Frameworks and guidelines for this can be provided from central government.

• Connect tourism to local value chains by:

  • fostering integrated approaches to tourism thematic product development and marketing. Product development should take into account, for instance, the close linkages of tourism with gastronomy and culture. Well-being and medical tourism are also an important segment for Greece, particularly for the ageing population, a demographic segment whose importance is growing both in terms of market size as well as spending power.

  • promoting vertical production processes to enhance the delivery of high-added-value, certified food products and strengthening the agricultural production base of tourist areas in order to address the shortage (e.g. in islands) of resources required by residents and tourists.

  • developing all-year-round supply chain networks, in co‑operation with local suppliers and regional logistics centres. Supply-side policies to improve competitiveness may also include investment promotion and the simplification of business regulations.

  • developing a comprehensive agro-tourism policy. Agro-tourism in Greece was initiated in the 1980s, however a structured agro-tourism policy is still missing. This type of tourism has been based heavily on individual initiatives and has been facing several difficulties due to the lack of experience and entrepreneurial skills, as well as correct infrastructure. Greece is starting to use quality labels to create synergies with the local agro-food sector and encourage tourism in rural areas. This practice should be further developed.

• Promote measures and actions in regions and localities targeted to foster digitalisation in the tourism sector. Both destinations and tourism businesses need to fully embrace digitalisation to foster their competitiveness and sell their products in the domestic and international markets. There are three main areas of action to support digitalisation in the tourism sector. first, branding and marketing to better communicate with tourists, second, to collect information and data on tourism supply and demand; third, to prepare the tourism workforce and develop the availability of skilled human resources.

Fostering quality employment and social inclusion in all the regions

Facilitate the creation of quality jobs and support the development of relevant skills locally

• Align education and skills provision with local labour markets. Greece has achieved high participation and attainment rates in education but the country needs to address the simultaneous issues of over- and under-qualification. A forward-looking skill strategy, including at the regional level, is needed to ensure a better match between the skills youth acquire at school and those needed in the labour market. Universities should offer training programmes that match the needs of regional employers for specialised skills. Training in financial literacy should be strengthened and youth should benefit from specific programmes to start businesses. Employers themselves should be encouraged to employ low-skilled youth and to expand quality apprenticeship and internship programmes. Regions should draw plans for continuous vocational training, targeting active adults, employees, job seekers, civil servants, freelance workers, entrepreneurs, ensuring the coherence of vocational training according to their economic and social priorities, in consultation with the state and social partners.

• Strengthen mechanisms and actions to better match job seekers and employers in local labour markets. Greece is among the OECD countries with the highest qualification mismatch rates in their workforces. Better matching job seekers with employers through improved vacancy registration and access to information as well as engagement with reinforced local employment offices can reduce unemployment, support labour productivity and firm growth. This would be particularly beneficial for SMEs that often lack capacity to manage recruitments. In view of the relatively centralised design of employment policy in Greece, the development of better regional data and information as well as a larger use of Local Development Pacts, whose design and implementation involves local actors and stakeholders, could help ensure the relevance of employment policies for local needs and economic opportunities. The tourism sector, which faces labour and skills shortages, should be supported by improving the awareness and attractiveness of careers in the sector and ensuring the availability of relevant training programmes linked to sectoral and local needs.

• Develop regional strategies to retain youth and talents. Although demand for talent and brain drain are both driven by job markets, ad hoc policies or measures implemented locally or regionally to retain, attract or regain a highly educated workforce can be also effective. Regions and cities could: i) better identify the needs of talent, for example by establishing a dialogue with young people; ii) improve co‑ordination with relevant players benefitting from the presence of talent in the territory; iii) identify and support key driving sectors for retaining/attracting talent; iv) stimulate the recruitment of outside talent; v) mitigate/remove structural impediments/barriers to attracting international talents; vi) co‑operate with other authorities facing the same challenges with regards to highly skilled workers; vii) improve broadband connectivity in rural and remote areas to improve opportunities for youth; and viii) leverage international networks, e.g. through the Greek international community, establishing links between youth, businesses and academia and facilitating business creation and investments, also through mentoring programmes and economic diplomacy programmes (e.g. by the Ministry of Foreign Affairs).

Reinforce local services to reduce poverty and support social inclusion

• Strengthen awareness and the ecosystem to support the social economy in all Greek regions. Addressing the diverse challenges of social inclusion requires Greece’s governments, whether at the national, regional or local level, to work with other actors, including the private sector and social economy. In Greece, the social economy, in particular, can play an important role in identifying local needs and responding to social and economic challenges on the ground, also for groups that are “hard to reach” through other measures. Social economy organisations such as associations, co-operatives, mutual organisations, foundations or social enterprises are driven by the goal of realising a social impact and rely on community resources such as volunteers to support social inclusion. The national and subnational governments can support those organisations by raising awareness for their work, provide support structures for developing social enterprises, facilitate access to funding sources and foster the acquisition of social-entrepreneurship skills in the education and training systems. To encourage employment creation through social economy organisations, it is important to strengthen the ecosystem by ensuring stable public financial support, enabling dedicated measures in public procurement and providing subsidies for the employment of disadvantaged individuals.

• Reinforce actions at the national and regional levels to better connect local labour markets with existing social services. Greece should further build on existing good practices providing local labour market activation and connections to social services such as the support schemes to the Roma community and migrants as well as community centres, whose network should be strengthened, further developed nationwide and made sustainable over time (beyond EU funding). While regions already have a mandate for designing and implementing regional action plans for social inclusion, they should require more and better-integrated data on social vulnerabilities, labour market and entrepreneurship aspects to inform more comprehensive social interventions across sectors and tailored to territorial needs.

Enhancing connectivity and sustainable development in all regions

Enhance regions’ connectivity to meet current and future needs

• Advance in the National Digital Strategy and strengthen digital infrastructure across regions, particularly in remote places. Greece should keep investing in a comprehensive digital strategy to enable its economic transformation, reap productivity gains, improve public services and the quality of life of citizens. Such a strategy should include: i) ensuring inclusive access to digital infrastructures, especially in rural areas and on islands; ii) accelerating the transition to high-speed Internet; iii) providing an adequate legal framework; iv) building a modern e-government with strengthened in-house capacity; and v) helping different economic sectors and SMEs take advantage of productivity-enhancing digital tools.

• Develop an integrated plan for maritime, air and land transport, in order to achieve the timely transition of residents, visitors and goods to and from regions and islands. Crucial for supporting growth is the presence of accessible, high-quality, resilient, reliable and sustainable infrastructures. The aim should be to develop and upgrade road and rail networks and improve the efficiency of maritime transport, which is important for Greece’s territorial cohesion. Upgrading commuting and communication between the islands and the mainland should be a further priority.

Ensure sustainability from the bottom up and protect natural assets in Greek regions

• Fully implement Greece’s Circular Economy Strategy, enforcing its action plan in all the regions. The Greek government has set as a priority the implementation of circular economy objectives through a Circular Transition Business Plan of Greece. It is necessary now to speed up and fully implement the Circular Economy Strategy, enforcing its action plan on the ground. Action should be accelerated at three levels: i) setting criteria for green and circular public procurement; ii) promoting industrial clustering of businesses for supporting circular entrepreneurship, environmental industry, digital transformation; and iii) stimulating employment through measures to strengthen the collaborative economy and small-scale entrepreneurship. In particular, the implementation of those actions outlined in (ii) and (iii) will necessitate the use of a territorial lens to be successful.

• Increase the commitment to the environmental agenda at the subnational level. Greece needs to build on existing progress in implementing national and EU environmental legislation and land use policies to preserve its environmental capital. This implies:

  • harnessing the potential of subnational governments to deliver sustainable development, including: i) strengthening regional and local data collection, statistical systems and methodological approaches to track policy implementation; ii) mobilising funding to help subnational governments address environmental priorities (e.g. developing a green fiscal strategy, making greater use of land value capture tools, green bonds etc.); iii) fostering effective horizontal co‑operation, in particular in metropolitan areas - for instance financing instruments (e.g. congestion charges, eco-taxes) should be applied at the regional/metropolitan scale, not only in city centres; and iv) speeding up and completing the legislative systematisation and mapping (e.g. “forest maps”) initiated with support from the European Commission.

  • making improvements in energy efficiency a major priority for subnational governments. The necessary completion of the National Energy & Climate Plans (NECPs) for 2021-30 within the EU “Clean Energy for all Europeans” strategy will be an important step forward. To succeed, clean energy investments need to carefully consider different regional needs and contexts. For instance, local authorities should be supported in implementing plans for decarbonisation, renewable resources, energy savings, demand-side management and the production of clean electricity. The monitoring of the impact of such measures should be reinforced.

  • continuing to upgrade waste management infrastructure in “more-in-need” regions/municipalities (e.g. islands), accelerating the construction of appropriate waste treatment units and increasing the utilisation of public-private partnerships and institutional contracts.

Strengthening multilevel governance for regional development

Consolidating the implementation of the decentralisation and regionalisation reforms

Better align fiscal and administrative decentralisation

• As part of the implementation of the Kleisthenis reform, further clarify the responsibilities and functions assigned to each level of government, notably for infrastructure and transport, urban planning, environmental policy and energy policy, in order to reduce the space for conflict in its allocation. Clarification of responsibilities is particularly needed for the competencies of regions and deconcentrated authorities.

• The Inter-ministerial Committees for the Redefinition of Competences and Procedures introduced by the Kleisthenis reform should consider:

  • ensuring a balance in the way different responsibilities and functions are decentralised, i.e. ensure that the various responsibilities are decentralised to a similar extent.

  • exploring the possibility of increasing the number of exclusive competencies for regions and/or municipalities and reducing the number of shared ones.

• Put in place a permanent committee within the Ministry of the Interior to evaluate every new bill that involves the transfer of responsibilities foreseen by the Kleisthenis reform.

• Revise the criteria for the allocation of state grants to municipalities. In particular, consider specific provisions or complementary indicators for insular and mountainous municipalities or localities that receive the most important influx of tourists at certain times of the year.

• Give subnational governments greater tax autonomy, i.e. more taxing power over rates and bases, in particular concerning property tax; tourist tax and other local taxes, and update the municipality residents’ registry, to have more accurate property tax collection.

• Given the very low subnational debt, there is room for manoeuvre to enhance borrowing at the subnational level to finance investment projects (golden rule), in particular for large metropolitan areas, in a prudent and controlled manner. This needs to go hand in hand with the development of a clear set of fiscal rules for “responsible borrowing”, including regular audits and controls, and enforcement mechanisms and sanctions for non-compliance. The use of bonds may be developed in Athens and Thessaloniki.

• There is room for manoeuvre to make more use of tariffs and fees, which are currently very low by international standards, especially for urban transport in large cities. Land-based financing might be introduced.

Further differentiate territorial governance

• Introduce more differentiation in the allocation of competencies to reflect not only geographic conditions but also different local government capacities. There are different ways to implement differentiated decentralisation according to the capacity and performance of municipalities: devolving additional competencies to the most capable municipalities; allocating additional fiscal powers to municipalities with greater financial and technical capacities (e.g. access to borrowing, tax power, ability to define user fees and tariffs, etc.); and simplifying reporting mechanisms of weaker municipalities to alleviate the administrative burden.

• Move forward with the decree allowing for territorially specific policies and the possibility for asymmetric decentralisation provided for by the Kallikratis Law, with differentiated sets of responsibilities given to different types of regions/cities, in particular to island municipalities in the domains of agriculture, natural resources, transport and planning and environment.

• Greece may encourage such differentiation through pilot experiments and on a voluntary basis, as has been done by different OECD countries. The system of “municipalities with extended powers” put in place by Columbia or the Czech Republic may be particularly inspiring for Greece.

Strengthening the Greek multilevel governance framework and regional development: A special focus on the multilevel governance of EU funds

Further consolidate the progress made in 2014-20 for the overall architecture of the Partnership Agreement (ESPA) system

• For the next (2021-27) programming period, Greece should focus on strengthening the existing management architecture instead of introducing new changes, which would bring further administrative costs and uncertainty. In particular, the delimitation and separation of the strategic planning functions from the management and implementation of the Operational Programmes (OPs) at the national level in the 2014-20 period should be consolidated.

• At the regional level, such division could be explored in the future – with regional Directorates of Development Planning taking on the equivalent role of executive units – if and only if regions have the appropriate human resources in terms of quantity and expertise.

• To consolidate the important progress made in the 2014-20 period, improvement efforts need to be focused on three dimensions: i) responsibilities and co-ordination: better delineating responsibilities and strengthening and deepening co‑ordination mechanisms, especially between the national and subnational levels; ii) administrative capacities: reinforcing the administrative capacities of the different parties with a special focus on beneficiaries; and iii) administrative simplification: continuing the efforts in streamlining the rules and procedures to navigate within the management and control system (MCS) to increase efficiency and accountability.

• Strengthen the role of the executive units by better clarifying and communicating their role and responsibilities to all the parties involved in the planning and management of EU funds as well as ensuring that they all have the adequate personnel and internal capacities to fulfil their responsibilities.

Strengthening co‑ordination across sectors

• Implement systematic co-ordination of policy priorities and collaboration on policy design and implementation (on the content of the OPs, the call for projects, their management and evaluation) among the different actors of the MCS. Greece would, for example, benefit from integrated outcome indicators for the projects’ monitoring defined by all parties, beyond the sectoral output and impact indicators.

• Better co‑ordination between the Managing Authorities implementing state aid actions and State Aid Special Service are also necessary. This co‑ordination could be improved by setting up a platform and/or a state aid database with direct access by the Managing Authorities (MAs). At the same time, it could be of help developing standard templates for state aid calls for proposals with reference to the institutional framework and, consequently, continuous updating in a database/platform.

• Improve the functioning of the Monitoring Committees and transform them into effective steering groups that ensure better use of funds by improving the communication among members as well as ensuring clearer communication of what is expected from these bodies. To facilitate their task, a smaller but potentially more targeted Monitoring Committee in terms of representation could be more functionally operational and efficient.

• Better exploiting the synergies and complementarities within the Managing Authorities, by harmonising the working culture and management process of projects with different sizes and scope, among others.

Building stronger partnerships with subnational governments

• For the next programming period, the 13 regions with cumulated experience can have a more prominent role, in particular in the definition of priorities to be included in the Regional Operational Programmes (ROPs). National ministries, MAs, regions and beneficiaries responsible for the implementation of the Partnership Agreement need to work more closely together on the preparation, implementation, monitoring and evaluation of the different programmes and projects.

• Improve the co‑ordination between the central, regional and municipal levels by strengthening the existing formal co-ordination mechanisms to further improve their impact and concrete outputs. National ministries, MAs, regions and beneficiaries responsible for the implementation of the Partnership Agreement must work systematically more closely together on the preparation, implementation, monitoring and evaluation of the different programmes and projects. For this, the role of municipalities’ regional associations in formulating common positions and issuing eligible programmes to be considered for incorporation into the ROPs lust also be strengthened.

• Adopt a more systematic approach to co-ordination and collaboration, especially with regards to beneficiaries (municipalities), disseminate best practices in project preparation.

• Establish regular opportunities for two-way communication between Managing Authorities (Mas), Intermediate Bodies (IBs) and beneficiaries regarding changes in regulations, processes or programmes to contribute to reducing project delays.

Reinforcing the capacities of all actors and institutions

• Staff shortages need to be addressed. Ad portas of the new programming period, the hiring of new personnel is a top priority; new staff needs to be involved from the planning stage of the new PA. Special services are in particular need of lawyers (particularly in the field of public procurement) and specialists in information technology (IT) and software programming, financial instruments, auditing, accounting, and local and regional development planning.

• For the next programming period, Greece may consider activating the register of freelance engineers that was considered by law 4314/2014 to support weak beneficiaries that lack technical staff.

• Develop a competency framework within MAs for the optimisation of human resources.

• Promote inter-regional collaboration to find innovative solutions to recruitment challenges. This has been carried out in Italy for example, in the regions of Calabria, Friuli-Venezia-Giulia and Umbria. These three regions have collaborated to set up a registry of chartered accountants specialised in programme management and control and co-financed by ESIF.

• Focus extensively on building the planning capacities of the 13 regions. Regions should gradually internalise tasks linked to the planning process that, during the last years, have been done mainly by external consultants. The degree of differentiation of the ROPs should be assessed, to make sure they reflect regional needs and priorities.

• Further expand the capacity-building activities that the Management Organisation Unit of Development Programmes (MOU) offers to regional MAs and, in particular, to beneficiaries. Develop targeted and dedicated actions to help small municipalities and their institutions to improve their technical, managerial and organisational skills for the implementation of their projects. This needs to be done after a comprehensive review of the training needs of operational staff and managers in regional MAs and an assessment of staff shortages.

• To better target the support, the MOU could also expand the geographical coverage of their taskforces, which are currently present in some areas of Greece, making it easier to address quickly any local requests.

Streamlining the rules and procedures for the management of EU Structural Funds

• Introduce flexibility and differentiation in the regulatory framework depending on the size of projects. Currently, the MCS requires the same amount and type of documentation and licenses, number of approvals, and obligations (e.g. to apply to an “open tender”) for large and expensive projects as it does for small and less expensive ones. A more flexible regulatory framework might ensure that resources are used in a more efficient way by responding more effectively to different needs tailoring responses to specific challenges.

• Activate the MCS Network. The National Co-ordination Authority (NCA) needs to activate the MCS network, including actors from all levels to serve as a consultative forum as well as a platform to share information and experience on critical matters such as system amendments, legal framework amendments and their impact.

• Diagnose the regulatory bottlenecks in the use of EU funds at the country level to identify where simplification and flexibility are needed.

Strengthening the overall multilevel governance system for regional development and public investment

Improving inter-sectoral and vertical co‑ordination

• Establish a co-ordination platform (which could be an inter-ministerial committee) to define the territorial development policy priorities of Greece. Setting up a cross-ministerial committee, including subnational actors, on regional development policies and investments would guide and complement the work done at the technical level by the numerous thematic networks and committees. Out of a sample of 27 OECD countries, 20 have put in place a permanent inter-ministerial committee on territorial development issues; Greece is therefore an exception in not having such a body.

• Greece could strengthen and expand the scope of the already existing contracts to transform them into broader “territorial contracts” promoting specific territorial goals and regional development priorities. Greece could follow the example of France that has a long tradition of state-region planning contracts. Contractual multi-year arrangements would also strengthen multi-sector investment approaches that go beyond EU funds.

Making co‑ordination across municipalities and regions more efficient

• Regions need to further pro-actively support projects that require cross-jurisdictional co-operation, in particular regarding weaker and rural municipalities. They are the ones that can organise peer learning, offer technical support and act as a political facilitator.

• The central governments can also create financial incentives whereby municipalities can access higher funding amounts for joint projects or shared services.

• Alternatively, Greece can promote co-financing arrangements for projects between the national government and municipal networks. This has been done by Portugal, for example, using multilevel contracts for this purpose.

Building trust among parties

• Pursue the efforts to strengthen transparency. Open data sources need to be redesigned to be more functional and usable. There is a need for more advanced tools mainly for data discovery, data visualisation (e.g. maps and charts) and users’ feedback.

• Further develop the national government’s website to track the implementation of the National Strategic Reference Framework (NSRF) to make data clearer and useful to understand local issues to support decision-making. This platform could consider all public investments and not only the ones funded through EU funds. Improve the consistency of the data sets so that the name of regional units does not change over time, for example, and so that they are ready to be statistically processed. Use the same “hierarchy” to present data.

• The central level has a key role to play in facilitating data and encouraging its use. For example, many countries in the OECD have digitised their planning documents (e.g. France, the Netherlands). The KOSTRA system in Norway has facilitated “bench-learning” and, by this means, informs policy-making.

Reinforce the administrative capacity of regions and municipalities

• Regions and municipalities should implement strategic workforce planning. For this, they should conduct an adequate and rigorous competency assessment of the capacity gap of municipalities and regions. In this task, it is important to distinguish between the short-term operational dimension and the longer-term strategic dimension.

• To overcome low salaries and attract qualified personnel, Greece could put in place incentives for public administration employees to move to smaller and remote municipalities, that might take the form of career advancements, allowances for housing and transport to personnel relocating.

• Introduce new IT tools or joint e-government platforms to narrow the gaps in capacity across regions or localities and facilitate peer learning. For example, Greece may be inspired by KiTerritorial which is a web-based toolkit developed by the Department of National Planning in Colombia that offers specific instruments to support local leaders in the formulation of their territorial development plans (PDT).

• Greek regions need to take a more proactive role in capacity-building processes to benefit municipalities in a more targeted way. Regions could, for example, directly support municipalities through technical assistance to prepare investment projects or planning instruments. Regions could also take a more proactive role in supporting critical projects that require cross-jurisdictional co‑operation and in encouraging peer learning practices. They could also have the mandate to incentivise municipal co‑operation for investment projects financed through the national investment programme or EU funds, offering technical support and acting as a political facilitator

Simplifying rules to design and implement regional development policies more efficiently

• Simplify legal checks for certain actions as all municipal and regional authorities’ decisions must be legally vetted by the state decentralised authorities which are often viewed as a source of considerable delays and bureaucratic impediments.

• Develop guidance on the most effective and efficient means of reducing regulatory burdens, including licence/permit arrangements, minimising reporting and record-keeping requirements, monitoring/testing requirements and enforcement and inspections procedures.

• Further improve Law 4412/2016 on public procurement. In particular, it could be considered merging stages of the bidding process (dead times) from the notice of the project to contracting. The time required for decentralised administrations to preapprove projects, usually leading to a 1-2 month delay for technical projects, could also be shortened. For further simplification, when the law is amended, a transitional period could be given to correct the standard tender documents.

• Introduce more effective and better-defined time limits into legal bases that might be accompanied by “silent-is-consent” rules, implying that if an authority has not responded, the applicant can assume the request was authorised.