Greece is among those EU countries where the real GDP grew faster (2.3%) than the euro area (EA) and the European Union (EU27) averages (0.85% and 1.02%, respectively) during 2023-2024. In addition to lower unemployment and a higher labor force participation rate, the economic activity in the country has been considerably boosted by gains in efficiency, higher-quality investment, and increased capital productivity compared to previous years. Specifically, in 2024, compared to 2023, slight improvements are observed in all productivity metrics reported here, including labour productivity in terms of GDP per worker (1%) and GDP per hour worked (0.77%). To the contrary, the EA19 and the EU27 presented zero or negative productivity growth, and very small productivity growth, respectively, between 2023-2024. The rates for labour productivity in terms of GDP per worker were 0% and 0.29%, and in terms of GDP per hour worked -0.16% and 0.34%, respectively.

Regarding the coming years, the productivity of the Greek economy is expected to grow, with a total increase of 2.3% in terms of GDP per worker and 2.0% in terms of GDP per hour worked in 2026, compared to 2024. The corresponding productivity growth in the EA19 and EU27 is expected to be slower than in Greece during the same period (2024-2026), namely, 1.6% and 1.2% in terms of GDP per worker and 1.3% and 0.6% in terms of GDP per hour worked, respectively. However, these improvements cannot lead to a substantial convergence with Europe. In particular, in 2024, the Greek GDP per worker remained at about 52% of the EA average and 57% of the EU average, while the Greek GDP per hour worked was even lower, namely, 46% of the EA average and 40% of the EU average. These productivity gaps are expected to remain basically the same during 2025 and 2026.

The total factor productivity (TFP) in 2024 grew by 1.1% compared to 2023, and its upward trend also remains modest and stabilised. From 2022 to 2024, capital intensity contributed only marginally to labour productivity growth, showing stagnation or underutilisation of new capital and the need to improve the quality of investments to translate them into tangible productivity improvements. Moreover, capital productivity shows signs of normalisation, with a growth of 1.5% in 2024, signifying the more efficient use of physical capital in the production process, which can lead to higher overall economic growth and help mitigate the effects of labour shortages. These productivity trends underscore the need to expedite the implementation of broad-based reforms that strengthen domestic productive capacity and correct the structural imbalances that have long constrained sustainable growth and the country’s resilience to external economic shocks.

The ongoing fiscal consolidation, the reduced debt-to-GDP ratio and the sizable surplus, which is attributed to both the public expenditure reduction (by 1.5 pp of GDP from the previous year) and the public revenue increase (up by 1.1 pp of GDP), would facilitate investment in technology and innovation in strategic sectors (e.g., raw materials and agriculture, defense, clean energy, and bio-economy) to reduce dependence on imported capital goods. This would also enhance education and vocational training systems to equip the workforce with the skills needed in high-tech manufacturing and other advanced sectors.

Greece exhibits a pronounced decline in government effectiveness and remains below both its pre-crisis levels and the EA average. During 2007-2023, it is positioned among the countries with the highest levels of public expenditure (as % of GDP) and notably low levels of public sector performance. This persistent gap suggests structural weaknesses in public administration service delivery, policy implementation, and the inefficient management of public expenditure. Policy efforts should emphasise strengthening public financial management by adopting outcome-based budgeting, enhancing transparency, and reinforcing accountability in the allocation and use of public resources.

Regarding R&D efficiency, Greece demonstrated an upward trend during the last decade, strengthening its national R&D ecosystem, which is underpinned by significant public sector funding and an expanding R&D workforce. However, it continues to lag behind the EU27 and EA20 averages in terms of the R&D intensity and GERD per inhabitant, while the business sector remains under-engaged. This is reflected in lower levels of business R&D intensity and a comparatively smaller share of R&D personnel and researchers. While scientific output relative to R&D expenditure – measured via publications and citations – is comparatively strong, the conversion of knowledge into patents and high-tech exports remains notably weak, with Greece ranking near the bottom among EU member states on these indicators. The relatively high share of R&D personnel in higher education institutions, coupled with the low engagement of the business sector in R&D activities, points to an innovation ecosystem that is heavily academic and public sector-driven but less integrated with private sector innovation and commercialisation.

As far as digitisation is concerned, despite the significant efforts of the Greek economy during the last few years, and, particularly, after the COVID-19 outbreak, Greece lags considerably behind most EU partners in digital competitiveness. According to the IMD World Competitiveness Ranking (2025 edition), Greece’s digital competitiveness improved by 3 ranks (compared to the 2024 edition), to the 49th position among 67 economies and 23rd among the EU26 (except Malta). Furthermore, according to the Digital Economy and Society Index (DESI), while the digitisation of the public sector has moved forward, Greece ranks 21st and 22nd in the digital public services for citizens and business, respectively.

Greece has also lost ground in overall competitiveness and ranks 50th among 69 economies globally, and 22nd among the EU26 member states that are included in the IMD World Competitiveness Ranking (Malta is not included). The most ground was lost in business efficiency, where Greece dropped 9 places (to 53rd, down from the 44th place in 2024 edition) and three places compared to the EU26 (now ranking 20th, down from 17th in the 2024 edition). It has also lost ground in economic performance (at the 22nd position, losing one rank), while it remained at the same rank in government efficiency (22nd) and infrastructure (40th) compared to the EU26. Greece’s weakness in government and business efficiency, coupled with weak institutions and heavy regulation, hampers its ability to attract both domestic and foreign direct investment, resulting in low business productivity, low overall production and exports, and low digital competitiveness.

According to the Government AI Readiness Index, although Greece ranks 16th in the technology sector in the EU27 and 22nd in the data and infrastructure pillar, its weak performance (26th) in the government pillar (including vision, governance and ethics, digital capacity, and adaptability) pulls the overall rank down to that same rank (26th). Greece not only falls back in the ranking of the government pillar, but its score, which improved between 2020-2023, worsened in 2024. Based on the OECD, Greece performs very well in AI publications, as it is ranked 5th in terms of AI publication percentage (12.7%) and 12th in the number of AI publications.

Emphasis should be given to digital technological skills in employee training and attracting foreign highly skilled personnel, along with the reversal of the ‘brain drain’. Scientific research legislation should also be improved to encourage innovation and to reform the legal environment to better support development and technology application. Greek companies need to become more agile and improve their ability to use big data and analytics to support decision making and to adequately address cybersecurity issues. Finally, Greece participates with “Pharos”, one of the first thirteen AI “factories” in Europe and aims to create synergies with related EU initiatives supporting the digital transformation, including the European Digital Innovation Hubs (EDIHs), Data Spaces, and National Competence Centers (NCCs).

In Greece, significant rates of value added growth in manufacturing in recent years have generated a small improvement in the share of manufacturing in the Greek GDP. Based on the most recent relevant data, the share of manufacturing value added in GDP stands at 8.7% in Greece versus 14% on average in the EU. This fact means that there is still much ground to cover to achieve convergence, as envisaged in the corresponding National Industrial Strategy target for year 2030 (share of up to 15%). The National Industrial Strategy and Action Plan for Greece aims to facilitate the digital transformation of industrial enterprises, supporting the green transition, developing human resources and skills, enhancing the business environment, and improving the resilience of the Greek industrial sector.

The implementation of the Strategy receives significant support from funds committed through the RRF. More particularly, key reforms pursued in the framework of the RRF concern the digitalisation of procedures, the spatial planning of industrial parks and other sectoral activities, and a new investment-friendly regulatory framework for carbon capture, utilisation and storage to balance the CO2 emissions of heavy industrial facilities. Furthermore, flagship structural investment programmes for industry funded through the RRF include the “New Industrial Parks”, the “Smart Manufacturing”, and the “Produc-e Green” programmes. In the framework of the EU’s new defence strategy, reforms in the domestic defence industry encompass the Hellenic Center for Defence Innovation and the revision of Greece’s National Defence Industrial Strategy to promote the country’s defence industry capabilities and to encourage international synergies.

Full Report

Το άρθρο GREEK NATIONAL PRODUCTIVITY BOARD ANNUAL REPORT 2025 εμφανίστηκε πρώτα στο Κέντρο Προγραμματισμού και Οικονομικών Ερευνών.

The successive crises of recent years, from the COVID-19 pandemic to the conflicts in Ukraine and the Middle East, have significantly strained European economies. Policy measures to improve productivity are considered as vital to promote sustainable development, enhance competitiveness and upgrade the standards of living and doing business. Apart from the international crises, Greece faces long-term vulnerabilities such as high debt and a low employment rate, compared with other European countries. These problems are coupled with additional reform challenges, the cost of the energy transition, the need for workforce upskilling, and frequent and severe natural disasters, such as wildfires and floods. Investments and reforms aimed at enhancing competitiveness and promoting the dual transition while maintaining a prudent fiscal stance are the main way forward.

While many EU countries have entered a period of prolonged stagnation, the 2023 GDP in Greece has expanded by 2%, the seventh highest among the EU, hours worked by 1.7%, employment by 1%, and capital by 0.35%. Consequently, labour productivity per hour worked improved by 0.3%, and labour productivity per person employed improved by 1%. Total factor productivity increased by 2.9% when using hours worked as the labour input and by 3.8% when using employment as the labour input. The majority of per capita growth is attributed to labour utilisation (2.1%), due to the decreasing unemployment and the increasing average hours worked, while labour productivity contributed only by 0.3%, underlying the fact that, since 2008, the role of labour productivity in supporting per capita output has diminished. The negative impact of capital intensity has been only marginally offset by total factor productivity (TFP). This outcome is attributed to the increasing trend in hours worked. However, capital productivity increased by 1.8% in 2023, suggesting that businesses have become more efficient in the use of their resources.

The major driver of GDP growth has been private household consumption. Investment is the second most important factor contributing to growth, while the lower impact of government expenditure is offset by a negative effect of equal magnitude in the balance of trade (goods and services). The current account balance reached -6.3% of GDP in 2023, exhibiting a remarkable improvement of 4 percentage points relative to 2022. In 2023, the Greek balance of services (goods) in 2023 increased by 0.5 (4.4) percentage points to 9.9% (-14.7%) of GDP. In the same year, exports for Greece were 22.6%, while imports were 37.5% of the nominal GDP. This is because increased investment and consumption are closely correlated with more imports, as a direct result of the production structure of the Greek economy, since a significant portion of capital goods required for various industrial purposes is imported.

Compared to 2022, general government net borrowing dropped to 1.6% of GDP, significantly lower than the EU average of 3.5%. Additionally, the primary balance was positive and, overall, fiscal discipline has led to a marked reduction in the debt-to-GDP ratio by more than 10 percentage points in one year, bringing it to an estimated 161.9% of GDP in 2023, and by more than 45 percentage points since 2020. Nonetheless, trade deficits affect the medium- and long-term growth prospects of the Greek economy and may destabilise fiscal indicators, as the current account deficit contributes to twin deficits. At the same time, industrial activities experienced the largest decline in labour productivity (nearly -8%) in 2023 due to significant increases in labour input and decreases in value added.

At the level of metropolitan regions, the functional urban areas (FUAs) of Athens and Thessaloniki experienced the largest labour productivity decline compared to all other EU FUAs (except Groningen) during 2010-2020 (by -23% and -21%, respectively). This outcome stresses the need to deploy place-based policies to harness agglomeration economies and address the shortage of dynamism, twin transition challenges and amplified productivity gaps among the EU regions. Moreover, while productivity gains appear to be disproportionately concentrated among small firms, as large firms are not actively contributing to value creation, the labour productivity of very small firms has been significantly reduced in Greece; this decline reached -20% between 2009-2023 in high-tech and knowledge-intensive SMEs.

Regarding the cost competitiveness of Greece, the Real Effective Exchange Rates (REERs) reached their lowest level in 2023 during the whole period from 2010 to 2023. The nominal unit labour cost (ULC) in Greece recorded the fourth lowest ULC increase among the EU member states, with only Denmark, Malta, and Italy exhibiting lower increases, while the relative ULC decreased by 1.6 percentage points in 2023 compared to 2022, which represents the fifth largest decrease among the EU27 member states. During 2018-2020, Greece’s backward participation has remained above the EU27 average, meaning that Greece depends more on imported inputs in order to produce goods or services that will be exported, compared to the other EU27 country members. This outcome shows the increasing reliance of the Greek economy on foreign markets, particularly in high-productivity sectors, such as manufacturing. Additionally, Greece performs above the EU27 average in all six key dimensions of the Logistics Performance Index (LPI), but the Customs indicator; since 2018, it has improved its scores and rankings in all six key dimensions, suggesting the country’s progress in enhancing its logistics capabilities. In order to further facilitate trade, Greece should emphasise the implementation of cross-border paperless trade, which requires improvements in electronic exchange and the legal recognition of trade-related data and documents across borders.

Greece ranks 25th (just ahead of Bulgaria) among the EU27 (except Malta) in terms of digital competitiveness, which means that it must accelerate the digital transition to significantly converge with the corresponding EU27 average. According to the 2024 IMD edition, Greece’s economic performance as well as government efficiency rank very low, i.e., 52nd among 67 countries and 23rd and 22nd, respectively, within the EU27 (except Malta). These weaknesses, together with the problems in the justice and education systems, deter foreign direct investment (FDI), whose flows are mostly concentrated on the real estate sector, which is not a productive one. Despite the rise in the amount of FDI inflow, the FDI stock is still at levels far enough from the EU27 average.

Specifically with regard to the Greek justice system, it particularly suffers from lengthy procedures, as the estimated time needed to resolve litigious civil, commercial and administrative cases is among the longest in the EU27. Digital acceleration, artificial intelligence applications, electronic case allocation and electronic communication tools are just some of the solutions and reforms which could have a significant impact on boosting the efficiency of the Greek justice system and would help increase its perceived independence.

Regarding the education system, Greece ranks low among the OECD countries at the levels of proficiency and skills in literacy, numeracy and problem-solving in technology-rich environments for adults, while these skills are not as highly rewarded with high wages as in other OECD countries. The already low student performance in Greece was exacerbated during the pandemic, when Greek students essentially lost a full school year in math and reading as well as half a school year in science. Effective remote learning environments, strong school-family partnership, creation of opportunities in the curriculum of students to engage in creative thinking and/or interdisciplinary work, and alignment of the education system and of a highly skilled workforce with industry needs will bolster Greece’s capacity to innovate and compete internationally.

Full Report

Το άρθρο GREEK NATIONAL PRODUCTIVITY BOARD ANNUAL REPORT 2024 εμφανίστηκε πρώτα στο Κέντρο Προγραμματισμού και Οικονομικών Ερευνών.

The Greek economy has fully recovered from the effects of the COVID-19 pandemic. Moreover, the initial inflationary pressures, that were caused by a multitude of internal and external factors, have subsided. Therefore, Greece is currently geared up, not only for normal growth, but possibly for a takeoff, under the condition that penned up investment and demand −after more than a decade of crisis and slow growth− are brought forward.

During 2022, the total factor productivity (TFP) of the Greek economy increased by 2.9% (in terms of hours worked) and by 3.8% (in terms of persons employed). The TFP growth of the Greek economy reached that of the EA19 and the EU27, as between the year before the pandemic (2019) and the current year (2023), it grew about three times more than the EA19 and EU27 average. Besides, labour productivity per hour worked increased by 0.3% and labour productivity per person employed increased by 2.0%. However, the difference in labour productivity between the Greek economy and the European economy, both in terms of persons employed and hours worked, remained essentially unchanged over the period 2019-2023. Namely, Greek labour productivity in terms of persons employed is around 61% of the EU27 average and 55% of the EA19 average. Similarly, Greek labour productivity in hours worked is around 49% of the EU27 average and 43% of the EA19 average.

Crucial for the materialisation of the expected growth dynamics of the Greek economy is, on the one hand, the increase in labour utilisation, a key factor considering the medium- to long-term adverse effects of population aging, and, on the other hand, the significant increase in fixed capital investment, particularly, in the business and high-technology sector of the economy. Regarding the Greek Recovery and Resilience Plan (RRP), its impact is expected to yield significant economic output (13.7 billion euro) and employment opportunities (about 400,000 jobs), namely, a growth of 8.3% in output and 10.5% in employment, compared to Greece’s 2020 GDP and employment levels. Nevertheless, our analysis suggests that the RRP may not be entirely aligned with Greece’s long-term strategic objectives, due to the overreliance on a limited set of sectors, mostly, Construction, which cannot sufficiently support the broader goals of sustainable productivity, reduced dependence on imports and substantial limitation of CO2 emissions. For this reason, a revision of RRP is suggested to boost productivity in a robust way and without compromising on environmental goals. It is also noted that Construction was the sector that experienced the highest labour productivity growth in the Greek economy during the period 2020-2022.

Recent developments stress the amelioration of the cost/price competitive position of the Greek economy relative to the EA19. Specifically, the Consumer Price Index (CPI)−based Real Effective Exchange Rate (REER) slightly decreased in 2022 for fourth consecutive year. The Unit Labour Cost in the total economy (ULCT)−based REER also decreased in 2022 for second consecutive year, reaching its lowest point during 2010-2022. The Unit Labour Cost (ULC) also decreased in 2022 for second consecutive year, while it was increased in the EA19 and the EU27. The relative ULC decreased by 1.7 p.p. in 2022, compared to 2021. However, the war in Ukraine (and the Middle East), the surge in energy prices, persistent inflation, the increased cost of borrowing for businesses and households, the deterioration in the current account balance, demographic change, technological backwardness and the more frequent natural disasters due to climate change pose additional challenges to the Greek economy. Besides, as reflects the Regional Competitiveness Index (RCI), all the Greek regions reside at the end of the scale, with persistent core-periphery difference (between the region of Attiki and the rest of the regions).

Furthermore, the report stresses that Greek firms need to accelerate their efforts towards digital transformation with a special focus on Industry 4.0 technologies. For this purpose, several actions are proposed, including the acceleration of knowledge transfer, cooperation and partnerships between business and universities, the transformation of AI publications into high impact AI projects, AI software and applications through venture capital funding schemes. Moreover, Greek firms should take actions to manage the environmental footprint associated with the use of Information and Communication Technologies (ICT) and reinforce the circular economy. A wide range of policies should also be considered to reduce inequalities while increasing productivity growth. Such policies may encompass the acquisition and development of skills, labour market reforms, robust social protection measures, affordable financing of small-scale entrepreneurship and support of technology transfer and inter-firm linkages for export promotion. Finally, the extension of bank credit can help to sustain higher levels of both TFP and the GDP growth.

Full Report

Το άρθρο GREEK NATIONAL PRODUCTIVITY BOARD ANNUAL REPORT 2023 εμφανίστηκε πρώτα στο Κέντρο Προγραμματισμού και Οικονομικών Ερευνών.

As economies are trying to recover from the pandemic-induced recession, the war in Ukraine, the energy crisis and inflationary pressures pose additional challenges.

The findings of this report show the fast recovery of the Greek economy from the pandemic shock as well as substantial improvements in growth and several productivity indices, such as 7.6% in labour productivity per person employed, 4% in total factor productivity (TFP) and 8.4% in per capita output. Tourism and transport are among those industries which experienced the highest increases in labour input, capital input and TFP, while the capital productivity performance of the Greek economy is top rated among the European economies.

However, the current conditions tend to increase uncertainty and threaten to upend growth dynamics. The rate of downward adjustment in the medium run will rely on several factors, such as the government expenditure to contain the adverse impact of inflation, the implementation of the scheduled investments and the course of tourism receipts. Specifically, income and import substitution policies can contain energy prices and favourably contribute to the price formation of industrial sectors.

From the stakeholders’ viewpoint, the major problems inhibiting the productivity of the Greek economy are its weak production base, the small average size of firms, the inefficient labour market conditions and institutional dysfunctionalities. The most promising policies for raising productivity refer to active labour market and educational reforms, productive investment, the promotion of research and innovation (R&I), the exploitation of synergies and incentives to grow the average firm size, and institutional reforms in the public sector and markets. 

The amelioration of the competitiveness of the Greek economy in 2021 is manifested in the improvement of a series of measures, including the primary deficit and the government deficit, the debt-to-GDP ratio, the current accounts deficit and the cost-competitiveness indicators of the CPI- based REER and the ULCT-based REER. The country has also made substantial improvement in attracting FDI, but more efforts should be made to attract greenfield investments and improve its business climate, particularly in terms of reforming contract enforcement and property registration.

Furthermore, the country continues to improve in digitisation, but it needs to increase the number of firms that provide ICT training, fixed VHCN coverage, fibre to the premises coverage, the number of SMEs with at least a basic level of digital intensity, the number of firms using cloud and the digital public services for businesses and for citizens as well as the number of pre-filled forms. It also presents high scores in the green transition, but it should improve green society indicators, particularly in recycling and green transport, and make progress in clean innovation indicators, such as green patents and foodtech private investment, as well as in climate policy indicators, including the sustainability of agriculture and other climate actions in alignment with the Paris Agreement. Moreover, Greece should enhance its position in attracting (foreign and domestic) investments in renewables, and accelerate in all other aspects of transition (in addition to the green and the digital ones) to converge with and exceed the EU average.

Finally, the country should increase public spending on R&I to reinforce the positive spillover effects on industry and the entire economy, together with the regular monitoring and evaluation of suitable R&D effectiveness measures. To this end, it should facilitate —via a wide range of incentives— the training of employees in the public and private sectors in new technologies and promote knowledge transfer, exploiting collaborations between the business sector and the government, universities, and research centres, through joint research projects and training programmes, and university-based science parks and business incubators.

Full Report

Το άρθρο GREEK NATIONAL PRODUCTIVITY BOARD ANNUAL REPORT 2022 εμφανίστηκε πρώτα στο Κέντρο Προγραμματισμού και Οικονομικών Ερευνών.

This annual report underscores the crucial role of productivity and efficiency in the formulation of comprehensive EU and national policies and the resilient and sustainable growth of the Greek economy. Several current issues regarding the recovery rate, investments from the Recovery and Resilience Facility (RRF) of the Next Generation EU (NGEU), the implementation of structural reforms, productivity developments and competitiveness indicators are analysed, together with potential risks and long-term challenges, which should be tackled within a comprehensive strategic development framework. It is argued that the country must reverse the divergence of its economy from the corresponding EU average, through promoting its efficiency and digitisation, attracting investments, and increasing its integration in global value chains and regional output/employment multiplier effects against import multipliers.

The growth projections which are made on the basis of alternative economic scenarios underline the considerable expansion opportunities as well as sources of uncertainty that may hinder growth dynamics. The Greek National Recovery and Resilience Plan (Greece 2.0) provides both short- and medium-term prospects for productivity growth, through supporting private investment, green transformation, digitisation and skills development. Yet critical issues such as those related to macroeconomic stability, high reliance on services’ receipts from tourism and transport, core-periphery disparities, and adverse demographic trends should be appropriately addressed.

Despite the positive impact of the pandemic on the acceleration of digitisation and attraction of investment resources, social and spatial inequalities, current account deficit, debt-to-GDP ratio, fiscal imbalances and cost/price competitiveness further aggravated. Although there are signs of strong digital competitiveness at the business level, there are still considerable gaps and weaknesses at the individual/household and employee levels as well as at the state and infrastructure levels.

This annual report gives special emphasis on two major challenges for the sustainable and resilient future of both the EU and the Greek economy. The first challenge refers to the provision, efficiency and competitiveness of health services, in order to support productivity and strengthen the ability to tackle new health crises. Our analysis shows that Greece has diminished the inefficient usage of health resources in recent years, while the Greece 2.0 plan can further enhance resilience and efficient resource allocation in the health system. Nonetheless, Greece is ranked low in the competitiveness index related to health, having weaknesses in public spending on health, health infrastructure, and universal health care coverage, due to the high rate of out-of-pocket payments of households, who pay 35.2% of the total current health expenditure. 

The second challenge concerns the productivity and competitiveness of the energy sector and the ability to ensure a smooth transition to decarbonatisation and affordable energy. During the last years, Greece implemented several reforms to accomplish harmonisation with environmental targets, achieving to reduce the greenhouse gas (GHG) emissions per capita and the intensity of GHG emissions of energy consumption, which is below the EU average. It has also expanded the competition in the energy market and set the goal of withdrawing all lignite plants by 2028, developing a Just Transition Development Plan for lignite areas.

Nevertheless, electricity and gas prices for households, expressed in purchasing power standard (PPS), in the country are among the highest in the EU and the share of energy poverty remains much higher than the EU average, which makes the national economy more exposed to the recent increase of energy products’ prices. At the same time, Greece’s economy shows increased dependency on energy imports and much lower energy productivity than the EU average. Thus, the considerable budget of the Recovery and Resilience Plan (about 6 billion euro) allocated to energy and green transition projects should be fully exploited to expedite the supply of decarbonised and affordable energy and achieve an energy competitive, inclusive and carbon-neutral growth, with the least possible negative effects on the economy and the society.

Full Report

Το άρθρο GREEK NATIONAL PRODUCTIVITY BOARD ANNUAL REPORT 2021 εμφανίστηκε πρώτα στο Κέντρο Προγραμματισμού και Οικονομικών Ερευνών.

Following the first annual report of the previous year (2019), this year’s (2020) report offers an up-to-date comprehensive analysis of the productivity and competitiveness developments of the Greek economy. In addition to the analysis of the patterns and drivers of productivity at the macro and sectoral level, an assessment of the impacts of the COVID-19 pandemic and of counter-measures to mitigate adverse effects is made. The effects of the macroeconomic shock of the pandemic are placed in the context of pre-existing conditions pertaining to the Greek economy, which kept its TFP far from the frontier of the European and world best-performing countries and led its labour productivity to diverge from the EA countries.

Among other factors, several of which are common and have contributed to the productivity slowdown in the advanced economies, the country’s productivity has been adversely affected by the declining capital intensity, the low performance in skills development and technological adoption, and the relatively high contribution to the economy of low-productivity sectors. The pandemic further contributes to lower investment, unemployment, and the deterioration of the budget balance, public debt and global trade linkages. Nevertheless, it is argued that this urgent situation may offer opportunities for the government to redesign its growth strategy and to attract and (re)allocate resources towards higher-productivity sectors, increasing physical and human capital intensity and diversification, expediting technological adoption and increasing the resilience to such global-scale (health, financial and environmental) risks.

The improvement of the overall competitiveness of the Greek economy, which is characterised by poor performance, involves the treatment of a wide range of critical indicators. At the national level, such indicators include the legal system, the land administration and the public sector management at both the central and local levels of government. Particularly in relation to sectoral competitiveness, it is suggested that the Greek manufacturing industry can improve its performance through reducing energy and transport costs, e.g., by adopting energy-efficient technologies and effective logistics practices, facilitating access to external finance and decreasing borrowing costs, boosting investments in human resources and (ICT and non-ICT) capital assets, and raising the R&D intensity and the share of production and exports of high-tech products.

Furthermore, two key thematic productivity challenges with considerable implications for the upgrading of the Greek economy to more efficient sectors are examined. First, the issue of the relatively low performance of the country in skills development, utilisation and matching is discussed. Holistic policy interventions and reforms are suggested with a focus on all levels of formal education and all types of learning to reinforce the link between the skills supplied by the education system and the skills required by firms. Second, the challenge of the adoption and use of new technologies by Greek firms, which lag behind the EU28 average in several ICT indicators, is discussed. Relevant public policies for the enhancement of human capital and technological infrastructure in businesses as well as flexible training, distance learning and mobility programmes to their personnel in ICT-related issues are proposed to mitigate some barriers to e-business/e-commerce and reduce digital divides. 

Despite the temporary disturbances caused by the pandemic, some positive developments in structural reforms over a range of institutions and functions of the public and private sector are also discussed, such as those aiming at attracting investment and improving the business environment and employment conditions. The need for strengthening the reform efforts is stressed, particularly in relation to the liberalisation of network industries (energy, transport and communication), the protection of property rights, the establishment of the rule of law, and the closer connection between changes in wage costs and growth in productivity and competitiveness.

It can be concluded that the prospects of a fast economic recovery, as will be outlined by the country’s Recovery and Resilience Plan, and of a long-term sustainable growth to be achieved during the new programming period, are closely related to a comprehensive package of policy reforms and investments, whose interactions and timing of implementation are crucial to boost productivity and competitiveness. It is indicatively mentioned that, given the current structure of the economy, while investments in the public sector and tourism services can bring about the largest increase in GDP and employment, a long-term industrial policy programme is required to enhance productivity and competitiveness, support import substitution and enhance forward linkages in global value chains, in conjunction with the green and digital transformation process.

Full Report

Το άρθρο GREEK NATIONAL PRODUCTIVITY BOARD ANNUAL REPORT 2020 εμφανίστηκε πρώτα στο Κέντρο Προγραμματισμού και Οικονομικών Ερευνών.

This first Annual Report of the Greek National Productivity Board for the year 2019 provides a broad and retrospective view of all the important trends, characteristics and aspects of the productivity and competitiveness of the country at the macroeconomic, sectoral and regional levels. It reviews policies that have already been implemented and others in progress which aim at enhancing the productivity and competitiveness of the Greek economy. First, the analysis underlines the significant productivity and competitiveness gaps between the Greek and the other EU economies. It identifies factors of productivity growth, in terms of investment, innovation, skills, enterprise and competition.

By disentangling the main components of aggregate demand over time, we stress that the current recovery mainly rests on the macroeconomic stability achieved through the fiscal consolidation and positive developments in the balance of trade and private consumption. However, investment behaviour remains volatile and several adverse external and domestic factors can threaten macroeconomic stability in the long run. Based on a decomposition approach, it is found that, during the crisis, and compared with the preceding period, decreases in labour utilisation played the most significant role in the reduction of output per capita, followed by smaller —but also significant— reductions in labour productivity growth.

The analysis of the sectoral composition of the Greek economy provides evidence that its overall structure remained largely unchanged during the crisis. By using a shift-share analysis, we show that changes in productivity growth are mainly explained by changes in productivity within sectors, with reallocation effects having a positive contribution before the crisis and a negative contribution during the crisis. Based on a growth accounting framework, the results indicate significant heterogeneity on the effects of Information and Communication Technologies (ICT) and non-ICT capital within sectors, and systematic underperformance of total factor productivity (TFP).

During the crisis period, the gap in productivity and TFP between the capital region of Attiki and the other regions of the country increased. Specifically, the TFP reduced in all the regions, although it has recovered somewhat since 2013. The larger reductions in both labour productivity and TFP are observed in the island regions (of Voreio Aigaio, Notio Aigaio and Ionia Nisia). In the same period, the region of Attiki increased its TFP gap with the best-performing EU region. In order to promote regional growth and convergence, the strategic objectives and policies of the sectoral growth plans should be aligned and integrated with the special planning frameworks for main economic activities, established land uses and special planning regulations for realising ‘fast-track’ infrastructure investments. In this way, more locally targeted actions will be taken to enhance productivity and diminish inequalities, avoiding possible conflicts between sectoral and regional policies.

Taking into account that the concept of competitiveness is multifaceted, different approaches are employed in order to illuminate its different aspects. Specifically, Greece exhibits a current account deficit that was significantly reduced during the economic crisis. The country’s price/cost competitiveness, as reflected in the real effective exchange rates, improved from 2010-11 until 2015-16, while the unit labour cost decreased from 2011 until 2016. Exports of both goods and services have been increasing since 2009, but the market share of Greece in the global markets is decreasing.

In terms of the international competitiveness indicators, Greece’s performance presents several problematic areas, such as the quality of institutions, macroeconomic stability, labour market efficiency and finance. Greece’s participation in Global Value Chains (GVCs) increased during 2010-2015, compared to the previous period (2005-2009) and exceeded the Euro Area 19 (EA19) average. Given that one of the country’s main characteristics is the significant difference between the capital region and the remaining regions, regional competitiveness is another important aspect that should be taken into account when competitiveness is measured and competitiveness-enhancing policies are designed. The most important competitiveness gaps between the Greek (mostly, the peripheral) and EU regions concern the areas of macroeconomic stability and labour market efficiency.

Therefore, it can be argued that the existence of negative (during the crisis period) or weak positive (in the mild recovery period that follows) productivity growth rates in the Greek economy, despite the treatment of fiscal deficits and the improvement of the current account balance and cost/price competitiveness, can be largely associated with: persistent structural problems of its production system (which is of low knowledge– and technology-intensity compared to the EA19 average) and its non-price/non-cost competitiveness, such as the stability of the macroeconomic environment, the quality of institutions, financing conditions, and the (in)efficient functioning of labour and product/service markets.

The need for implementing a comprehensive policy framework with both sectoral and regional dimensions is stressed. Such a framework would promote the export-oriented entrepreneurship of the Greek economy, through structural reforms, and emphasise the quality of jobs and human resources to boost the productivity of Greek businesses. An effective demand management policy should rely on international tradeable sectors of the economy: (a) tradeable services, (b) the primary sector and (c) a few industrial sectors that can significantly affect output/employment, given that the manufacturing industry is heavily dependent on imports. Such a framework could involve redistributing government expenditures and increasing the autonomous demand of key sectors, in conjunction with an industrial policy programme.

Finally, as far as horizontal policies are concerned, these should be targeted at increasing Research and Development (R&D) expenditures, supporting innovation and upgrading the role of e-government/digitisation in public administration. They should also improve the market conditions and create high-quality, accessible, resilient, reliable and sustainable infrastructures in network industries (transport, logistics, energy, information and telecommunications), as these can foster Greece’s economic transformation and lead to significant productivity gains.

Full Report

Το άρθρο GREEK NATIONAL PRODUCTIVITY BOARD ANNUAL REPORT 2019 εμφανίστηκε πρώτα στο Κέντρο Προγραμματισμού και Οικονομικών Ερευνών.