OECD Territorial Reviews
Regional Policy for Greece
Post-2020
OECD Territorial Reviews
Regional Policy for Greece
Post‑2020
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The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of
such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in
the West Bank under the terms of international law.
Note by Turkey
The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single
authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of
Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey
shall preserve its position concerning the “Cyprus issue”.
Note by all the European Union Member States of the OECD and the European Union
The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The
information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.
Please cite this publication as:
OECD (2020), Regional Policy for Greece Post-2020, OECD Territorial Reviews, OECD Publishing, Paris,
https://doi.org/10.1787/cedf09a5-en.
ISBN 978-92-64-45282-4 (print)
ISBN 978-92-64-64783-1 (pdf)
OECD Territorial Reviews
ISSN 1990-0767 (print)
ISSN 1990-0759 (online)
Photo credits: Cover © Gabriella Agner.
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© OECD 2020
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3
Foreword
This review is part of a series of OECD Territorial Reviews created in 2001 to support regional development
across OECD countries. Territorial reviews examine a range of policies to support economic growth in
regions, improve the well-being of residents and support the transition to a low-carbon economy. Policies
for economic growth, social inclusion and environmental sustainability are more effective when they are
aligned and take into account the region-specific characteristics, assets and bottlenecks in their design.
The Territorial Review of Greece: Regional Policy for Greece Post 2020, approved by the Regional
Development Policy Committee [CFE/RDPC(2020)5] on 28 May 2020, was undertaken prior to the
COVID-19 pandemic and examines the role of regions and regional policy in the recovery of the Greek
economy since the 2008 global financial crisis. It examines the performance of Greek regions against
international trends and identifies effective policy responses and recommendations for effective
implementation of regional and EU cohesion policies in Greece for the years ahead.
The release of this report comes at a critical time for Greece, having exited financial assistance in
August 2018 and sustaining a path to economic recovery. This momentum needs to continue and be
deepened in the coming years, despite the current COVID-19 outbreak that is hindering Greece’s recovery
efforts.
Amid heightened attention on growing geographic inequality, OECD member countries have re-oriented
regional development policies towards a place-based approach to foster inclusive growth. Economic and
social reforms have been extensive in Greece and must be complemented by place-based policies that
target or adapt them to region-specific conditions.
Place-based regional policy design and implementation can stimulate investment, improve entrepreneurial
and business ecosystems and build resilient labour markets while tackling social challenges such as
fostering dialogue, rebuilding trust, reducing inequalities and improving the quality of jobs and education.
Place-based regional development policy can help Greek regions to realise their economic potential and
capitalise on their strengths. This requires a deep understanding of how policies interact at different levels
of government for maximum impact.
Regional governments need to develop their own bottom-led regional development strategies and ensure
they are co-ordinated with national priorities, together with private investment and foreign direct investment
(FDI) to spur local development. The OECD’s work has illustrated the importance of aligning regional
development strategies with sectoral policies (support for private investment, infrastructure and human
capital policies) to generate multiplier effects. To this aim, many OECD Member countries have
strengthened their multi-level governance system or promoted asymmetric decentralisation in recent years.
This trend is likely to continue and can help to adapt governance to various regional, metropolitan and
local conditions and capacities.
While Greece has advanced on this front in recent years undertaking administrative and regulatory
reforms, it is imperative to further consolidate the role of subnational governments in regional development
and investment policies.
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
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Acknowledgements
This publication was produced in the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE),
led by Lamia Kamal-Chaoui, Director, as part of the programme of work of the Regional Development
Policy Committee (RDPC). The review has been conducted in partnership with the Ministry of Development
and Investments of Greece and the European Commission (EC) Directorate-General for Structural Reform
Support (DG REFORM). The review benefitted from the financial support of the EC.
Special thanks go to Dimitrios Skalkos (Secretary General for Public Investments and ESPA) and his
predecessor Panogiotis Korkolis, Ioannis Firbas (General Director, National Coordination Authority for
ESIF), Dimitrios Iakovidis (General Director for Public Investments), Maria Kostopoulou (Alternate Director,
Special Service for Strategy, Planning and Evaluation), Dimitrios Troulakis (Director, Special Service for
ESF Actions Coordination and Monitoring Authority), Dimitrios Fakitsas (Director, Special Service for
Institutional Support) and to the members of the local team: Michail Goumas, Emmanouela Karapataki,
Marina Koutsouri, Stavroula Pelekasi, Maria Pragiati, Petros Stavrou, Konstantinos Vlachos, Anastasia
Zarkopoulou, Smaro Zissopoulou, Anastasia Arvaniti, Emmanouela Kourousi, Xristos Kyrkoglou, Kyriaki
Manolopoulou, Georgia Tsoni, Ioannis Zirinis, as well as to the General Secretariat for the Coordination
of Economic and Growth Policies. We are also grateful to George Petrakos (former Rector and professor
at the Department of Planning and Regional Development, University of Thessaly) and Ioannis Psycharis
(Director, Regional Development Institute, Panteion University of Social and Political Sciences), who
contributed as external consultants to the development of the review.
The review was co-ordinated by Stefano Barbieri, Senior Policy Analyst in the Regional Development and
Tourism Division, under the supervision of Alain Dupeyras and Jose Enrique Garcilazo, Head and Deputyhead of the Regional Development and Tourism Division and the overall direction and strategic guidelines
of Joaquim Oliveira-Martins, Deputy Director.
The review was drafted by Ana Moreno Monroy and Lenka Wildnerova (Chapter 2), Stefano Barbieri and
Tamara Krawchenko (Chapter 3), and Isidora Zapata (Chapter 4) of the OECD Secretariat. The review
also benefitted from valuable comments and input from other OECD colleagues: Rudiger Ahrend (Head of
Economic Analysis, Statistics and Multi-Level Governance Section), Lucia Cusmano (Acting Head of SME
and Entrepreneur Division), Dorothee Allain-Dupre, Anna Bolengo, Isabelle Chatry, Arno Engel, Klara Fritz,
Eric Gonnard, Kim Soo-Jin Kim, Alexander Lembcke, Marco Marchese, Alina Matta, Varinia Michalun,
Anna Piccinni, Paolo Rosso and Jane Stacey.
Thanks are due to the Foundation for Economic and Industrial Research (ΙΟΒΕ) and in particular to
Nikos Vettas and his team: Giorgos Gatopoulos, Alexandros Moustakas, Grigoris Pavlou, Sophia Stavraki
and Michalis Vasileiadis, who contributed to Chapter 2, as well as to Constantinos Kokkinoplitis (Director,
Seven Sigma Innovation) and Michalis Nikitaridis (Managing Director, LKN Analysis), who provided input
to Chapter 4. We are very grateful to Mauro Pisu and his colleagues from the OECD Economics
Department, who provided very valuable input to the review and supervised IOBE’s contribution.
The OECD extends warm thanks to the members of DG REFORM who actively supported the review:
Daniele Dotto (Head of Unit, Governance and public administration), Nikos Kleniatis, Phivi Haratsi, and to
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
5
the other members of the Advisory Group, which included DG REGIO and DG EMPL of the European
Commission. The OECD is also grateful to all stakeholders from the government and civil society,
academia and business representatives who contributed to the publication during in-site mission. A special
mention is also due to the Special Service for Strategy, Planning and Evaluation, the Managing Authorities
of the regional and sectoral Operational Programmes within the ESPA 2014-2020, the Management
Organisation Unit of Development Programmes (MOU-MOD), the Institute of Greek Tourism Confederation
(SETE), and the Hellenic Federation of enterprises (SEV).
The OECD is grateful for the involvement and contribution of peer reviewers Duarte Rodrigues
(Vice-President of the Board of the Cohesion and Development Agency of Portugal) and Tito Bianchi
(Coordinator, Programming Evaluation and Analysis Unit, Department for Cohesion Policy, Presidency of
the Council of Ministers of Italy).
The review was prepared for publication by Saliha Beaumont, Jeanette Duboys and Eleonore Morena.
The production process was coordinated by Pilar Philip.
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
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Table of contents
Foreword
3
Acknowledgements
4
Abbreviations and acronyms
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Executive summary
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1 Assessment and recommendations
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Assessment
Recommendations
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2 Socio-economic trends, growth potential and opportunities
Summary
National economic trends framing regional development
The distribution of people and economic activity across regions
The effects of the crisis on regions
Enabling regional development
The allocation and macroeconomic effects of EU funds
References
Notes
Annex 2.A. New estimations of the effects of EU funds on the Greek economy
3 Policies and strategies for place-based development and inclusive growth
Summary
How is regional policy organised in Greece and why is it important
Strengthening the territorial dimension of Cohesion policy
Fostering productivity, competitiveness and job creation
Fostering quality employment and social inclusion
Enhancing connectivity and sustainable development
References
Notes
4 Multi-level governance for regional development
Introduction
New architecture to deliver regional policies: Consolidating the implementation of the
decentralisation and regionalisation reforms
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Strengthening the Greek multi-level governance framework for regional development: Progress,
challenges and ways forward
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References
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Notes
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FIGURES
Figure 2.1. GDP in Greece and OECD countries, 2000-18
Figure 2.2. GDP per capita across OECD countries, 2008 and 2018
Figure 2.3. Well-being indicators in Greece and OECD countries, 2017
Figure 2.4. Labour productivity in selected OECD countries and EU28, 2000-17
Figure 2.5. Inflation and real wages in Greece, 2001-18
Figure 2.6. Exports of goods and services in Greece, 2002-19
Figure 2.7. Trade in primary and manufacturing goods by knowledge intensity, 2000-17
Figure 2.8. Elevation in Greece and TL3 administrative divisions
Figure 2.9. Population shares by regional typology across OECD countries, 2019
Figure 2.10. Population in remote rural TL3 regions across OECD countries, 2019
Figure 2.11. Population density in TL3 regions in Greece, 2019
Figure 2.12. Distribution of the population in Greece by OECD regional typology (TL3), 2019
Figure 2.13. Share of the population by accessibility to a city, 2015
Figure 2.14. Functional urban areas in Greece
Figure 2.15. City size distribution in Greece, 2017
Figure 2.16. Population distribution by age group in Greece and OECD countries, 2018
Figure 2.17. Population projections by type of TL3 region in Greece, 2015-60
Figure 2.18. Regional distribution of immigrants by country of origin in Greece, 2011
Figure 2.19. Net migration flows in Greece and selected TL2 regions, 2000-17
Figure 2.20. Net migration in selected island regions in Greece, 2000-17
Figure 2.21. Working-age population change by regional typology in Greece, 2001-19
Figure 2.22. Elderly dependency ratio by type of TL3 region in Greece, 2002-19
Figure 2.23. GDP per capita evolution by region in Greece, 2000-17
Figure 2.24. Regional contribution to national GDP growth in Greece, 2015-17
Figure 2.25. Growth of household income in OECD TL2 regions, 2007 and 2017
Figure 2.26. Regional poverty rates in selected TL2 regions in Greece, 2007 and 2018
Figure 2.27. Employment change by region in Greece, 2007-18
Figure 2.28. Unemployment in TL2 regions in OECD, 2007 and 2018
Figure 2.29. Youth unemployment and unemployment in European TL2 regions, 2018
Figure 2.30. The Beveridge curve in Greece, 2009-18
Figure 2.31. Regional share of inactive young people in Greece, 2007 and 2018
Figure 2.32. Female to male labour force participation ratio in selected regions in Greece, 2001-18
Figure 2.33. Structural shifts in Greek industries, 2007 and 2017
Figure 2.34. Tourism intensity across OECD countries, 2008-18
Figure 2.35. Tourism GDP as a share of total GDP, 2008-18
Figure 2.36. Employment rate and change in household disposable income, 2007 to 2017
Figure 2.37. Contribution to Greek national labour productivity growth, 2007-16
Figure 2.38. Productivity versus city size across OECD FUAs, 2007 and 2016
Figure 2.39. Productivity level of frontier and lagging TL3 regions in Greece, 2000-15
Figure 2.40. Productivity divergence of frontier and lagging TL3 regions in Greece, 2000-15
Figure 2.41. Tradeable sectors intensity by region and its productivity convergence type, 2007 and 2016
Figure 2.42. Employment and productivity growth in Attica
Figure 2.43. Education attainment by region in Greece, 2013 and 2018
Figure 2.44. Higher education attainment across selected TL2 regions in Greece, 2015
Figure 2.45. Share of university-educated workforce in OECD regions in 2018
Figure 2.46. R&D intensity in Greek regions in 2015
Figure 2.47. Innovation intensity across OECD regions, 2015
Figure 2.48. Regional well-being indicators for Greece, 2016
Figure 2.49. Individual well-being indicators outcomes in Greek regions, 2016
Figure 2.50. Availability of healthcare in Greek regions
Figure 2.51. Life expectancy at birth in OECD regions, 2018
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Figure 2.52. Air pollution experienced by the population in metropolitan areas, 2000-16
Figure 2.53. Air pollution in PM2.5 in Greek regions, 1990-2010
Figure 2.54. CO2 emissions share by type of sector and region, 2008
Figure 2.55. Total amount of EU co-funded expenditure per annum, 2009-18
Figure 2.56. Share of EU funds to regional administrations
Figure 2.57. Distribution of EU funds for investment projects
Figure 2.58. Distribution of EU investment co-financing by sector
Figure 2.59. Estimated impact of Cohesion Policy financing on GDP for the 2000-06 period (3rd CSF)
Figure 2.60. Estimated impact of Cohesion Policy on GDP for the 2007-13 period
Figure 2.61. Impact of 2014-20 EU funding on member states’ GDP, until 2023
Figure 3.1. EU Cohesion Policy in Greece, 2014-20
Figure 3.2. Operational Programmes of the EU Structural and Investment Funds, 2014-20
Figure 3.3. A typology of place-based policies
Figure 3.4. Spatial planning in Greece: Law 4447/16
Figure 3.5. SME employment and value-added
Figure 3.6. Organisational chart for tourism bodies
Figure 3.7. Upstream effects of tourism expenditure in national economies
Figure 3.8. Thematic Objective 9: Social inclusion by country for 2014-20
Figure 4.1. Regionalisation in America, Asia and Europe
Figure 4.2. Greek multi-level governance system
Figure 4.3. National and subnational public expenditure, 2016
Figure 4.4. Public investment across levels of government, 2016
Figure 4.5. Structure of subnational government revenue, 2016
Figure 4.6. Subnational government tax revenue as a percentage of public tax revenue and as a percentage
of GDP, 2016
Figure 4.7. Regional Authority Index in OECD and EU28, 2016
Figure 4.8. The 12 principles of the OECD Recommendation on Effective Public Investment across Levels of
Government
Figure 4.9. Partnership agreement (PA) process preparation
Figure 4.10. The implementation process of the PA 2014-20
Figure 4.11. Key actors of the Greek Management and Control system
Figure 4.12. Organisation structure of Greek managing authorities
Figure 4.13. Confidence in national government in 2016 and its change since 2007
Figure 4.14. Capacity building in OECD countries – Monitoring of the implementation of the OECD
Recommendation on Effective Public Investments across Levels of Government
Figure 4.15. Composite indicators: Ex post evaluation for primary laws, 2018
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Annex Figure 2.A.1. VECM variables trend during 2000-18
Annex Figure 2.A.2. GDP impulse response to shocks on the endogenous variables
Annex Figure 2.A.3. EU co-funded projects’ estimated contribution to annual GDP (in GDP ppts)
Annex Figure 2.A.4. EU project co-funding including national co-financing quota, 2008 chain-linked volumes
Annex Figure 2.A.5. EU co-financing and effect on the Greek GDP, in the period 2009-23
Annex Figure 2.A.6. Actual Greek GDP versus the counterfactual of the estimated level of the Greek GDP
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TABLES
Table 2.1. Number of functional urban areas (FUAs) and population share by size category, Greece, 2017
Table 2.2. Population, employment, GDP, firms and turnover shares, and average firm size across TL2
regions in Greece, 2019
Table 2.3. Regional specialisation in industries in Greece, 2017
Table 2.4. Pre-crisis GDP recovery scenarios for Greece
Table 2.5. Employment outcomes in Greek regions, 2007-18
Table 2.6. EU Structural and Investment Funds in Greece
Table 2.7. Additional population served by water and wastewater projects co-financed by the ERDF and
Cohesion Fund, 2007-13 (up to end of 2014)
Table 3.1. European Structural and Investment Funds (ESIF), by thematic priority, Greece, 2014-20
Table 3.2. Greece’s National Growth Strategy
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Table 3.3. Economic opportunities and policy priorities across four categories of regions in Greece
Table 3.4. Characteristics of modern place-based regional policy
Table 3.5. Distribution of powers, local and regional governments
Table 3.6. Percentage change in employment and GVA, 2005-15, predominantly rural regions, Greece (TL3)
Table 3.7. Share of employment and GVA, 2015, predominantly rural regions, Greece (TL3)
Table 3.8. European Agricultural Fund for Rural Development (EAFRD), Greece, 2014-20
Table 3.9. Policy priorities for entrepreneurship, business development and innovation, Greece
Table 3.10. Employment outcomes in Greek regions, 2006-16
Table 3.11. Total (EU and national) contribution for ESIF Thematic Objectives 4, 5 and 6
Table 3.12. Total (EU and national) contribution of Regional Operational Programmes (2014-2020) for
Thematic Objectives 4, 5 and 6
Table 3.13. Financing of measures of the Rural Development Programme 2014-2020 that are related to
natural rural amenities
Table 3.14. Budget for the areas of the network NATURA 2000 for 2014-20 in Greece
Table 4.1. Municipal own-source taxes
Table 4.2. Breakdown of responsibilities across subnational levels: A general scheme
Table 4.3. Resources allocated to Greece and its regions from the EU Cohesion Policy, programming period
2014-2020
Table 4.4. Bilateral European Territorial Cooperation Programmes
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Annex Table 2.A.1. Variable definitions for VECM estimation
Annex Table 2.A.2. VECM quarterly data set descriptive statistics
Annex Table 2.A.3. VECM estimation output
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BOXES
Box 2.1. Well-being indicators in Greece
Box 2.2. National administrative divisions, island groupings and OECD regional typology
Box 2.3. The seasonal economy of Greek islands
Box 2.4. Rank-size rule applied to cities in Greece
Box 2.5. International migrants in Athens and the Aegean islands
Box 2.6. Informal hiring and the Beveridge curve
Box 2.7. The increasing importance of tourism in Greece
Box 2.8. Productivity performance in Athens compared to similar OECD cities
Box 2.9. Productivity dynamics in small (TL3) regions in the post-crisis period
Box 2.10. Qualification mismatches in Greece in an OECD context
Box 2.11. Priorities of EU Structural Funds in Greece
Box 2.12. Selected example of reforms to improve the spending of EU funds
Box 2.13. Literature analysing EU funding impact on the economy
Box 3.1. Success factors for Smart Specialisation Strategies: Evidence from across the OECD
Box 3.2. The territorial impact of the current COVID-19 pandemic
Box 3.3. The impact of COVID-19 on cities
Box 3.4. Maritime spatial planning
Box 3.5. Spatial planning challenges: Example of Crete
Box 3.6. The development of cadastral registration in Greece
Box 3.7. The need for improved metropolitan governance in Athens
Box 3.8. The unlikely “smart city” of Trikala, Greece
Box 3.9. Implications of Coronavirus (COVID-19) crisis for rural development
Box 3.10. Fisheries and aquaculture
Box 3.11. National institutions to manage agricultural land: France
Box 3.12. The co-operative model in Trentino, Italy
Box 3.13. Building scale through LEADER – A collaborative network to promote quality Greek products
Box 3.14. Entrepreneurship and innovation in rural areas
Box 3.15. The impact of COVID-19 on SMEs
Box 3.16. Interfaces and platforms for technology transfer
Box 3.17. OECD principles and characteristics of an enabling environment for innovation
Box 3.18. The EU Integrated Maritime Policy
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Box 3.19. The Greek new government’s plan to boost domestic shipping
Box 3.20. The impact of COVID-19 on the tourism economy
Box 3.21. Upstream effects of tourism expenditure in national economies
Box 3.22. A digitalisation strategy for Austrian tourism
Box 3.23. The impact of COVID-19 on local employment and economic development
Box 3.24. Trends in jobs at risk of automation, Greece
Box 3.25. How can regions and cities tackle brain drain?
Box 3.26. Social services in Athens – The role of NGOs as a stop-gap measure to provide services over the
crisis period
Box 3.27. Defining the social economy and social enterprises
Box 3.28. Improving social inclusion at the local level through the social economy
Box 4.1. Trends in decentralisation and regionalisation
Box 4.2. The first and second memoranda of understanding and their impact on local governments
Box 4.3. Making decentralisation work: 10 OECD guidelines
Box 4.4. The Regional Authority Index (RAI) and the Local Autonomy Index (LAI)
Box 4.5. The Kleisthenis reform in Greece
Box 4.6. Breakdown of responsibilities and functions across subnational government levels
Box 4.7. Defining differentiated competencies for different municipalities: The case of Colombia, the Czech
Republic and Denmark
Box 4.8. Different models for metropolitan governance: The cases of France and the UK
Box 4.9. The OECD Recommendation on Effective Public Investment across Levels of Government
Box 4.10. Partnership Agreements on the European Structural and Investment Funds (ESIF)
Box 4.11. The Management and Control System in Greece
Box 4.12. Other actors in the PA implementation
Box 4.13. Articulation of MCS actors in Portugal
Box 4.14. The specialisation process in Greece
Box 4.15. Using contracts to enhance co-ordination across levels of government in Portugal
Box 4.16. OECD-EC project: Strengthening the Governance of EU Funds under Cohesion Policy: Roadmaps
for Administrative Capacity Building
Box 4.17. The MOU’s capacity building activities
Box 4.18. EU Competency Framework for the management and implementation of the ERDF and Cohesion
Fund
Box 4.19. The Sustainable Islands Network
Box 4.20. Oversight of the implementation of EU law in Denmark
Box 4.21. Approaches to regulatory offsetting in selected EU member states
Box 4.22. Place-based development strategies and cross-sectoral co-ordination in OECD countries
Box 4.23. Different instruments and platforms to build partnerships across levels of governments
Box 4.24. State-region planning contracts in France
Box 4.25. Incentives for cross-jurisdictional co-operation
Box 4.26. The London DataStore to promote transparency, accountability and participation
Box 4.27. Transparent financial management
Box 4.28. The public online consultation process in Greece
Box 4.29. Using data for policymaking
Box 4.30. Competency assessment in Korea and Mexico
Box 4.31. Capacity building at the subnational level
Box 4.32. Law on Better Regulation of 2012
Box 4.33. Measurement and reduction of administrative burdens in Greece
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Abbreviations and acronyms
Δ.Ε.ΑΝ.Α.Δ.
ACCMR
ALMP
BOP
CA
CAP
CCDP
CDFI
CF
CFP
CLLD
DAFNI
DEMETRA
DG REGIO
DG REFORM
DWT
EAFRD
EAGF
ECB
EDP
EEA
EEO
EIB
EIDHR
EIF
EKDDA
ELSTAT
EMFF
ENPE
EPAnEK
ERDF
ESF
ESIF
ETAT
ETC
EYSE
EYSEKT
EYSSA
EYTHY
FEAD
GNTO
GVA
GVC
IB
Inter-ministerial Committees for the Redefinition of Competences and Procedures
Athens Coordination Centre for Migrant and Refugee Issues
Active Labour Market Policy
Balance of Payments
Certifying Authority
EU Common Agricultural Policy
Co-ordinating Committee for Development Policy
Community Development Finance Institution
Cohesion Fund
Common Fisheries Policy
Community-Led Local Development
Sustainable Islands Network
Organisation of Agricultural Vocational Education, Training and Employment
European Commission Directorate-General for Regional and Urban Policy
European Commission Directorate-General for Structural Reform Support
Deadweight Tonnage
European Agricultural Fund for Rural Development
European Agricultural Guarantee Fund
European Central Bank
Entrepreneurial Discovery Process
European Economic Area
Energy Efficiency Oblication
European Investment Bank
European Instrument for Democracy and Human Rights
European Investment Fund
National Centre for Public Administration and Local Government
Hellenic Statistical Authority
European Maritime and Fisheries Fund
Association of Regions of Greece
Operational Programme for Entrepreneurship, Competitiveness and Innovation
European Regional Development Fund
European Social Fund
European Structural and Investments Funds
Food Industrial Research and Technological Development Company
European Territorial Co-operation
Special Service for the Implementation
Special Service for the Co-ordination and Monitoring of ESF Actions
Special Service for Strategy, Planning and Evaluation
Special Service for Institutional Support
Fund for European Aid to the Most Deprived
Greek National Tourism Organisation
Gross Value-added
Global Value Chain
Intermediary Body
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
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IBO
ICT
IDEKE
IDIKA
IIS
IMF
ITI
KEDE
KEK
LAG
LAI
LRAs
LSP
MA
MCS
MIS
MoEE
MoU
MOU
MTFS
NAS
NCA
NDP
NGA
NGO
NSRF
NWMP
OAED
OASA
OP
ORSA
PA
PAYT
PEDA
PIB
PIP
PPP
PSKE
R&D
RAI
RDP
RIA
RIS3
ROPs
RTI
SEO
SMEs
SSP
TiVA
TO
UNHCR
VAT
VET
YEI
ZOE
Inter-branch organisations
Information and Communication Technology
Institute of Adult Continuing Education
National Social Security Service
Integrated Information System
International Monetary Fund
Integrated Territorial Investments
Central Union of Municipalities of Greece
Vocational Training Centres
Local Action Group
Local Autonomy Index
Local And Regional Authorities
Local Spatial Plan
Managing Authority
Management and Control System
Special Service for the Monitoring Information System
Ministry of the Environment and Energy
Memorandum of Understanding
Management Organisation Unit of Development Programmes
Medium-Term Fiscal Strategy Framework
Greek National Adaptation Strategy
National Co-ordination Authority
National Development Programme
Next Generation Access
Non-Governmental Organisation
National Strategic Reference Framework
New National Waste Management Plan
Manpower Employment Organisation
Athens Urban Transport Organisation
National and regional Operational Programmes
Organisation for Planning and Environmental Protection of Athens
Partnership Agreement
Pay As You Throw
Regional Association of Municipalities of Attica
Public Investment Budget
Public Investment Programme
Private Public Partnerships
State Aid Information System
Research and Development
Regional Authority Index
Rural Development Programme
Regulatory Impact Assessment
Research and Innovation Strategy for Smart Specialisation
Regional Operational Programmes
Research, Technology and Innovation
Social Economy Organisation
Small and Medium Enterprises
Special Spatial Plan
Tourism Trade in Value Added
EU Thematic Objectives
United Nations Refugee Agency
Value Added Tax
Vocational Education and Training
Youth Employment Initiative
Urbanisation Control Zones
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Executive summary
Key messages
After the 2008 crisis, the Greek economy initiated its recovery in 2017, bouncing back in 2018 with a 1.9%
growth rate that was estimated to reach up to 2.3% by 2019. Unemployment – although still high – has
edged down from 27.5% in 2013 to around 17.3% in 2019.
While Greece has contained the COVID-19 pandemic effectively, the negative impact on tourism,
investment and public finances is a setback to Greece’s longer-term recovery. The impact of the COVID-19
pandemic on the tourism sector is unprecedented. Tourism has been hard hit, especially in places where
the sector supports many jobs and businesses. OECD estimates on the COVID-19 impact point to a 60%
decline in international tourism – if recovery starts in July in 2020. This could rise to 75% if recovery is
delayed to September and up to 80% if recovery begins in December 2020. Domestic tourism will recoup
more quickly but will not be able to fully compensate for the decline in international tourism.
The unique geography of Greece shapes the distribution of population and high concentration of economic
activities in urban regions. Compared to other OECD countries with large, sparsely populated regions,
relatively more people live in Greece’s rural areas, especially remote ones with rather limited access to
cities. The impact of the financial crisis has not been equal across Greek regions. Greece now has the
9th highest level of regional disparities in gross domestic product (GDP) per capita among 30 OECD
member countries. The greatest declines in productivity because of the 2008 crisis occurred in remote
islands, but also in Western Greece and Attica. The latter, which was contributing 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 over half (58%) of total job losses in Greece.
This economic shock was so sharp that “lagging” Greek regions have converged to Attica’s current
productivity level – which remains below its potential. This may be considered the “wrong kind” of regional
convergence.
OECD estimates show that, at a growth rate of around 2%, Greece would recover to its pre-crisis period
level in 15 years. In contrast, if growth in Attica could be restored to 3%, the recovery period in Greece
would be halved to around 8 years. Thus, revamping the productivity of Athens is key to fostering Greece’s
national growth, especially under the current circumstances of a global slowdown due to COVID-19.
Recovery in Attica, however, should not be isolated. Balanced and widespread growth across all Greek
regions is needed. European Union (EU) funds have played an important role during the recovery process
and will continue to be crucial in the future. They represent over 80% of Greek public investment and
OECD analysis estimates that, between 2009 and 2018, each euro of EU Structural Funds in Greece
generated an additional 64 cents of GDP.
Since the global financial crisis, Greece has undertaken an impressive number of nationwide structural
reforms (from pension and tax reforms to justice, labour market, public investment, social, energy and
environmental policies) as well as decentralisation and regionalisation reforms. The country is now facing
additional development priorities from fostering digitalisation, improving entrepreneurial and business
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ecosystems, and addressing environmental challenges. These new priorities must also tackle existing
social challenges and mitigate rising inequalities.
The current COVID-19 outbreak is slowing recovery down and putting the Greek economy at risk again.
While the medium- and long-term impacts of the pandemic remain uncertain, the Greek government will
need to co-ordinate policy action at the local, regional and national levels in order to minimise job losses
and business closures in the immediate and medium terms.
Key recommendations
Preparation of the current national strategy should be complemented by a new place-based development
strategy. Regions, cities, rural communities and municipalities need to align objectives and all have an
active role to play in meeting the economy-wide targets while tailoring public investments and service
delivery to local needs. To fulfil this task, Greece will need to continue advancing reforms in institutional
and fiscal multi-level governance systems and sustain the progress in the governance and utilisation of
EU funds in the 2021-27 programming period, with a particular focus on regional development.
To sustain Greece’s economic recovery from the global financial crisis and ongoing COVID-19 pandemic,
the review has identified concrete actions in five main areas:
1. Strengthen regional policies
Strengthen the place-based approach to regional development by creating a national placebased policy with a long-term vision, prioritising place-based policies across different types of
Greek regions and adapting structural policies to their needs and opportunities. Elaborate longterm evidence-based and integrated development strategies at the regional and local levels and
support place-based policy intervention through quality data and public consultations.
Make better use of spatial planning and develop integrated perspectives at the regional level
through the facilitation and speeding up of the transition to the new integrated approach to regional
spatial planning, aligning regional spatial plans and regional operational programmes.
Develop an explicit national urban policy, strengthening the governance systems of the
metropolitan areas of Athens and Thessaloniki and reinforcing inter-municipal co-operation to
foster the role of cities and municipalities as economic development actors.
Strengthen the co-ordination of rural development with sectoral policies and develop an
integrated medium- to long-term overarching rural development strategy.
Foster rural economic diversification supporting bottom-up initiatives beyond agriculture and
traditional sectors, favouring the digital transformation of the rural economy and sustaining the
development of a broader view of innovation – beyond the traditional science and technologybased model – through better-tuned regional smart specialisation strategies.
Strengthen the competitiveness of the agro-food sector from the bottom up through the
development of new and more focused measures to preserve and consolidate agricultural land,
strengthening demand-driven farm advisory and extension services and modernising producer
groups and co-operative enterprises.
2. Foster productivity, competitiveness and local job creation in all regions
Focus support on regions’ key economic specialisations, further differentiating smart
specialisation strategies among groups of regions in Greece.
Strengthen support to SMEs for local employment generation by mobilising regional networks
of entrepreneurs and researchers to better link research and businesses, consolidating the
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knowledge triangle of education, research and innovation through place-based policies and
strengthening and expanding business services for SMEs in all Greek regions.
Develop integrated national and regional tourism strategies for the medium to long term
using tourism as a catalyst for regional development and connecting tourism to local value chains
by: fostering integrated approaches to thematic tourism product development and marketing;
promoting vertical production processes to enhance the delivery of high added-value certified food
products; developing an all-year-round supply chain network; developing a comprehensive agrotourism policy; and promoting measures and actions in regions and localities targeted at fostering
digitalisation in the tourism sector.
3. Foster quality employment and social inclusion in all regions
Facilitate the creation of quality jobs and support the development of relevant local skills
through aligning education and skills provision with local labour markets, strengthening
mechanisms and actions to better match job seekers and employers in local labour markets and
developing regional strategies to retain youth and talent.
Reinforce local services to reduce poverty and support social inclusion by strengthening both
awareness and the ecosystem to support the social economy in all Greek regions and reinforcing
actions at the national and regional levels to better connect local labour markets with existing social
services.
4. Enhance connectivity and sustainable development in all regions
Enhance regional connectivity to meet current and future needs by advancing in the National
Digital Strategy and strengthening the digital infrastructure across regions – particularly in remote
places.
Ensure sustainability from the bottom up and protect natural assets in Greek regions by fully
implementing Greece’s Circular Economy Strategy, enforcing its action plan in all regions and
increasing the commitment to the environmental agenda at the subnational level.
5. Strengthen multi-level governance for regional development
Consolidate the implementation of the decentralisation and regionalisation reforms by better
aligning fiscal and administrative decentralisation and further differentiating territorial governance.
Strengthen the Greek multi-level governance framework and regional development,
consolidating and expanding the progress made over 2014-20 for the overall architecture of the
ESPA system. Simplify and streamline the rules and procedures both for the management of EU
Structural Funds and for the design and implementation of regional development policies.
Reinforce the administrative capacities of all regions, municipalities, actors and institutions.
Improve efficiency and increase trust among parties through strengthened inter-sectoral and
vertical co-ordination across municipalities and regions while building stronger partnerships with
subnational governments.
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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.
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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 longterm 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.
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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:
o
Metropolitan regions with developed research and technology capabilities and a potential to
further diversify knowledge-intensive manufacturing and services (Attica, Central Macedonia).
o
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.
o
Rural regions with local services and primary activities, and potential for innovation in the agrofood industry, also linked to tourism (Epirus, Peloponnese, Thessaly and Western Greece).
o
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, firmlevel 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
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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 coordinate 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:
o
developing specific partnership agreements or contracts between the largest metropolitan
areas and the government (as in the United Kingdom, for example).
o
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.
o
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
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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. Intermunicipal 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 ruralurban 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:
o
strengthen the tradeable sector in rural areas through value-added activities and linking up to
export markets.
o
support the development of rural tourism in key rural destinations through quality tourism
products and by linking up to local food and handicraft industries.
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o
strengthen the valorisation of rural amenities and ecosystem services.
o
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 nonstandard 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:
o
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.
o
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.
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o
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 knowledgeintensive 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:
o
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 “homegrown” innovation instead of purchasing it.
o
consolidating the knowledge triangle of education, research and innovation by placebased 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.
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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:
o
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.
o
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.
o
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.
o
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
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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
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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 highspeed 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.
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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:
o
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.
o
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.
o
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.
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The Inter-ministerial Committees for the Redefinition of Competences and Procedures introduced
by the Kleisthenis reform should consider:
o
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.
o
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
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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
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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
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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 interministerial 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.
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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 12 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.
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2 Socio-economic trends, growth
potential and opportunities
This chapter discusses the socio-economic structure and performance of
regions in Greece, with a focus on how the 2008 financial crisis affected
economic structures and future regional growth potential. The diagnosis
made in this chapter serves as a basis for framing regional policies to set
regions on a solid and fast recovery path that can help alleviate the
worsening socio-economic conditions brought about by the crisis. The
uneven and deep effects of the crisis mean that regional development
strategies require not only a substantial increase in economic activity and
employment, but also the reallocation of resources to more productive
uses. OECD analysis estimates that, between 2009 and 2018, each euro of
EU Structural Funds in Greece generated an additional 64 cents of GDP. In
this context, the EU funds have been key to supporting public investment
and GDP growth in Greece.
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Summary
In the aftermath of the financial crisis, Greece experienced the largest recession across OECD countries.
While most OECD countries returned to gross domestic product (GDP) growth by 2010, Greece only did
so in 2017 (1.3%) and 2018 (2.2%). The crisis and long recovery period had sizable consequences for the
economy and its regions so that Greece’s GDP is today one-fourth smaller than in 2007. To recover what
was lost across all regions, Greece would need to boost its economic growth considerably, especially in
lagging regions: growing at average 2014-17 levels means Greece would only return to its pre-crisis level
beyond 2050 and some underperforming regions would not recover even within this century.
This chapter discusses the socio-economic structure and performance of regions in Greece, with a focus
on how the 2008 financial crisis affected economic structures and future regional growth potentials. The
diagnosis made in this chapter serves as a basis for framing regional policies to set regions in a solid and
fast recovery path that can help alleviate the worsening socio-economic conditions brought about by the
crisis.
In Greece, unique geographical characteristics shape the distribution and access of people and resources
across the territory. A mountainous terrain and island geography mean that relatively more people in
Greece live in low-density rural areas with less access to cities than in other OECD countries. In fact, the
share of people in remote rural areas resembles that of countries with large sparsely populated territories
such as Norway and Sweden, with the difference that in Greece most people in remote regions lack
adequate access to the Internet. The geographical conditions have also resulted in a high concentration
at the top of the urban system, so that almost one out of two people live in one of the two main metropolitan
areas, Athens (located in the Attica region) and Thessaloniki (located in Central Macedonia). In between
these extremes, medium-sized cities will likely continue losing population to ageing and urban
concentration in the next five decades despite recent incoming waves of international migrants.
Against this background, the analysis of the effects of the crisis and long recovery shows a fundamental
change in the population composition and productive structure of regions. The loss of half a million people
nationwide to outmigration had a much larger negative impact on the share of the working-age population
in urban regions including Attica (11% decrease) compared to intermediate and rural regions (4% and
2.5% decrease respectively) between 2000 and 2019. Because migrants were mostly working-age,
outmigration also led to an acceleration of the elderly dependency ratio especially in urban regions where,
by 2016, there was one elderly person for every three working-age persons.
The productive structure of Greece changed as a response to the shock of the crisis. In the post-crisis
period, resources shifted towards tourism-related sectors, allowing island regions to buffer the effects of
the crisis in terms of employment and incomes. However, the bulk of sectors declined and regions
specialised in manufacturing and construction were badly hurt. The economic decline that followed the
crisis was mostly concentrated in Attica and Central Macedonia, where more than half of the near
725 000 jobs lost occurred. Job creation in two island regions relying on tourism was not nearly enough to
compensate for the downfall of the two main regions.
Because of the combined effect of population and productive structure shocks, the largest urban regions,
Attica and Central Macedonia, showed a remarkable lack of resilience to the negative economic shock
compared to other island regions that rely on tourism. Particularly striking is the complete change in the
role of Attica that went from leading productivity growth in the pre-crisis period to dragging the recovery in
the post-crisis period, despite its strong potential.
Still, urban regions concentrated most of the economic activity in the country in 2017. Attica is the only
region that hosts activities that benefit from scale economies and it is the only region with a larger share
of Greek GDP (48%) compared to population (35%). The distance between Attica and the rest of the
country is large: regions at the bottom produce only half a unit for every unit of GDP per capita produced
in Attica. As the largest, most diverse in terms of economic structure and most educated regional economy,
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Athens has the potential to generate further scale effects in Attica and Greece. However, with the crisis,
Athens lost ground to all other OECD cities of similar size including those over which it held an initial
advantage (Barcelona, Manchester and Naples).
Employment recovery is thus key in addressing pressing social issues including low incomes, poverty and
inequality across regions. The uneven and deep effects of the crisis mean that regional development
strategies require not only a substantial increase in economic activity and employment but also the
reallocation of resources to more productive uses. A decade after the crisis, more than half of all part-time
employees are in search of full-time positions and the share of unemployed who have not had a job for
more than a year is over 40 percentage points higher in Greece compared to other OECD countries.
Unemployment rates in regions in Greece are amongst the highest across the OECD and in some regions
more than half of young workers are unemployed. Despite the high share of university graduates that place
Athens at the level of European capitals like Berlin, investment in research and development (R&D) is low
and the innovation performance of regions in Greece is at the bottom across OECD regions.
Since the early 1980s, the European Union Structural Funds (now called European Structural and
Investment Funds, ESIF) have provided financing aid to EU member states to promote convergence
across Europe’s regions. ESIF finance several economic and social areas including public infrastructure
and human capital, social policy and public administration. Greece has been a major beneficiary of these
funds. Without ESIF, the crisis would have been deeper and the ongoing recovery slower. The results from
two different models show that between 2009 and 2017, each euro of EU funds generated an extra 64
cents of GDP, implying a multiplier of 0.64. In this context, the EU funds have been key to supporting public
investment and GDP growth. Another study estimates that EU Structural Funds in the programming period
2007-13 boosted Greece’s GDP by 2.2% a year by 2015 and by 2023; the yearly impact is predicted to
increase to 2.8% (Monfort et al., 2017[1]).
This chapter contains five sections. The first section gives an overview of relevant macroeconomic trends
affecting regional performance before and after the economic crisis. The second section describes the
distribution of people and economic activity across the Greek territory, highlighting the role of geographical
factors in their concentration. The third section analyses the effect of the crisis on regions in terms of
demographic dynamics, income and poverty, employment, economic structure and productivity. The fourth
section discusses the role of innovation, human capital, environmental and social capital as enabling
factors for regional development. The last section discusses the impact of the EU funds on the Greek
economy. Beyond immediate responses (more information on www.oecd.org/coronavirus), the mediumand long-term impacts of the recent (February 2020-ongoing) COVID-19 pandemic remain uncertain and
will vary between countries and segments of the industry.
National economic trends framing regional development
Recent macroeconomic indicators show that economic recovery in Greece is within reach but it will take
time to materialise. This section analyses the evolution of the main macroeconomic indicators on economic
activity, productivity, prices and external performance before and after the economic crisis.
At current growth rates, Greece would recover its pre-crisis GDP level only in 15 years
GDP in Greece grew by 1.9% in 2018, with estimates showing GDP growth at 2.3% in 2019 and 3% in
2020. While this is a positive development, GDP in Greece would recover to its 2007 GDP levels in about
15 years at this growth pace. In 2007, prior to the crisis, GDP in Greece had increased by one-third of its
value in 2000, growing at a faster rate than OECD countries (Figure 2.1). With the crisis, GDP levels fell
by 24% by 2016 as compared to its peak in 2007. Although GDP subsequently stabilised, by 2018, the
economy had a similar size than it had in 2003 and was one‑fifth smaller than before the crisis. In contrast,
GDP in OECD countries recovered to pre-crisis levels by 2011 and in 2018, was 40% larger than in 2007.
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Figure 2.1. GDP in Greece and OECD countries, 2000-18
Greece
OECD average
GDP, 2007 = 100
150
140
130
120
110
100
90
80
70
60
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Note: GDP is measured in current prices, constant purchasing power parity (PPPs), 2015 being the reference year, the unit of measure is USD.
GDP is normalised to its 2007 level.
Source: OECD (2020[2]), OECD National Accounts, http://www.oecd.org/sdd/na/, (accessed on 20 February 2020).
StatLink 2 https://doi.org/10.1787/888934166384
After the crisis, GDP per capita in Greece became the third-lowest among OECD
countries
Greece is one of three OECD countries where GDP per capita is lower in 2018 than in 2008. GDP per
capita in Greece stood at USD 28 024 in 2018, down from USD 35 538 in 2008. Across OECD countries,
only Chile and Mexico had lower GDP per capita levels in 2018. In 2008, Greece ranked slightly behind
the OECD average GDP per capita, ahead of Chile, Israel, Korea, Mexico, New Zealand, Portugal, Turkey
and Eastern European countries (Figure 2.2). The deep crisis and slow recovery of the Greek economy
reflect on the overall life satisfaction of the Greek population, which fell to the lowest levels among OECD
countries (Box 2.1).
Figure 2.2. GDP per capita across OECD countries, 2008 and 2018
2018
2008
GDP per capita
140000
120000
100000
80000
60000
40000
20000
0
Note: GDP is measured in constant prices, 2015 PPPs.
Source: (OECD, 2020[3]) Gross domestic product (GDP) (Database), https://data.oecd.org/gdp/gross-domestic-product-gdp.htm, (accessed on
13 August 2020).
StatLink 2 https://doi.org/10.1787/888934166403
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Box 2.1. Well-being indicators in Greece
Greece’s regions are top-scorers in the OECD for the well-being indicators of health and safety but are
among the lowest when it comes to jobs and life satisfaction. Economic outcomes weigh in heavily on
the well-being of Greece in multiple dimensions. Greece fares better in health outcomes, safety and
work-life balance, according to the OECD Better Life Index, a composite indicator of ten well-being
dimensions (Figure 2.3). Yet, subjective well-being is among the lowest in OECD countries, with Greeks
grading their general life satisfaction with an average grade of 5.2, compared to 6.5 OECD average.
More than a decade after the crisis, Greece performs below OECD averages in most economic
indicators of well-being, including jobs and income. Compared to the OECD average, the share of the
working-age population with a job is much lower, about 52% compared to 67%. A large proportion of
the unemployed are unemployed long-term and Greeks face 17.4% loss of earnings if they get
unemployed, compared to 4.9% across the OECD. Job quality, measured in average wages, is far
below the OECD average (USD 25 124 versus USD 44 290), as do household income and net financial
wealth.
In terms of well-being indicators, “civic engagement”, which measures citizens’ participation in the
political process, engagement in developing regulations and inequality, Greece has a grade 3.9 out of
10. “Voter turnout” stands at 64% in the last elections, has fallen since 2007 and is lower than 69%
average across OECD countries. “Community” is 82.3 and puts Greece at the 36th place out of 38
countries. Greeks are also exposed to high air pollution and lower water quality than the OECD average.
Figure 2.3. Well-being indicators in Greece and OECD countries, 2017
Greece
OECD average
Health
10
Life satisfaction
8
Work and life balance
6
Jobs
Safety
4
2
0
Education
Income
Housing
Community
Environment
Civic engagement
Note: Based on the Better Life Index. Each indicator set is measured by one to four indicators from the OECD Better Life indicator set. Each
indicator is normalised between scores of 1 (worst) to 10 (best).
Source: (OECD, 2017[4]), OECD Better Life Index, http://www.oecdbetterlifeindex.org/, (accessed on 16 January 2019).
StatLink 2 https://doi.org/10.1787/888934166422
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Greece has a low incidence of part-time employment, high total working hours and
longer average tenure as compared to other OECD countries
Reducing the costs of labour for firms is a step towards labour retention and slowing down unemployment.
However, the crisis period induced structural changes and sectoral reallocation of economic activity on the
labour market and therefore created large skill, sectoral and locational mismatches, resulting in high
structural unemployment (Tagkalakis, 2016[5]).
Indeed, the labour market in Greece is characterised by a low incidence of part-time employment, high
total working hours and longer average tenure as compared to other OECD countries. By 2017,
unemployment remains high and employment rates low, more than half of all part-time employees are in
search of a full-time position and the share of unemployed who have not had a job for more than a year is
over 40 percentage points higher in Greece compared to other OECD countries.
In 2007, 8% of jobs were part-time, while a share of part-time work in the OECD was a double of the share
in Greece. The prevalence of part-time employment increased to 11% by 2017, mainly driven by an
increase in involuntary part-time employment, as 6.6% of employees would prefer a full-time job instead.
Yet, despite the conditions of part-time work improving in recent years, part-time employees still face a
penalty in terms of pay, job security, training or promotion (OECD, 2018[6]).
Besides high part-time employment, Greece has one of the highest annual working hours across OECD
countries. An average worker in Greece worked 2 018 hours in 2017, the third-largest behind Korea and
Mexico and well above the OECD average of 1 759 hours. Since the crisis, the average hours worked per
employee declined, while the OECD average has been stable. Long working hours are a sign of labour
market rigidities that translate into lower productivity per hour worked.
The average tenure in Greece increased in 2010, which suggest that mostly fewer senior employees were
let go during the crisis period and less new hires were initiated. An average Greek employee had worked
at their current employer for 12.8 years in 2017. This tenure average is close to other southern countries,
including Italy and Portugal, but well above the OECD average of 10.2 years. Long-tenure workers also
face a risk of long-term joblessness (OECD, 2018[6]). The average tenure in Greece reached its peak in
2013 as the labour market recovered and new workers were hired, decreasing average tenure.
Labour productivity has steadily declined since 2007
Labour productivity measures the efficiency of labour input with other factors of production in the production
process and serves as a benchmark for competitive performance across countries. Potential GDP growth
in Greece declined from the early 2000s, due to both falling productivity and employment growth (OECD,
2018[7]). The fall in investments during the crisis has diminished the productive capital in Greece with the
capital’s depreciation rate higher than the investment rate. Low capital accumulation is also holding back
growth in labour productivity and consequently hurting living standards (OECD, 2018[7]).
Greece’s labour productivity stayed below OECD average levels during the period 2000-18. Initial levels
and growth rate between 2000 and 2008 were comparable to those of Slovenia. However, labour
productivity in Greece declined continuously since its peak in 2007. By 2018, it had reached 90% of its
pre-crisis level, similar to the level of labour productivity in some Eastern European countries that had
substantially lowe productivity in 2000.
Compared to other Southern European countries, labour productivity in Greece increased faster in the
period leading up to the crisis. Between 2000 and 2007, Greece improved its productivity by 15%, while
productivity in Italy and Spain remained stagnant. After 2007, productivity growth picked up across
European countries at a different pace, increasing by about 9% in EU28 countries during the past decade,
while it declined in Greece (Figure 2.4).
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Figure 2.4. Labour productivity in selected OECD countries and EU28, 2000-17
Gross value-added (GVA) per hour worked, normalised to its value in 2007
Greece
Hungary
Italy
Spain
EU28
2007=100
125
115
105
95
85
75
65
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166441
While inflation has recently returned wage levels remain below pre-crisis levels
For most of the post-crisis period, Greece experienced deflation. Consumer prices fell continuously
between 2013 and 2016 by 0.8 to 1.7% annually. The deflation trend has reversed since 2017, with prices
increasing by 1.1% in 2017 and 0.6% in 2018 (Figure 2.5). Since 2012, annual inflation in Greece has
remained low at under 2%. Private consumption has stabilised and investments grew by 10% in 2017,
after falling each quarter between 2009 and 2013 by up to 33%.
Figure 2.5. Inflation and real wages in Greece, 2001-18
Inflation
Real wages
%
20
15
10
5
0
-5
-10
-15
-20
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Note: Real wage growth measured using average wages in USD 2016 PPP.
Source: OECD (2020[9]), Average Wages, Inflation CPI (indicators), https://data.oecd.org/, (accessed on 06 March 2020).
StatLink 2 https://doi.org/10.1787/888934166460
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Despite recent inflation, wage pressure remains moderate. Following a continuous drop between 2010 and
2013, real wages stabilised, growing at an annual rate of 1% in 2018. Compared to their highest level in
2009, real wages were 21% lower at their peak between 2013 and 2018 (at USD 33 763), and 19% lower
than in 2007. This contrasts with Italy, Portugal and Spain, where real wages are about the same as they
were prior to the crisis.
Wages in Greece are among the lowest across OECD countries. In 2016, a medium-skilled worker in
Greece earns as much as a worker with the same skills in Portugal, about USD 8.4 per hour worked. The
skill premium for high-skilled workers is about 60% compared to medium-skilled workers, similar to the
premium in the United States (60%) and under the premium in Mexico (89%), Turkey (81%), Portugal
(77%), Hungary (68%), Poland (68%) and Slovenia (65%). Going from low skill to medium skill increases
the hourly wage by about 28% in Greece, which is close to the average skill premium across OECD
countries.
Exports recovered but shifted towards medium-low technology goods
External demand gained importance after the crisis following the crash of internal demand. The share of
exports in GDP rose from 24% in 2008 to 34% in 2017 (OECD, 2018[7]). The value of exports fell sharply
at the end of 2008 and in the first quarter of 2009 (Figure 2.6). Across OECD countries, the value of exports
of goods fell by 22% between 2008 and 2009, and together with exports in services recovered to their
pre-crisis levels by 2011.
While exports of goods recovered to their pre-crisis level by 2011, exports in services were still below their
pre-crisis peak by 2019. Manufacturing goods represent the largest share of the goods exports, while
agricultural products are also important export commodities especially for the largest trading partners, as
they represented 14% of exports to Italy and 10% to Germany. In contrast, exports in services had not yet
reached their pre-crisis peak by 2017. Still, service exports represented more than half of total exports in
2019, making Greece one of the top countries where service sector exports represent the majority of trade.
Across OECD countries, only Luxemburg (84%) and Iceland (56%) have a higher share of services in total
exports.
Figure 2.6. Exports of goods and services in Greece, 2002-19
Goods
Services
USD millions
16000
14000
12000
10000
8000
6000
4000
2000
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Note: Quarterly data. The value of exports is converted to USD and seasonally adjusted.
Source: OECD (2020[10]), International Trade and Balance of Payments (database), http://www.oecd.org/sdd/its/, (accessed on 14 February
2020).
StatLink 2 https://doi.org/10.1787/888934166479
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Despite increases in R&D-intensive industries exports, Greece’s export portfolio shifted towards mediumlow technology exports. Between 2000 and 2017, the share of exports in medium-low technology
manufacturing in total primary and manufacturing exports increased by 4.2 percentage points, from 48%
in 2000 to 53% in 2017 (Figure 2.7). Almost one-third of 2016 manufacturing exports were in coke and
refined petroleum products, followed by food and beverages products (18%) and basic metals (11%).
Meanwhile, the share of exports in R&D intensive industries increased from 7.9% to 8.2% while the share
of exports from low technology industries fell by 3.4%.
Compared to their exports, Greece imports more from industries with better technologies. Across economic
sectors, the largest share of merchandise imports come from mineral fuels, lubricants and related material
(23%), followed by machinery and transport equipment (22%), and chemicals (16%) (OECD, 2018[7]). Out
of the total value of imports, 12% are from high and 20% from medium-high technology industries.
Figure 2.7. Trade in primary and manufacturing goods by knowledge intensity, 2000-17
Share in exports and imports in 2017 and change over 2000-17
Imports
Exports
Change imports
Change exports
Change in shares, % (arrows)
15.0
Share, %
60
9.1%
50
10.0
4.2%
40
5.0
1.9%
0.3%
30
0.0
-1.0%
-1.9%
20
-3.4%
10
0
-10.0
-9.1%
High R&D intensive industries
Medium-high R&D intensive industries
-5.0
Medium-low technology industries
Low technology
-15.0
Note: Classification of industries by knowledge intensity is defined by Eurostat.
Source: OECD (2019[11]), Industry and Services (database), https://www.oecd.org/statistics/data-collection/industryandservices.htm, (accessed
on 20 February 2019).
StatLink 2 https://doi.org/10.1787/888934166498
The distribution of people and economic activity across regions
Because of its idiosyncratic features, geography is an important determinant of local economic outcomes
in Greece. Mountainous and island geographical features are behind high population concentration in the
two main metropolitan areas and the existence of sparsely populated in large parts of the territory. This
section discusses main geographical features and administrative divisions of Greece, the distribution of
the population across the territory and inequalities in access to cities. It then continues with a description
of the distribution of economic activity, which mirrors the distribution of the population across the territory.
The next section will discuss the regional dynamics before and after the crisis.
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Unique geographic features shape the distribution of people across regions
Greece has a unique mountainous and island geography
Greece is located in the south-eastern part of Europe, occupying almost one-quarter of the territory of the
Balkan Peninsula and two smaller peninsulas of Khalkidhiki and Peloponnese. The country borders
Albania, North Macedonia, Bulgaria in the north and Turkey in the east. The Aegean Sea surrounds the
east of the country, the Ionian Sea the west and the Mediterranean Sea the south.
Greece has the largest coastline in Europe and the 11th longest coastline in the world at 13 676 km in
length, with around 6 000 islands1 that represent about 20% of the national territory, out of which only 227
are inhabited. The largest islands are Crete, Euboea, Lesbos and Rhodes. The remaining islands are at
most two-thirds of the size of Rhodes, with 27 islands spreading over an area of at least 100 km² (see
Box 2.2).
Seas and coastal areas play a very important economic and strategic role for Greece and Greece’s
maritime and blue economy have great potential for innovation and growth. In 2018, the blue economy in
Greece counted 14.2% of all jobs and about 5.2% of GVA. Coastal tourism and maritime transport were
the larger contributors with 13% of the GVA and 3.8% of the employment, while marine living resources
generated around 7% of jobs and GVA (EC, 2020[12]). Located on the crossroad of Africa, Asia and Europe,
Greece holds a strategic position in global freight transport. Most of the trade in goods by volume and
value is exchanged using cargo. The port of Piraeus in Athens is one of the top ten European ports in
number of cargo units by 2017. In addition, it is one of the fastest-growing major European ports; the
number of cargos handled more than doubled between 2011 and 2017, in line with the increase in exports
in the same period. Passenger ports are also busy. In 2015 more than 8 million passengers passed through
the port of Piraeus, a volume only surpassed by the ports of Calais, Dover, Helsinki, Stockholm and Tallinn
in Europe. Yet, in 2015, the port of Piraeus served 25% fewer passengers than in 2010. The port of
Perama, the western terminus of Athens’ port, embarked and disembarked over 7 million passengers,
falling by 45% between 2010 and 2015 (Eurostat, 2015[13])
Box 2.2. National administrative divisions, island groupings and OECD regional typology
Greece is a unitary country with a two-tier sub-national system. The local government structure is
represented by 325 municipalities (dimos) and 13 regions. This system is in place since the 2010
Kallikratis reform, replacing a previous organisational structure of 1 033 municipalities and communities
and 54 prefectures. The average population of a municipality is 33 410 inhabitants (Brezzi et al.,
2011[14]). The municipalities are further divided into 6 133 local communities (with less than 2 000
inhabitants) and municipal communities (with more than 2 000 inhabitants). The General Secretary
appointed by the Ministry of the Interior leads seven deconcentrated state administrations. Greece is
divided into 74 regional units for administrative purposes.
The only official definition of urban areas and rural areas is the definition of the Hellenic Statistical
Authority (in the Statistical Yearbook of Greece 2009-10). It defines an urban population as the
population of municipal/communal departments in which the largest population centre has 2 000 or
more inhabitants; and rural population as the population of those municipal/communal departments in
which the largest locality has less than 2 000 inhabitants.
Moreover, there is no clear official medium-sized cities in Greece. A population of 50 000 inhabitants is
used as a threshold for medium-sized cities in Law 3852/2010 for Local Administration. Cities with a
population of between 2 000-10 000 inhabitants are considered very small (previously semi-urban) and
from 10 000-50 000 are considered small to medium.
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Islands are grouped into seven clusters. Crete with its surrounding islands constitutes the administrative
region of Crete. The Argo-Saronic Islands spread near Athens in the Saronic gulf and the administrative
region of Attica. Euboea is located in Continental Greece. The North Aegean islands are located in the
northeastern Aegean Sea near the west coast of Turkey. The North Aegean islands belong to the
administrative region of North Aegean, with the exception of Samothrace and Thasos , which are
administratively attached to the Eastern Macedonia region. The third-largest Greek island, Lesbos, is
also located in this cluster. Islands in the southern part of the west Turkish coast are labelled
Dodecanese islands and include Rhodos. The Cyclades is a dense cluster of islands in the central part
of the Aegean Sea. The Dodecanese islands and Cyclades compose the administrative region of the
South Aegean islands. Sporades is a group of islands in the Aegean Sea near the coast of Euboea in
the region of Thessaly, and finally, the Ionian Islands are located in the west in the Ionian Sea. The
Ionian Islands constitute the region of the same name except for the island of Kythera, which is
administratively attached to Attica.
The regions in OECD countries are classified into two territorial levels that reflect the administrative
organisation of the given country. Greece has 13 large regions (TL2) and 52 small regions (TL3). TL2
regions correspond to 13 Greek regions formed by the Kallikratis reform. TL3 regions correspond to
regional units and a combination of regional units. According to the OECD regional typology, out of 52
TL3 regions: 8 are predominantly urban (PU), 15 are intermediate (IN), 3 are predominantly rural close
to a city (PRC) and 26 are predominantly rural remote (PRR). Such typological classification is useful
for comparison of indicators across countries. More details on OECD regional typology can be found in
(Brezzi et al., 2011[14]).
Source: (Brezzi et al., 2011[14]), “OECD Extended Regional Typology: The Economic Performance of Remote Rural Regions”,
https://dx.doi.org/10.1787/5kg6z83tw7f4-en.
Most of the Greek territory is mountainous. The Pindus range, an extension of the Dinaric Alps, spreads
across Greece from the northwest to the southeast. Another part of the same mountain stretches across
the Peloponnese region and the Aegean Sea under water, forming many of the islands. The Rhodope
Mountains is another mountain range at the border with Bulgaria. The highest peak is Mount Olympus at
2 918 m above sea level. The Central and Western regions also contain many mountainous peaks and
canyons. Forests spread across the eastern part of Greece. Central Macedonia and Thessaly territories
contain lower elevation areas (Figure 2.8).
In Greece, relatively more people live in rural areas compared to other OECD countries
The population of Greece was 10.72 million in 2019, which places it at the 18th place in the ranking of the
most populated OECD countries. Compared to OECD countries, predominantly urban regions in Greece
contain a smaller proportion of people (45% versus 48%) and land (2.9% versus 6.1%); intermediate
regions contain a smaller percentage of people (23% versus 27%) and a larger percentage of land (25%
versus 11%); and predominantly rural regions contain a larger percentage of people (32% versus 25%)
and a smaller percentage of land (72% versus 83%) (Figure 2.9, see Box 2.2). The share of the population
in urban regions in Greece is comparable to countries of similar population size such as Portugal (47%)
and Sweden (50%).
Out of 3.4 million people living in predominantly rural regions, 3 million live in rural remote regions, making
Greece the country with the second-largest share of the rural population in remote regions across OECD
countries (Figure 2.10), with levels similar to countries with large areas relative to population, such as
Iceland and Norway.
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Figure 2.8. Elevation in Greece and TL3 administrative divisions
Source: Grid elevation tiles obtained from Amazon Web Services. For a complete list of sources, see https://github.com/tilezen/joerd/blob/mast
er/docs/data-sources.md.
Figure 2.9. Population shares by regional typology across OECD countries, 2019
Predominantly urban
Intermediate
Predominantly rural
%
100
90
80
70
60
50
40
30
20
10
0
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166517
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Figure 2.10. Population in remote rural TL3 regions across OECD countries, 2019
% of national population
35
30
25
20
15
10
5
0
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166536
Figure 2.11. Population density in TL3 regions in Greece, 2019
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
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The mountainous and island geography results in relatively low and widely varying population density
levels across the Greek territory. All urban small regions belong to the two main large regions of Greece
that concentrate more than half of the country’s population: Attica, home to the capital Athens, and Central
Macedonia, home to Thessaloniki, the second-largest city. Meanwhile, Epirus and Continental Greece are
entirely composed of predominantly rural regions; the North Aegean, Peloponnese and Western
Macedonia regions all have more than 73% of their population living in rural remote small regions.
Figure 2.12. Distribution of the population in Greece by OECD regional typology (TL3), 2019
Urban
Intermediate
Rural
Attica 34.9%
Central Macedonia 17.5%
Thessaly 6.7%
Crete 5.9%
Eastern Macedonia 5.6%
Western Greece 6.1%
South Aegean 3.2%
Peloponnese 5.4%
Ionian 1.9%
North Aegean 2.1%
Western Macedonia 2.5%
Central 5.2%
Epirus 3.1%
0
10
20
30
40
50
60
70
80
90
100
%
Note: The country’s distribution of population among regions is listed next to the region’s name. The bars indicate the percentage of the
population living in TL3 regions classified into three types of regions according to the OECD regional typology.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166555
The level of access to cities in Greece is comparable to that of countries with large sparsely
populated regions
The proportion of people with relatively low access to a city in Greece is high compared to OECD countries.
People in mountainous areas and small islands need considerable travel time to reach the closest city:
about a quarter of the population in Greece lives at least a 60-minute drive from a populated centre with
50 000 inhabitants or more (Figure 2.13). Across OECD countries, this is comparable to the share of
population distanced from a city in sparsely populated countries such as Canada or Iceland.
About 1 million people in Greece (approximately 973 000) must travel at least 90 minutes to reach the
nearest city. Some populated areas do not have access to a city even within two or more hours of travel.
It takes more than six hours on average to reach the nearest town from islands in the South Aegean region,
almost three hours from the Ionian Islands region and over two hours from the North Aegean and
Peloponnese regions. These differences in accessibility highly influence the incidence of seasonal
activities across the territory (see Box 2.3).
Accessibility to towns and cities matters for a number of reasons. Larger agglomerations have more
dynamic and diversified economies and a greater range of public and private services available, including
specialist services that are unlikely to exist in smaller communities (e.g. healthcare specialists and postsecondary education institutions). In contrast, regions with more limited accessibility – like Greece’s many
islands – face higher transportation costs and seasonal transport variability. Moreover, many islands are
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47
poorly connected to core energy infrastructure and obtain their electricity primarily from inefficient,
expensive and polluting diesel generators (Roinioti and Koroneos, 2019[15]).
Figure 2.13. Share of the population by accessibility to a city, 2015
Over 60 min
Share in total population
0.8
Over 90 min
1.2
0.7
1
0.6
0.8
0.5
0.4
0.6
0.3
0.4
0.2
0.2
0.1
0
0
Note: Accessibility is measured as the median time in minutes to travel from the TL3 region to the closest town or city with at least
50 000 inhabitants. The accessibility to cities grid as described in Weiss, 2018[16] is used to calculate the median TL3 time to the closest city
across grid-cells that fall within TL3 boundaries A city is defined as an urban centre in the GHSL SMOD layer, that is, “contiguous cells with a
density of at least 1 500 per km2 or a density built up greater than 50% and a minimum population of 50 000 inhabitants” (Weiss, 2018[16]). Travel
times are based on an impedance travel grid capturing the availability of roads, railroads, waterways and topographical conditions.
Source: Calculations based on Weiss, 2018[16] using the Global Human Settlement Layer (2015).
StatLink 2 https://doi.org/10.1787/888934166574
Box 2.3. The seasonal economy of Greek islands
During the summer period, Greek islands are relatively well connected but transport options diminish in
the winter, posing significant challenges to access to services and public goods. About 12% of the total
number of subsidised ferry routes provided their services less than 52 times a year and 22% of routes
are served exactly 52 times per year. About 10% of the routes have at least a daily service on average
over the year (Angelopoulos, Chlomoudis and Papadimitriou, 2013[17]) The ferry schedule changes in
the winter, when ferry frequency drops to two times per week. The case of the island of Anafi in the
South Aegean with 271 inhabitants during the wintertime and up to 2 000 in the summer illustrates the
situation: the only way to get to Anafi is maritime transport, which takes 19 hours from Athens and much
longer in winter months when the ferry frequencies drop.
Regarding air transport, there are 39 airports in Greece, including 15 international, 5 serving 85% of the
total air traffic. About three-quarters of tourist trips are made via air transport (ECORYS, 2007[18]) The
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South Aegean region has at least ten national and international airports, the North Aegean five and the
Ionian Islands four.
The remaining islands that do not have an airport must rely on the ferry connections. As the cost of
serving an island can be significant, ferry stops are subsidised by the national government. Public
service obligation ensures transport services necessary to service provision in areas with lack of
commercial potential, in concordance with the EU Charter of Fundamental Rights (Article 36) that
argues for access to services of general economic interest to promote social and territorial cohesion of
the union. In 2011, public service obligation services subsidised 87 routes out of which 56 were interisland connections.
Source: (Angelopoulos, Chlomoudis and Papadimitriou, 2013[17]) Cost Assessment of Sea and Air Transport PSO Services: The Case of
Greece; (ECORYS, 2007[18]), Study on Strategic Evaluation on Transport Investment Priorities under Structural and Cohesion Funds for the
Programming Period, http://www.ecorys.com.
The lack of physical access in Greece is not balanced with higher Internet access. Although access to
services improved between 2006 and 2017, Greek regions remain among the bottom regions in terms of
broadband Internet access. In Attica, the most economically advanced region, only 59% of households
have access to broadband Internet. This level is comparable to regions in Chile, Mexico, Turkey and some,
mostly remote, regions in Israel, Japan, New Zealand, Poland and the United States.
Most of the urban population in Greece is concentrated in two metropolitan areas
The share of urban population living in metropolitan areas in Greece stands out in comparison to other
OECD countries. More than half (57%) of country inhabitants live in functional urban areas (hereon called
cities), distributed into: 33% in a large metropolitan area; 10% in a metropolitan area; 6% in medium-sized
cities; and 8% in small cities (Table 2.1 and Figure 2.14). In comparison, 39% of the OECD population
lives in large metropolitan areas, 16% in metropolitan areas, 11%, in medium-sized cities and 4% in small
cities. Besides small countries with no medium-sized cities (Estonia, Latvia and Luxemburg) across OECD
countries, only Korea has a smaller share of the population in medium-sized cities (5%) compared to
Greece (OECD, 2018[19]). Medium -sized cities in Greece are also smaller than what the rank-size rule of
city size would predict (see Box 2.4).
Table 2.1. Number of functional urban areas (FUAs) and population share by size category, Greece,
2017
FUA category (size range)
Number
Share of national population (%)
Large metropolitan area
(over 1.5 million inhabitants)
1 (Athens, 3.5 million inhabitants)
33
Metropolitan area
(500 000 to 1.5 million inhabitants)
1 (Thessaloniki, 1 million inhabitants)
10
Medium-sized
(250 000 to 500 000 inhabitants)
6
6
Small
(50 000 to 250 000 inhabitants)
6
8
Total
14
57
Source: OECD (2019[20]), Functional Urban Areas, http://www.oecd.org/cfe/regionaldevelopment/Greece.pdf (accessed on 28 July 2020).
StatLink 2 https://doi.org/10.1787/888934166593
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Figure 2.14. Functional urban areas in Greece
Source: OECD (2019[20]), Functional Urban Areas, http://www.oecd.org/cfe/regionaldevelopment/Greece.pdf (accessed on 28 July 2020).
Box 2.4. Rank-size rule applied to cities in Greece
Medium-sized cities in Greece seem to be under-sized
The city size distribution in Greece compared to a rank-size rule shows that middle-size cities in Greece
could potentially host a larger share of the urban population. According to the rank-size rule of the cities
(Zipf’s law), the largest city is usually twice the size of the second-largest city, with this relation
continuing linearly. For Greece, a graphic representation of cities with more than 75 000 inhabitants
shows that the smaller cities have a population under the rank-size rule prediction. A slope smaller than
minus one is indicative of primacy of the main city, Athens. Thessaloniki, which is less one-third of the
size of Athens, would potentially host another 760 000 inhabitants for a perfect rank-size rule match.
The gap between Thessaloniki and the third-largest city is even larger. Patras has only slightly more
than one-fifth of Thessaloniki’s population, suggesting that it would be able to host another 300 000
people.
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Figure 2.15. City size distribution in Greece, 2017
Population (in thousands), log scale
Athens
3 633
City size prediction
y = -1.4x + 15.9*
1 055
Thessaloniki
223
Larisa
Patras
Ioannina
Volos
Serres
Trikala Xanthi
Kavala
Katerini Kalamata
Irakleio
76
Chania
1
10
2
3
4
10
Rank, log scale
Note: Cities refer to functional urban areas. Prediction is estimated given the size of Athens. The linear fitted lower line takes all functional
urban areas.
Source: OECD (2019[20]), Functional Urban Areas, http://www.oecd.org/cfe/regionaldevelopment/Greece.pdf (accessed on 28 July 2020).
StatLink 2 https://doi.org/10.1787/888934166612
Intermediate and rural regions will shrink in the next five decades
Greece’s population is ageing – a megatrend that is common across many OECD countries. The
percentage of people of 65 years of age or more is 24%, about 4 percentage points above the value for
OECD countries, and has a similarly balanced distribution between females (25%) and males (22%) to
OECD countries (21% females versus 18% males) (Figure 2.16). Low fertility rates have affected the
proportion of young people that could potentially join the labour force within the next decade: in Greece,
the proportion of people in the 0-10 age bracket is 14% whereas across OECD countries it is 17%. In turn,
the elderly population increased by about 21% while the working-age population shrank by 6% between
2001 and 2017.
Intermediate and rural regions are projected to experience considerable population losses between 2015
and 2060, while population levels in urban regions are projected to remain relatively stable (Figure 2.17).
Population levels in intermediate regions will decrease from approximately 2.5 million people in 2015 to
approximately 1.5 million in 2060, while rural regions are projected to shrink from about 3.5 million to about
2 million.
Meanwhile, international migrants residing in Greece are mostly concentrated in Athens. According to the
latest population census, in 2011, the share of foreign residents from non-EU and EU countries in the total
population was 9% and 3% respectively. Besides Attica, foreign residents also cluster in Northern Greece,
Central Macedonia and Continental Greece (Figure 2.18).
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Figure 2.16. Population distribution by age group in Greece and OECD countries, 2018
Secondary axis used for OECD values (number of persons, thousands)
Males Greece
Females Greece
Males OECD
Females OECD
Persons
(thousands)
60 000
40 000
20 000
0
20 000
40 000
60 000
80+
75 to 79
70 to 74
65 to 69
60 to 64
55 to 59
50 to 54
45 to 49
40 to 44
35 to 39
30 to 34
25 to 29
20 to 24
15 to 19
10 to 14
5 to 9
0 to 4
600
400
200
0
200
400
600
Source: OECD (2020[21]), Demography and Population (database), https://data.oecd.org/pop/population.htm, (accessed on 18 February 2020).
StatLink 2 https://doi.org/10.1787/888934166631
Figure 2.17. Population projections by type of TL3 region in Greece, 2015-60
Predominantly urban
Intermediate
Predominantly rural
Persons (thousands)
5 500
5 000
4 500
4 000
3 500
3 000
2 500
2 000
1 500
1 000
2015
2020
2025
2030
2035
2040
2045
2050
2055
2060
Source: Eurostat (2019[22]), Population Projections, https://ec.europa.eu/eurostat/web/population-demography-migration-projections/populationprojections-data, (accessed in February 2019).
StatLink 2 https://doi.org/10.1787/888934166650
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Figure 2.18. Regional distribution of immigrants by country of origin in Greece, 2011
Other EU countries
Non-EU countries
Non-EU in total population (right axis)
%
14
Population (thousands)
500
450
12
400
350
10
300
8
250
200
6
150
4
100
2
50
0
0
Note: Analysis performed at TL2 level; The OECD migrant definition includes temporary and permanent migrants with visas, asylum seekers
and undocumented migrants. Although this category has a diverse composition, generally speaking, it is a vulnerable group at high risk of
poverty, facing unemployment, with no or limited access to services, including the financial and health system.
Source: (Eurostat, 2019[23]), Migration and migrant population statistics (Database), https://ec.europa.eu/eurostat/statisticsexplained/index.php/Migration_and_migrant_population_statistics, (accessed 1 March 2019).
StatLink 2 https://doi.org/10.1787/888934166669
Economic activity concentrates in urban regions
Attica is the only region in Greece that contributes a larger share of national output
compared to the population
Higher productivity of factors arising from scale economies and agglomeration effects allow large urban
conglomerations to produce more output proportional to their populations (OECD, 2015[24]). Attica
concentrates almost half (47%) of the country’s GDP, above its share of the population (35%) and
employment (36%) (Table 2.2). In contrast, the second largest region, Central Macedonia, concentrates a
larger share of the population (17%) relative to GDP (14%) and about the same share of employment
(17%).
Attica is the only region in Greece with a substantial presence of industries with higher scale economies.
The region concentrates the largest percentage of firms in the country (27%), absorbs the bulk of total
turnover (65%) and has much higher average firm sizes compared to other regions (47 employees per firm
versus an average of 14 across regions). In contrast, Central Macedonia, the second region in importance,
concentrates 19% of firms but only 11% of turnover and has an average firm size of 12 employees per
firm. Within the region of Attica, the sector with the largest employment-to-size ratio is monetary
intermediation (where over 45 000 people work in 57 firms), followed by the manufacture of refined
petroleum products and temporary employment agency activities.
Regions outside Attica and Central Macedonia have much thinner economic activity bases, composed of
activities with much smaller turnover and average size. Attica concentrates 6 times more employment,
3 times more firms and 20 times more turnover, and has 35 workers more per firm on average compared
to Thessaly, the third region in importance. The gap with the smallest region in terms of population, the
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53
North Aegean, is even more staggering: Attica concentrates 18 times more employment, 10 times more
firms and 89 times more turnover, and has 42 more workers per firm on average.
Table 2.2. Population, employment, GDP, firms and turnover shares, and average firm size across
TL2 regions in Greece, 2019
Percentage of total national value
Population
(% national)
GDP
(% national)
Employment
(% national)
Firms
(% national)
Turnover
(% national)
Average firm size
(employees per firm)
Attica
35
47
36
27
65
47
Central
Macedonia
17
14
17
19
11
12
Thessaly
7
5
6
9
3
12
Western
Greece
6
5
6
7
3
8
Crete
6
5
6
7
4
7
Eastern
Macedonia,
Thrace
6
4
6
5
2
11
Peloponnese
5
4
5
5
3
9
Continental
Greece
5
5
5
5
2
8
Epirus
3
2
3
3
1
29
South
Aegean
3
3
3
4
2
7
Western
Macedonia
2
2
2
2
1
11
Ionian
Islands
2
2
2
3
1
10
North
Aegean
2
1
2
3
1
5
TL2 region
Note: Average firm sizes calculated as weighted averages from small region-NAEC 3-digit sector values, with employment used as weight.
Source: Population (2019), GDP (2018) and employment (2018) come from OECD (2020[8]), Regions and Cities (database),
https://stats.oecd.org/ (accessed on 19 February 2020); employment and firms come from Hellenic Statistical Authority (2016[25]), Statistical B
usiness Register, http://www.statistics.gr/en/statistics/-/publication/SBR01/.
StatLink 2 https://doi.org/10.1787/888934166688
Manufacturing activity clusters in small regions close to metropolitan areas
Higher-level services that require agglomeration economies tend to show high levels of concentration in
metropolitan areas, while resource-intensive sectors tend to show large concentration near natural
resources. The regional specialisation index measures the extent to which an economic sector is over- or
under-represented in comparison to the national sectoral distribution. Sectors that use more mobile
resources and that do not rely on specialised resources tend to show regional specialisation indices close
to one, so that the share of the sector in the region is close to the national average.
The regional specialisation index shows that, indeed, higher-level services are overrepresented in Attica,
including information and communication, finance and professional, scientific and technical sectors
(Table 2.3). On the other hand, natural resources guide the specialisation in mining and energy of Western
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54
Macedonia in the northwest, Continental Greece, and Peloponnese in the south, and in tourism in the
regions of the South Aegean and the Ionian Islands, where tourism, wholesale and retail trade, repairs,
transport, accommodation and food services, contribute to over 50% of value-added.
Specialisation in manufacturing coincides with proximity to the two main metropolitan areas, Athens and
Thessaloniki. In Continental Greece, located north of Attica region, manufacturing accounts for 27% of the
value-added, 17 percentage points over the national average. Peloponnese, also bordering Attica, as well
as the northern regions of Thessaly, Eastern and Central Macedonia – where Thessaloniki is located –
also have higher than average shares of manufacturing in GVA.
Table 2.3. Regional specialisation in industries in Greece, 2017
Regional share of GVA of an industry as a multiple of the national average
Note: The index of specialisation is computed as a share of GVA in industry within the region over the average share of this industry across all
regions. Then, the index of specialisation of magnitude 1 shows that the industry share of the region is equivalent to the national average. If the
index is smaller than one, the industry is under-represented compared to the national average, and values over one indicate over-representation
and therefore specialisation of the region in the given industry. The real estate sector has been excluded because it accounts for the value of
real estate and employs a small share of employment, shifting the weight of the real economy. The real estate sector has had different dynamics
than the rest of the sectors. Real estate GVA grew in all regions over the past decade, increasing the value-added in the sector by at least 20%
over the period and almost 40% in Eastern Macedonia. Other sectors grew by smaller – if any – margin. The unit of measure is real GVA in
2015 USD.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166707
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The effects of the crisis on regions
The economic crisis and long recovery period had dissimilar effects across the Greek territory. This section
discusses the effect of the crisis across regions and cities in five areas: demography, incomes, investment,
employment and productive structure. It also includes a special focus on productivity developments across
regions, focusing on the dynamics of catching up and regional characteristics that play a role in productivity
shifts.
Uneven effects on population levels and composition in large and small regions
Population levels shrank after the crisis despite incoming international migration
A combination of ageing, low fertility rates and negative net migration flows resulted in an absolute loss in
population of 355 000 individuals between 2011 and 2017, representing a continuous fall in population of
0.5% per year on average over the period.
Negative net migration flows were one contributor to population loss in the post-crisis period. Net migration
flows started to decline in 2005 and fell rapidly in 2008 when a steady decline in net migration linked with
the economic crisis began. By 2010, outflows exceeded inflows, particularly driven by outmigration from
Attica. After reaching the lowest level of net migration in 2012 (about 125 000 people leaving against
58 000 entering), net migration flows rose again and became positive in 2016. The increase in inward
migration is not related to return migration but to an increase in international migration mostly to Attica and
some of the islands (from around 33 000 in 2014 to about 85 000 in 2017) partly originating from
Afghanistan, Iraq and Syria (see Box 2.5).
Figure 2.19. Net migration flows in Greece and selected TL2 regions, 2000-17
Difference between the number of immigrants and the number of emigrants
Greece
Attica
Central Macedonia
Persons
80 000
60 000
40 000
20 000
0
-20 000
-40 000
-60 000
-80 000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Note: Net migration statistically adjusted (adjusted for demographic trends); regions in the sample: Attica (TL2), Central Macedonia (TL2) and
national level (TL1).
Source: (Eurostat, 2019[23]), Migration and migrant population statistics (Database), https://ec.europa.eu/eurostat/statisticsexplained/index.php/Migration_and_migrant_population_statistics, (accessed 1 March 2019).
StatLink 2 https://doi.org/10.1787/888934166726
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Box 2.5. International migrants in Athens and the Aegean islands
International migrants represent a considerable part of the population in Greece, especially in Athens
and some island regions. The OECD definition of migrants includes temporary and permanent migrants
with visa, asylum seekers and undocumented migrants, regardless of whether their movement is
voluntary or involuntary, what the causes for the movement are or what the length of the stay is.
According to the last population census in 2011, 23% of the population in the municipality of Athens
(155 000 people) had a foreign nationality background. Albanians, Filipinos, Bangladeshis and
Ukrainians were the largest migrant communities. Estimates based on the number of resident permits
issued show that the number of annually-issued permits decreased after the 2008 economic crisis,
down to 33 000 in 2016 from about 56 000 in 2009. By 2016, some 78 000 migrants had a residence
permit. Estimates on the number of refugees and asylum seekers2 show that more than 40% of refugees
in Greece (around 15 000 people) are currently settled in Athens. Since 2015, the Aegean Islands have
been the main destination for international migrants alongside Athens (Figure 2.20). In 2019, the
Aegean Islands hosted around 14 400 refugees and migrants. Ikaria and Lesvos are in fact the top two
European regions (TL3) with the highest rates of net migration.
Figure 2.20. Net migration in selected island regions in Greece, 2000-17
Difference between the number of immigrants and the number of emigrants
Lesbos, Lemnos
Ikaria, Samos
Chios
Kalymnos, Karpathos, Kos, Rhodes
Persons
6 000
5 000
4 000
3 000
2 000
1 000
0
-1 000
-2 000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Note: Net migration statistically adjusted (adjusted for demographic trends).
Source: (Eurostat, 2019[23]), Migration and migrant population statistics (Database), https://ec.europa.eu/eurostat/statisticsexplained/index.php/Migration_and_migrant_population_statistics, (accessed 1 March 2019).
StatLink 2 https://doi.org/10.1787/888934166745
The loss in working-age population in the past decade happened mostly in urban areas
Urban areas in Greece bore the bulk of population losses in the post-crisis period. The loss of population
in urban regions between 2007 and 2019 explains 84% of the national population loss of
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
57
311 390 individuals. In contrast, urban regions in OECD countries absorbed 71% of the population gains
in the same period.
Urban regions bore even larger losses of working-age population due to an increase in the elderly share.
The total loss of 533 140 working-age individuals over 2007-19 represented a loss of the working-age
population of 11% in urban regions, 4% in rural regions and 2.5% in intermediate regions (Figure 2.21).
The losses in working-age population are larger compared to the total population due to related to ageing
and low birth rates in Athens and Thessaloniki, where the elderly population increased by 135 000 in the
period. Lower birth rates added to population decline. The population under 15 years of age decreased by
about 1% since 2002, amounting to a decrease of 31 000 young people over the decade since 2007.
Figure 2.21. Working-age population change by regional typology in Greece, 2001-19
Intermediate regions
Predominantly rural
Predominantly urban
Population, 2007 = 1
1.02
1
0.98
0.96
0.94
0.92
0.9
0.88
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Note: Population is normalised to 1 in 2007.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166764
Dependency ratios increased rapidly in urban regions in the post-crisis period
Greece has one of the highest shares of elderly population living in urban areas across OECD countries.
The share of people aged 65 and over in 2016 in urban regions in Greece was 6 percentage points higher
than across OECD urban regions (30% versus 24%, or 3 working persons per every 1 elderly person as
compared to 4 working persons per 1 elderly person). This gap appeared almost entirely after the crisis,
as in 2002 it was only 1 percentage point (21% versus 20%) (Figure 2.22). Across OECD countries, only
Greece, Poland and Portugal experienced increases in the elderly dependency ratios in urban areas
between 2002 and 2016.
Despite fast increases in ageing in urban areas, elderly dependency is highest in rural regions. In 2019,
the elderly dependency ratio in rural regions close to cities was 40%, close to the value for remote regions
(39%) and above intermediate regions (32%). This stands in contrast with 2002 values for OECD rural
regions close to cities and remote regions where the elderly dependency ratios were lower (34%).
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Figure 2.22. Elderly dependency ratio by type of TL3 region in Greece, 2002-19
Urban
Intermediate
Rural close to cities
Rural remote
%
40
35
30
25
20
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Note: Elderly dependency ratios constructed with 65+ over 15-64 working-age population data.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166783
Uneven effect on incomes and poverty in large regions
Large regions other than Attica have led the recent economic recovery
Attica has the highest GDP per capita among Greek TL2 regions (EUR 22 704 in 2017), more than double
of the value of Eastern Macedonia (EUR 11 777) and close to its levels in 2000. This is despite a 23% fall
in its levels between 2007 and 2016 that brought the region’s GDP back to its 2000 levels. The South
Aegean has the second-highest GDP per capita (EUR 18 537), which is still 20% lower than Attica (Figure
2.23). By 2017, all regions in Greece ranked below the median of OECD regions in terms of income,
measured in disposable income per capita.
Prior to the crisis in 2007, Attica grew at a fast pace, increasing its GDP per capita by 26.7% in period
2000-07 at an average annual growth rate of 4.5%. The North Aegean grew at a similar pace, while other
regions increased their GDP per capita by about 18% between 2000 and 2007, except for Western
Macedonia where growth halted in 2006. Between 2014 and 2017 and in line with national trends, most
regions started growing in terms of GDP per capita again, with the exception of the North Aegean and
Western Macedonia.
Despite large differences in economic size, each region in Greece has the potential to contribute to the
recovery of economic growth. Greek GDP would grow by 1.4% instead of actual 0.2% between 2013 and
2016 if the Attica region was excluded. Between 2015 and 2017, regions of Attica and Western Macedonia
diminished the aggregate contribution of all other regions to the national GDP by almost 50%. The fall of
GDP in Attica and Western Macedonia over the period was almost equivalent to the GDP increase in
Continental Greece and Thessaly combined. Central Macedonia contributed to the growth of national GDP
the most over 2015-17 period, responsible for over 60% of the national GDP increase (Figure 2.24).
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
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Figure 2.23. GDP per capita evolution by region in Greece, 2000-17
Attica
Central Macedonia
Thessaly
Western Macedonia
Average of other regions
2007=100
105
100
95
90
85
80
75
70
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Note: The GDP per capita normalised to its level in 2007.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166802
Figure 2.24. Regional contribution to national GDP growth in Greece, 2015-17
%
60
40
20
0
-20
-40
Note: Regional contribution to national growth is calculated as an interaction of region’s growth in GDP between 2015 and 2017 and 2017 share
of regional in national GDP, and further normalised by overall Greek GDP growth in the given period to calculate the share. The figure portrays
positive contribution if the growth rate in the region was positive, and negative if GDP fell in the region, rescaled by the size of the contribution.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166821
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Returning to pre-crisis income levels may take some regions an additional 12 years
If regional growth rates remained at 2014 levels (the first year of economic recovery since the crisis),
five Greek regions would recover to their pre-crisis GDP per capital levels by 2027. The majority of the
other regions would reach this level by 2039. However, for three regions (Continental Greece, Central
Macedonia and Eastern Macedonia), recovery would be even beyond 2039.
In a scenario wherein 2018 all regions would return to their average pre-crisis levels (2002-07), Attica
would recover by 2023 (Table 2.4) and other regions would recover shortly after, by 2029 at the latest.
However, if growth rates remained at average 2015-17 levels, Greece would not see recovery in this half
of the century and some regions such as the North Aegean and Western Macedonia, with shrinking GDP
in this period, will not recover. The Ionian Islands region saw the largest drop in its pre-crisis GDP, with
2016 GDP 29% below its 2007 level. This region would recover by 2051 in this scenario. Continental
Greece, with the highest average annual growth rates between 2015 and 2017 would recover first in 2029.
Alternatively, if Attica and Central Macedonia grew at a 3% pace each year, Greek GDP would reach its
pre-crisis level by 2028, and both Attica and Central Macedonia regions would recover by 2027.
Table 2.4. Pre-crisis GDP recovery scenarios for Greece
Recovery to pre-crisis
level
2002-07 average growth
rates
2014 growth
3% growth for metro,
2014 rates for the rest
Average 2015-17 growth
rates
Greece
2024
2045
2028
Beyond 2050
Attica
2023
Beyond 2050
2027
Beyond 2050
Central Macedonia
2025
Beyond 2050
2027
2034
Ionian Islands
2027
2027
2027
Beyond 2050
Note: Growth rate of GDP in each region is averaged across years. The recovery is considered as the first year when Greece or the region has
equal or higher GDP to its levels in 2007. If the growth rate is negative, the region will not recover in such a scenario.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166840
Regional household incomes decreased and regional poverty rates increased across more
regions in Greece than in any other OECD country
After the crisis and during the long recovery period, most large regions in Greece experienced a decrease
in household incomes while most OECD regions experienced an increase. All regions in Greece, with the
exception of the Ionian Islands and South Aegean regions (with income growth of 9% and 11%
respectively), had experienced an average 14% drop in their pre-crisis household income by 2017
(Figure 2.25). Meanwhile, household income across other OECD TL2 regions increased by 26% on
average. In fact, between 2007 and 2017, 11 of the 12 TL2 regions with available data (246) with falling
household incomes were Greek.
Such fall in income implies that by 2017, large regions in Greece had the lowest income among regions of
EU countries in Southern Europe, even after accounting for the lower-than-average increase in income in
many of the regions in Southern Europe. In Figure 2.25, regions located below the 45-degree line have a
lower income in 2017 than in 2007, including regions in Greece and the Melilla region in Spain, while
regions above the trend line grew faster than an average OECD region. Incomes across regions in Greece
in 2017 were lower than in many of Eastern European regions, most of which had lower income levels than
Greek regions in 2007.
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Figure 2.25. Growth of household income in OECD TL2 regions, 2007 and 2017
Northern Europe and France
Outside Europe
Eastern Europe
Southern Europe
Greece
2017, USD PPP
100 000
90 000
80 000
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
2007, USD PPP
Note: The figure includes data only if available for both years. Northern Europe and France include regions from Austria, Denmark, Finland,
France, Germany, Ireland, Luxembourg, the Netherlands, Sweden and the United Kingdom. Outside Europe includes regions from Australia,
Canada, Israel, Korea and the United States, Eastern European regions are from the Czech Republic, Estonia, Hungary, Latvia, Lithuania,
Poland and the Slovak Republic. Finally, Southern Europe is composed of regions in Italy, Portugal and Spain.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166859
As with household incomes, poverty rates increased in Greek large regions between 2007 and 2018 while
they decreased in most European regions. The largest increases in the percentage of people at risk of
poverty or social exclusion occurred in the Aegean Islands and Crete from 27.5% by 9 percentage points
between 2007 and 2018, followed by Attica and Continental Greece with increases of about 6 and 3
percentage points from 23% and 32% respectively. Other European regions experienced similar changes
in poverty rates in the same period were multiple regions in Spain such as Comunidad Valenciana
(10 percentage points) or Canarias (7), Cantabria (9) and Ceuta (9) and the Italian regions Abruzzo (9),
Campania (8), Marche (9) and Provincia Autonoma di Trento (13). The other regions where the measure
is available for the period experienced smaller increases and most had seen a poverty rate drop. Some
regions in Hungary, Italy and Spain are the only ones that, together with Greek regions, faced poverty
rates of over 30% in 2017.3
Despite the large changes in some of the islands, Attica and Continental Greece, the regions with the
highest risk of poverty in Greece before and after the crisis are located along the northern border as well
as in regions within Peloponnese. In contrast, regions with medium or medium-to-high rates of risk of
poverty are close to metropolitan areas (Artelaris and Kandylis, 2014[26]).
The increase in the geographical divide in household income and poverty performance across regions
after the crisis was accompanied by increasing levels of interpersonal inequality at the national level.
Between 2000 and 2007, Greece experienced an exceptional inequality reduction compared to other
European countries, when the bottom 40% of income distribution grew at a significantly higher rate than
the average national income. Yet, in the decade following the economic crisis, the dynamics reversed, and
lowest income part of the distribution fell behind the average growth as in most of Northern and Western
European countries (Blanchet, Chancel and Gethin, 2019[27]). This trend reversal made Greece one of a
few countries (Bulgaria, Germany and the United Kingdom) with both high poverty and high inequality
levels.
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62
Figure 2.26. Regional poverty rates in selected TL2 regions in Greece, 2007 and 2018
People at risk of poverty or social exclusion, as a percentage of the total population
2018
2007
%
40
35
30
25
20
15
10
5
0
Central Greece
Aegean Islands and Crete
Northern Greece
Atica region
Note: TL2 regions are grouped as follows: Northern Greece refers to Central Macedonia, Eastern Macedonia and Thrace, Epirus and Western
Macedonia. Continental Greece groups Continental Greece, the Ionian Islands, Peloponnese, Thessaly and Western Greece regions. The
Aegean Islands and Crete bring together Crete and the North and South Aegean Islands regions. Finally, the region of Attica remains by itself.
At risk of poverty are persons with an equivalised disposable income below the at-risk-of-poverty threshold, which is set at 60% of the national
median equivalised disposable income (after social transfers). Material deprivation covers indicators relating to economic strain and durables.
For 2018, the NUTS 2 region data have been weighted by regional population and aggregated to allow comparability with 2007.
Source: Eurostat (2020[28]), People at Risk of Poverty or Social Exclusion by NUTS 2 Regions (database), https://ec.europa.eu/eurostat/tgm/ta
ble.do?tab=table&init=1&language=en&pcode=tgs00107&plugin=1 (accessed on 14 February 2020).
StatLink 2 https://doi.org/10.1787/888934166878
Uneven effects on employment in large regions
All regions except South Aegean employ fewer people today than before the crisis
The crisis brought about significant employment losses, amounting to about 725 000 jobs between 2007
and 2018. Ten out of 13 regions in Greece employ 9% to 20% fewer people than before the crisis
(Figure 2.27). In absolute terms, the largest decreases in employment between 2007 and 2018 occurred
in Attica (a loss of 370 000 jobs), followed by Central Macedonia (140 000 jobs) and Western Greece
(46 000 jobs). The island regions had the smallest job loss in Greece, with 1% to 4% fewer jobs in 2018 in
the North and South Aegean Islands, and the Ionian Islands. The large employment losses between 2007
and 2013 in Attica and Central Macedonia took place mostly in Athens (a decline of 17%) and Thessaloniki
(a decline of 24%). By 2015, Athens added 36 000 employees, which represents a 1.3% yearly increase
between 2013 and 2015. Thessaloniki grew their employed workforce by about 2.5% and 18 000 jobs
between 2013 and 2015.
The economic crisis and long recovery impacted negatively the labour market of all regions and worsened
their position relative to other OECD regions. In 2015, Epirus, Western Greece and Western Macedonia
were among the 10% bottom OECD regions in terms of employment and unemployment rates. Even the
highest-ranking region in Greece, the South Aegean, ranked as the 35th worse out of 388 OECD regions.
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
63
Figure 2.27. Employment change by region in Greece, 2007-18
Employment change (%)
0
-5
-10
-15
-20
-25
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166897
Regional unemployment rates and spells in Greece remain high for OECD standards
despite recent improvements in the labour market
The increase in unemployment following job losses hit some regions harder than others, regardless of their
pre-crisis employment performance. Nationally, the unemployment rate increased to 27.5% at its peak in
2013, and subsequently fell to 23.9% in 2016 and further to 19.6% in 2018. Regions which had 2007
unemployment levels in line with average OECD regions (7%-8%) experienced also smaller increases in
unemployment compared to the national average: 6% in Eastern Macedonia and 7%-8% higher
unemployment in Crete, the Ionian Islands, the Peloponnese region and South Aegean by 2018
(Table 2.5). Meanwhile, regions with the highest unemployment rates in Greece in 2007, Epirus and
Western Macedonia, experienced different trends: Western Macedonia still had the highest unemployment
across regions in 2018 but Epirus moved down the ranking from having the second-highest unemployment
rate (10.2%) in 2007 to a mid-range unemployment region (20.5%) in 2018.
Table 2.5. Employment outcomes in Greek regions, 2007-18
Employment rate (%)
Crete
Ionian Islands
South Aegean
Peloponnese
Attica
Eastern Macedonia, Thrace
Thessaly
Continental Greece
Central Macedonia
Epirus
2007
65.1
60
58
61
62.1
60.4
61.1
60.8
59.5
59
2018
59.4
58.9
57.4
56.8
55.7
55
54.6
53.8
53.2
53.1
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
Unemployment rate (%)
2007
5.6
9.1
9.6
7.7
7.9
10
8.1
9.7
9.2
10.2
2018
13.6
16.5
17.3
14.8
20.2
16.3
19
19.2
21
20.5
Long-term
unemployment share (%)
2007
2018
29
50.4
28.4
54.1
21.7
32.6
55.6
73.4
49.4
76
55.8
68.1
48
71.1
49.8
74.2
54.3
67.5
59.9
77.4
64
Employment rate (%)
2007
57.5
56.9
55.7
60.8
Western Greece
North Aegean
Western Macedonia
Greece
Unemployment rate (%)
2018
50.9
50.6
50
54.8
2007
10
8.2
12.3
8.6
2018
24.6
23
27.5
19.6
Long-term
unemployment share (%)
2007
2018
51.2
72.5
42.2
67.5
63.4
71.5
49.7
70.3
Note: The rates are for the working-age population 15 to 64 years old. The share of long-term unemployment is the ratio of long-term
unemployment in all unemployed individuals.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166916
Because of widespread unemployment increases, by 2018, all Greek regions moved down to the bottom
20% OECD regions in terms of unemployment rates. In comparison, about less than half of large regions
in the OECD have unemployment rates higher in 2018 than in 2007, while the remaining two-thirds have
unemployment rates approximately 2% lower on average in 2018 than in 2007 (Figure 2.28). In fact,
Western Macedonia had the second-highest unemployment rates across OECD regions in 2018, at 27.5%.
Together with two French overseas regions, four Spanish regions and one Turkish region, Western
Macedonia, Western Greece and the North Aegean belong to the top 10% of regions with the highest
unemployment in OECD in 2018.
Figure 2.28. Unemployment in TL2 regions in OECD, 2007 and 2018
Unemployment in 2007
Unemployment in 2018
Greece in 2007
Greece in 2018
%
30
Western Macedonia
Western Greece
North Aegean
Central Macedonia
25
20
Attica
Thessaly
South Aegean
Ionian Islands
Peloponnese
Crete
15
10
Western Macedonia
Ionian Islands
5
Attica
Crete
Peloponnese
0
0
50
100
150
200
250
300
350
Ranking of TL2 regions
Note: All TL2 regions in OECD member countries for which the unemployment rate is available for both years are displayed. In 2016, there were
300 regions; for 2006, the data are available for 391 regions. Unemployment refers to unemployment rates.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166935
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The crisis also had a considerable and long-lasting effect on average unemployment duration across
regions. In 2018, 70% of the unemployed in Greece had not had a job for at least 1 year, compared to 32%
in OECD countries. Already prior to the crisis, Greece had a higher share – about one-half – of long-term
unemployed workers than the OECD average but, clearly, the crisis exacerbated the problem. Across all
regions in Greece, long-term unemployment rates increased between 2007 and 2018, and in 2018, the
highest share of long-term unemployed was in Epirus (77.4%) and lowest in the South Aegean (32.6%)
(Table 2.5).
Long-term unemployment is problematic as the integration of unemployed persons into the labour market
is harder after longer unemployment spells. A large share of the workforce being long-term unemployed
underlines the structural weakness of the economy as well as the mismatch of the supply and demand of
skills on the labour market. Re-employment probabilities of the long-term unemployed require active labour
market policies, retraining and skill improvement. Finally, the prevalence of informal hiring has increased,
although it is difficult to measure precisely to what extent (see Box 2.6).
In some regions in Greece, more than half of young workers are unemployed
Regional youth unemployment rates in Greece are among the highest in Europe and can be twice as high
as the general unemployment rate. The youth unemployment rate across regions in Greece ranges from
24% to 62% in 2018. Regions in Greece, together with regions in French overseas territories, the south of
Italy and Spain, have the highest levels of youth unemployment in Europe. Continental Greece, North
Aegean and Western Macedonia, had 51% to 63% of their youth unemployed. On the other side of the
spectrum, Crete and South Aegean had around one-quarter of their youth unemployed. Youth employment
rates across regions mirror unemployment rates in the regions but, in some, are slightly lower than the
trend across European regions would predict, given the unemployment rate of the working-age population
(Figure 2.29).
Figure 2.29. Youth unemployment and unemployment in European TL2 regions, 2018
Youth (%)
70
Western Macedonia
North Aegean
60
Peloponnese
Central Greece
Epirus
Thessaly
Eastern Macedonia, Thrace
Attica
Ionian Islands
50
40
Western Greece
Central Macedonia
South Aegean
30
Crete
20
10
0
0
5
10
15
20
25
30
35
40
All adults (%)
Note: Some data are reported having reduced reliability due to the sample size.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166973
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Box 2.6. Informal hiring and the Beveridge curve
Evidence on job vacancies points to an increase in informal hiring
Despite the falling unemployment rate, the job vacancy rate is at lower levels than the average job
vacancy between 2011 and 2012 when the unemployment was about the same. Structural reforms
were accompanied by an outward shift in the Beveridge curve with the unemployment increasing for
the same level of job vacancies (Tagkalakis, 2016[5]). The Beveridge curve is a graphical representation
of the relationship between unemployment and the job vacancy rate, portraying the current state of the
economy. For example, periods of recession are generally accompanied by high unemployment and
low vacancy rates, displayed in the lower part of the graphic. In times of recovery, the curve moves
back to the original point of departure and, traditionally, recovery in unemployment rates lagging slightly
behind the recovery in job vacancy rate. The curve moving outward over time displays the falling
efficiency in the labour market as job seekers are not matched with the job offers, due to changes in
education, population age, immigration or deterioration of skills.
In Greece, the unemployment rate fell during the recovery period but the vacancy rate continued to fall
signifying no job creation and a possible result of outmigration rather than improved matching between
unemployed and firms. Another reason might be that employers avoid posting vacancy offers through
official channels and rather fill the post in an informal way or via their networks.
Figure 2.30. The Beveridge curve in Greece, 2009-18
Job vacancy rate (%)
2.5
2009
2
1.5
2010
2011
1
2012
2016
0.5
2018
2014
2015
2013
2017
0
0
5
10
15
20
25
30
Unemployment rate (%)
Note: The job vacancy rate represents available job vacancies in industry, construction and services over the occupied posts. The curve is
smoothed by calculating a 4-quarter running average. The unemployment rate corresponds to the percentage of unemployed of working
age 15 years old and over.
Source: (Eurostat, 2019[29]), Job Vacancy Statistics, https://ec.europa.eu/eurostat/web/labour-market/job-vacancies/database; (Hellenic
Statistical Authority, 2019[30]), Labour Force (Quarterly Data), http://www.statistics.gr/en/statistics/-/publication/SJO01/ (accessed on 13
March 2019).
StatLink 2 https://doi.org/10.1787/888934166954
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Increasing youth unemployment is consistent with increasing inactivity rates of young people. Across
regions, average regional inactivity rates of young people increased by 7% by 2014 from 19% in 2007
(Figure 2.31). Attica, Crete and Western Greece have the most active youth, with about 16% of youth in
these regions neither employed nor following any training or education. In Attica and Crete, inactivity almost
doubled from 2007 to 2014 but, by 2018, stabilised to levels 2% higher than before the crisis. The regions
with the most inactive youth populations are the North Aegean region, with 39%, and Continental Greece
with 35% of its 18 to 24 year-olds inactive.
Figure 2.31. Regional share of inactive young people in Greece, 2007 and 2018
Rate of young people not in employment nor in any education and training
2018
2007
% population aged 18 to 24
45
40
35
30
25
20
15
10
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934166992
Female labour market participation sustained the share of employed to working-age
population across regions after the crisis
The worsening of employment indicators in the post-period crisis coincided with increased female labour
market participation. Nationally, female labour market participation increased from 55% to 60% of the total
female working-age population between 2007 and 2018, while male participation fell in the same period
by 0.5 percentage points from 77.3%. In 7 out of 13 regions, the share of males employed from the total
male working-age population was still lower in 2018 in comparison with 2001. Female participation rose in
all regions and disproportionally in regions with initially low shares of the female working population
engaged in the workforce, such as Continental Greece and North Aegean (Figure 2.32).
Regions with the lowest female labour market participation had above-average employment rates for the
male workforce in 2001. In Crete and Eastern Macedonia, where 59% and 55% of females worked, more
than 80% of working-age males are employed. In North Aegean, where 2 out of 5 working-age females
were engaged in formal employment, female labour market participation increased by 24 percentage points
between 2001 and 2016, while male participation fell by 11 percentage points.
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
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Figure 2.32. Female to male labour force participation ratio in selected regions in Greece, 2001-18
Ratio of participating as a share of the total working-age (15-64) population
Crete
Eastern Macedonia, Thrace
Central Greece
North Aegean
Share, female to male
0.95
0.9
0.85
0.8
0.75
0.7
0.65
0.6
0.55
0.5
Note: The displayed regions are selected by their highest (Crete, Eastern Macedonia and Thrace) and lowest (North Aegean and Continental
Greece) female labour market participation in 2001 among Greek regions.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167011
Uneven effects across economic sectors in large regions
With the crisis, manufacturing lost importance in the economy in favour of tourism-related
sectors
Across economic sectors, while the largest absolute losses occurred in the services sector, manufacturing
lost relatively more importance in national employment shares. The share of national employment in
industry sectors decreased from an already low level of 11% in 2007 to 9% in 2018, while employment
share in all types of services increased from 70% to 75% (Figure 2.33). While all main economic sectors
lost employment during the period, industry sectors lost a larger share of its pre-crisis employment (28%
or 150 000 employees by 2018), compared to agriculture (13% or 70 000 employees) and services (7% or
241 000 employees). Construction lost half of its pre-crisis employment, equivalent to a total loss of
152 000 jobs.
Before the crisis, the top five sectors in terms of employment were wholesale and retail trade and
accommodation and food services, community, social, personal and other services, and industry (including
mining, manufacturing and electricity). By 2016, the top two largest sectors preserved and strengthened
their status but the industry sectors lost their relative importance to agriculture and are closely followed by
real estate and scientific and business activities.
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
69
Figure 2.33. Structural shifts in Greek industries, 2007 and 2017
Employment in the given industry as a share of total employment
2017
2007
%
40
35
30
25
20
15
10
5
0
Trade,
Community, social, Agriculture,
accommodation personal and other
forestry
and food service services [O-U]
and fishing [A]
activities [G-I]
Industry (mining,
Real estate;
Construction [F]
Information
Financial and
manufacturing,
scientific and
and
insurance activities
electricity) [B-E] business activities
communication [J]
[K]
[L-N]
Note: The full labels of the individual industries, shortened in the graphical representation, are as follows: Trade, accommodation and food
service activities [G-I] (includes wholesale and retail trade, repair of motor vehicles and motorcycles [G], transportation and storage [H], and
accommodation and food service activities [I]), community, social and personal services [O-U], agriculture, forestry and fishing [A], industry [BE] (includes mining and quarrying [B], manufacturing [C], electricity, gas and water supply; sewerage, waste management and remediation
activities [D-E]), real estate, renting and business activities [L-N], construction [F], information and communication [J], financial and insurance
activities [K].
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167030
Regions relying on tourism were more resilient to employment losses than regions hosting
metropolitan areas
While manufacturing lost relative importance, tourism-related activities gained weight in the economy.
Between 2007 and 2016, the share of employment in accommodation and food services sector increased
from 6.6% to 8.4% following an increase of 30 500 additional jobs (a 10% increase). The only sector that
created employment in the period was another tourism-related sector, real estate, renting and business
activities (see Box 2.7).
Regions with a stronger reliance on tourism were more resilient to the crisis. Regions that saw smaller
reductions in their employment, notably Attica, Crete, the Ionian Islands, North Aegean and South Aegean,
had a larger share of GVA in tourism-related activities in 2017, including distribution, trade, accommodation
and food service activities. They also had the highest number of nights spent in tourist accommodation per
inhabitant (59.6 nights per inhabitant in the South Aegean, 53.4 in the Ionian Islands, 38 in Crete, 8 in
North Aegean and 7.4 in Western Macedonia) (Eurostat, 2020[31]).
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
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Box 2.7. The increasing importance of tourism in Greece
International arrivals almost doubled in the past decade but income from tourism remained stagnant
Tourism represents an important part of the Greek economy. In 2018, international receipts from tourism
per inhabitant were equal to USD 1 770, and for every Greek, there were 2.6 international arrivals. This
places Greece in the upper third of the distribution of OECD countries in tourism intensity (Figure 2.35).
Between 2008 and 2017, Greece nearly doubled the international arrivals to over 30 million. However,
the value of international receipts rose only by 8%. In terms of GDP, tourism contributed by 5.8% of its
value in 2018, an increase from its 5% share in 2008. Tourism in Greece plays a more important role
in the 2018 national GDP only in Iceland and Luxemburg.
A higher share of the population depends on tourism for their income, while the share of GDP from
tourism is relatively smaller. Tourism accounted for a larger share of employment; with almost 10%
employed in the tourism industry in 2018, or 366 000 employees, 37 000 more than in 2008 (OECD,
2020[32]).
Figure 2.34. Tourism intensity across OECD countries, 2008-18
Total international receipts per inhabitant and their increase over the past decade
2018
USD/inhabitant
10 000
9 000
Change 2008-2018 (right axis)
120
100
8 000
80
7 000
6 000
5 000
4 000
60
40
20
3 000
0
2 000
1 000
0
-20
-40
Note: Iceland growth rates at 380% is not displayed. International receipts are a sum of international travel receipts and international
passenger transport receipts.
Source: (OECD, 2020[32]), Industry and Services (database), https://www.oecd.org/statistics/data-collection/industryandservices.htm,
(accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167049
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Figure 2.35. Tourism GDP as a share of total GDP, 2008-18
2018
2008
%
18
16
14
12
10
8
6
4
2
0
StatLink 2 https://doi.org/10.1787/888934167068
Source (box and figures): (OECD, 2020[32]), Industry and
collection/industryandservices.htm, (accessed on 19 February 2020).
Services
(database),
https://www.oecd.org/statistics/data-
The regions with dominant tourism also experienced a smaller fall or some gain in income and had higher
employment rates in 2017 (Figure 2.36). The disposable household income grew between 2007 and 2017
only in two regions, the Ionian Islands and South Aegean by about 10%. The remaining regions had seen
a drop in disposable income varying from 6% in Western Macedonia to 21% in Attica. Unlike the mining
region of Western Macedonia, in the Ionian Islands and South Aegean, the relatively lower fall in income
in 2007-17 is simultaneous with higher employment rates in 2017.
While tourism has been good news in terms of income and employment for regions in the post-crisis period,
regions relying mostly on the tourism industry in Greece have higher levels of vulnerability because of the
combined effect of seasonality and intensity of tourism (Batista e Silva et al., 2018[33]).
The public sector did not buffer employment losses despite being relatively large in some
regions
The variation of public sector employment as a share of total employment is large across Greek regions.
The North Aegean region has the highest share of public sector presence across regions, with 27% of
employees working in the public sector in 2015. Eastern Macedonia lags slightly, with a quarter of
employees in the public sector. Continental Greece and the Ionian Islands are at the other side of the
spectrum with 16% of employees working for the public sector.
Compared to 185 OECD TL2 regions, most Greek regions have a lower share of public sector employment
than an average region at 25% in 2016. Five Greek regions belong to the bottom 10% of the OECD regions
with the lowest public sector employment, among regions in the Czech Republic, Italy, Portugal, Slovenia
and the Slovak Republic.
The shares of public employment in Greek regions remained stable between 2006 and 2016, increasing
on average by about 1% over the period. This shows that public employment has not been a guaranteed
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72
workplace in Greece. As employment fell across regions, public sector employment fell as well, keeping
the shares approximately constant.
Figure 2.36. Employment rate and change in household disposable income, 2007 to 2017
Indicators normalised to the across-region average.
Employment rate (2017)
4
Crete
Peloponnese
South Aegean
3
Attica
Central Greece
Ionian Islands
2
Thessaly
1
Eastern Macedonia, Thrace
0
Central Macedonia
Epirus
Western Greece
-1
North Aegean
-2
-3
-4
Western Macedonia
-5
-6
-0.15
-0.1
-0.05
0
0.05
0.1
0.15
0.2
0.25
Income change (2007-2017)
Note: The index of performance is computed for each indicator in each region as the standard deviation from the mean. The higher the index,
the better the region performs as compared to others.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167087
Special focus: Regional productivity dynamics before and after the crisis
More regions caught up with the productivity frontier after the crisis but only because the
frontier fell back
Regional dynamics can be analysed in light of the performance of regions with respect to “frontier regions”,
defined as those that lead in a country in terms of labour productivity, measured by the real GDP per
employee.4 Regions can have 3 different statuses at any point in time in terms of productivity: catching up
with the frontier region (growing 5% faster), further diverging (grow 5% slower) or keeping pace.
Over the period 2000-16, Greece was among 14 OECD countries where large regions at the “productivity
frontier” (Attica) contributed more than 50% to the overall productivity growth in their country or had a socalled regionally concentrated productivity growth model (OECD, 2019[34]). Catching-up dynamics reversed
in the post-crisis period compared to 2000-07. Back then, no region was catching up with the productivity
frontier (Figure 2.37). In 2008-16, more regions in Greece were keeping pace compared to regions in
29 OECD countries (69% of regions compared to 31%) as opposed to those catching up (0.7% versus
38%) or diverging (23% versus 32%) (OECD, 2018[35]).
This reversal relates not so much to improved regional performance across regions but to the relative fall
of the frontier region. Between 2008 and 2016, 40% of total employment losses and 49% of GVA losses
occurred in Attica and the region actually decreased national labour productivity growth by 1.8%.
Meanwhile, Central Macedonia also had sizable relative losses in terms of jobs (19% of national) and GVA
(less than 14% of national) but unlike Attica, it actually made a positive contribution of 6% to national labour
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
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productivity growth (Figure 2.37). Athens contributed to the fall in productivity in Attica and had a worse
positioning in terms of productivity compared to OECD cities of similar size (Box 2.8). The same trends
hold at the level of small regions (Box 2.9).
Figure 2.37. Contribution to Greek national labour productivity growth, 2007-16
2008-16
2000-07
% points
0.2
% points
0.2
0.44
0.15
0.15
0.1
0.1
0.05
0.05
0
0
-0.05
-0.05
-0.1
-0.1
-0.15
-0.15
Note: Difference between national labour productivity growth as calculated with and without the indicated region. Attica, in black, is the frontier
region in Greece. The bars highlighted in darker blue represent regions with the productivity converging with the levels at the productivity frontier,
Attica. The light blue denotes regions that are keeping pace with the most productive region. Finally, the striped pattern highlights regions that
are diverging from the productivity frontier.
Source: OECD (2019[36]), OECD.Stat (database), http://stats.oecd.org (accessed on 28 January 2019).
StatLink 2 https://doi.org/10.1787/888934167106
Box 2.8. Productivity performance in Athens compared to similar OECD cities
After the crisis, Athens lost ground to OECD cities of similar size
In 2015, productivity in Athens was smaller than in OECD cities of comparable size. Average labour
productivity in Athens dropped from USD 90 659 in 2007 to USD 79 014 in 2015. The drop in absolute
productivity values was larger than in other OECD cities and implied a fall in productivity ranking from
the 39th position in 2007 to the 83rd position in 2015 among 228 OECD cities. Compared to cities in the
3-million to 4-million population bracket, Athens lost ground to cities that had lower labour productivity
levels in 2007. For example, Barcelona went in this period from having about 19% lower productivity
than Athens to having 6% higher productivity (Figure 2.38).
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Figure 2.38. Productivity versus city size across OECD FUAs, 2007 and 2016
2007
2015
GDP per worker (log)
GDP per worker (log)
11.8
11.8
11.6
11.6
11.4
11.4
11.2
11.2
11
11
10.8
10.8
Athens
Athens
10.6
10.6
10.4
10.4
12
13
14
15
16
Population (log)
12
13
14
15
16
Population (log)
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167125
Box 2.9. Productivity dynamics in small (TL3) regions in the post-crisis period
Convergence in productivity in the post-crisis period occurred because of a fall in small frontier regions
instead of robust growth in small lagging regions
In 2008-15, a relatively higher contribution of lagging regions to national productivity growth compared
to small frontier regions translated into productivity convergence with the frontier region (Figure 2.39).
Frontier regions in Greece at the TL3 level remain the most productive but their productivity fell by
0.73% per year since 2000. Meanwhile, productivity in lagging regions grew by 0.09% per year and the
lagging regions at 75th percentile in terms of national employment rose by 0.2% a year.
Frontier small regions were 10% less productive in 2015 than in 2000. Meanwhile, lagging regions
reached 2001 productivity levels in 2015 (Figure 2.40). Labour productivity grew faster in frontier as
compared to lagging regions between 2000 and 2003. In 2004 and 2005, lagging small regions actually
caught up with the productivity frontier. The subsequent years display a dominant convergence between
frontier and lagging regions, while productivity fell in both types of regions but less in lagging regions.
From 2013 onwards, productivity increased in lagging regions but fell further from the frontier
(Figure 2.40).
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Figure 2.39. Productivity level of frontier and lagging TL3 regions in Greece, 2000-15
Frontier reigons
Lagging regions
75% of regions
Top10
USD PPP per employee
110 000
100 000
90 000
80 000
-0.73% per year
70 000
60 000
0.2% per year
50 000
40 000
30 000
0.09% per year
2000
2005
2010
2015
Note: Productivity at the level of the small (TL3) region. Productivity is calculated as regional GDP over regional employment measured at
the place of work. It is expressed in USD constant PPP, constant prices, reference year 2010. Frontier (lagging) regions are defined as
those with the highest (lowest) productivity until the equivalent of 10% of national employment is reached. The “75% of regions” line refers
to the lagging regions representing 75% of national employment.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167144
Figure 2.40. Productivity divergence of frontier and lagging TL3 regions in Greece, 2000-15
Frontier regions
Lagging regions
75% of regions
Productivity growth (1995=100)
123
118
113
108
103
98
93
88
2000
2005
2010
2015
Note: Productivity at the level of the small (TL3) region. Productivity is calculated as regional GDP over regional employment measured at
the place of work. It is expressed in USD constant PPP, constant prices, reference year 2010. Frontier (lagging) regions are defined as
those with the highest (lowest) productivity until the equivalent of 10% of national employment is reached. The “75% of regions” line refers
to the lagging regions representing 75% of national employment.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167163
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Tradeable sectors are less dominant in diverging regions
Tradeable sectors tend to innovate and upgrade their technology more frequently than sectors that are
considered as non-tradeable, including governmental services, education, healthcare, construction sector
and retail. Even if not all goods and services within tradeable sectors are traded, they tend to be exposed
to international competition. In Greece, the importance of tradeable sectors increased since 2007 in some
large regions, such as Central and Western Greece. On the other hand, diverging regions, but also some
regions that were keeping in pace (Eastern Macedonia, Epirus and Peloponnese), had seen a drop in the
share of tradeable sectors (see also Psycharis-Petrakos (2016[37])).
Attica is below the average of European frontier regions in terms of the importance of the tradeable sector,
which decreased in terms of employment share from 28% in 2007 to 26.3% in 2015 (Figure 2.41). Other
regions that were catching up or keeping pace between 2008 and 2015 had a larger share of employment
in tradeable sectors (33%-45%) than diverging regions (20%-26%) (Figure 2.41). In contrast, tradeable
sectors explained a higher share of GVA in catching up regions than in diverging regions across
22 European countries (OECD, 2018[35]).
Figure 2.41. Tradeable sectors intensity by region and its productivity convergence type, 2007 and
2016
Share of employment in tradeable sectors in TL2 regions
2016
2007
%
50
45
40
35
30
25
20
15
Attica
Frontier
Western Peloponnese
Eastern
Macedonia
Macedonia,
Thrace
Catching up
Thessaly
Central
Greece
Western
Greece
Keeping pace
Central
Macedonia
Epirus
Crete
North
Aegean
Ionian
Islands
South
Aegean
Diverging
Note: Tradeable sectors group sectors: agriculture (A), mining, manufacturing, energy, electricity, water supply (BCDE), information and
communication (J), financial and insurance activities (K), and other services (RSTU). Non-tradeable sectors are constructed as a sum of activity
in sectors: construction (F), distributive trade, repairs, transport, accommodation, food services activities (GHI), business services (MN), and
public administration (OPQ). Real estate activities sector (L) can be considered as non-tradeable services but is excluded in this figure.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167182
The share of the tradeable sector in GVA in regions that are keeping pace and catching up with frontier
regions is also higher than the contribution of these sectors to the economy in diverging regions. In 2015,
tradeable sectors in Western Macedonia, a catching-up region, contributed 60% of total GVA and 40%
employment. Meanwhile, Continental Greece and Peloponnese, while keeping pace with frontier, had 53%
and 46% of GVA produced by tradeable sectors and about 45% of employment. In comparison, regions
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that are keeping pace with frontier had smaller employment shares in tradeable sectors that were in any
case higher than the corresponding shares in diverging regions.
Manufacturing sectors sustained productivity growth despite large employment losses
Between 2008 and 2014, manufacturing sustained regional productivity growth or at least decreased
productivity less as compared to non-tradeable services. In some regions, this happened at the expense
of employment. For example, Central Macedonia, a region that relies on manufacturing more than the
average region in Greece, lost 36 000 manufacturing jobs between 2008 and 2014, yet experienced
productivity growth of 1.48% in the same period (Figure 2.42). Attica lost 74 000 employees in
manufacturing (a 5.9% decrease) and still, the sector drove productivity growth in the region.
Figure 2.42. Employment and productivity growth in Attica
Contribution of sectors between 2000-07 (left) and 2008-15 (right)
2008-15
2000-07
Labour productivity growth, %
Labour productivity growth, %
16
6
Manufacturing
-74 000
14
Agriculture 4
2
12
Agriculture
0
10
Utilities and
resource
extraction
6
-4
-6
Manufacturing 4
+12 000
2
Tradable
services
+67 000
-12
-2
-10
-5
Utilities and
resource
extraction
Non-tradeable
-8
services
-257 000 -10
0
-15
Tradeable
services
-43 000
-2
Non-tradable
services
+178 000
8
-14
0
5
10
Employment growth, %
-8
-6
-4
-2
0
2
4
6
8
Employment growth, %
Note: Labour productivity is measured as real GVA in USD in constant 2010 prices and PPPs per worker. The size of the bubble indicates the
size of the sector in terms of the number of employees in 2000, while the numbers at each bubble indicate the change of employment during
the period. The sector clusters are composed of multiple individual sectors. Tradeable services refer to sectors: information and communication
(J), financial and insurance activities (K), and other services (RSTU). Non-tradeable services are constructed as a sum of activity in sectors:
construction, distributive trade, repairs, transport, accommodation, food services activities (GHI), business services (MN), and public
administration (OPQ). The real estate activities sector (L) can be considered as non-tradeable services but is excluded in this figure. The size
of the circle indicates relative share of employment in the assemble of given industries in 2000.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167201
Even in the pre-crisis period, labour productivity in manufacturing increased at the expense of employment
in some regions, including Eastern Macedonia, the Ionian Islands, Peloponnese and South Aegean. Other
regions saw their manufacturing labour productivity fall between 2000 and 2007, including Continental
Greece (a fall of 3%), which relies more on manufacturing in terms of value-added than other regions, and
Crete (a fall of 0.8%).
Non-tradeable sectors were not immune to global shocks. Prior to the crisis, the non-tradeable service
sector generated the largest employment gains across Greek regions. These gains turned out to be
unsustainable in the period 2008-14 and employment loses in non-tradeable service sectors were larger
than previous gains. In Attica alone, non-tradeable services were responsible for the largest share of
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78
employment loss, with 257 000 jobs lost in the 7 years after the crisis, more than pre-crisis job creation
(178 000 jobs).
Agriculture was also a source of job losses and, in many cases, productivity growth across regions.
Agricultural GVA in Thessaly and Western Greece, 2 regions for which the sector weights relatively more
in the local economy, grew by about 3% between 2008 and 2014. However, productivity and employment
in agriculture in Thessaly fell in the precedent period and Western Greece lost about 5.8% of jobs, yet the
agricultural productivity in this region also increased by 2.7% between 2000 and 2007.
Enabling regional development
After reviewing the uneven effects of the crisis across regions in Greece, this section focuses on four main
enabling factors for future regional growth: human capital, technology, social capital and environmental
capital. The section identifies gaps in the allocation of human capital to productive activities, and the need
to boost investment in innovation and technology in order to strengthen regional innovation systems that
can serve as a backbone for regional development.
Human capital and innovation
Attica has one of the most educated populations across OECD regions
Educational attainment is the strongest predictor of the likelihood of having a job and earning a higher
salary in Greece. In many countries, it is rather higher skills and proficiency that predict employment
outcomes (OECD, 2018[38]). Educational attainment in Greece is around the OECD average, with 31% of
adults holding a tertiary qualification and 42% a high school diploma. Most of those with university
education are bachelor’s degree holders and the proportion of people with master or doctoral education
level is low (OECD, 2018[38]). This is different for the younger workforce. In the 25-34 year-old age group,
41% have a tertiary qualification. A large share of the population in Greece (27%) have completed
schooling below upper secondary education level, above levels in Chile, Mexico, Turkey and other
southern European countries including Italy, Portugal and Spain.
Within Greece, Attica is the region with the most educated population. In 2018, over 39% of adults had a
university degree and 44% had a high school diploma (Figure 2.43). Epirus, Thessaly and Central
Macedonia follow, with 34% to 32% of adults having obtained university degree, and at the same time
slightly below Greece’s average share of those with a high school diploma.
Inequalities in the distribution of workers with at least secondary education across regions in Greece are
substantial. Across OECD regions, Attica, with 86.9% of the labour force with at least secondary education,
ranks in the top third of OECD regions by this measure. The second largest region, Central Macedonia,
ranks around the bottom half OECD regions with a share of 76.2%. The least performing region, Eastern
Macedonia, had a 23 percentage-point lower share in secondary education than Attica.
Demographic change and migration can shift the shares of educational attainment of the population. Young
people that entered the workforce between 2013 and 2017 may have been more educated than the base
working-age population. At the same time, the working-age population may have increased if a higher
share of people that left the region had low educational levels, and the effect of incoming migrants with
lower educational attainment levels than locals would counterbalance this effect. For international
migrants, this is indeed the case, as they have lower educational attainments than the local population
across all regions: the educational gap between foreign-born and native-born residents and in terms of
higher education attainment is 14 percentage points at the national level and the difference varies widely
across regions (Figure 2.44).
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Figure 2.43. Education attainment by region in Greece, 2013 and 2018
Tertiary in 2013
Tertiary in 2018
Secondary in 2013
Secondary in 2018
%
48
43
38
33
28
23
18
13
Note: Education attainment measured as a share of 25-64 year-olds. Sorted by the highest tertiary attainment in 2018.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167220
Figure 2.44. Higher education attainment across selected TL2 regions in Greece, 2015
Share of highly educated people (in percentage of the total population of the same group)
Foreign-born
Native-born
%
40
35
30
25
20
15
10
5
0
Attica
Greece
Central
Macedonia
Thessaly
Crete
Western
Greece
Peloponnese
Eastern
Macedonia,
Thrace
South Aegean
Note: Epirus, the Ionian Islands, North Aegean and Western Macedonia are not displayed because of missing data.
Source:
OECD
(2019[39]),
Migrants
in
OECD
Regions:
Foreign-Born
Education
https://stats.oecd.org/Index.aspx?DataSetCode=REGION_MIGRANTS, (accessed on 25 April 2019).
Central
Greece
(Database),
StatLink 2 https://doi.org/10.1787/888934167239
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Enrolment in education increased despite a falling premium to education
Despite the many years of schooling, the benefit of premium years of education on skills in Greece is lower
than in other OECD countries. Those with tertiary education score 19 points higher in literacy than those
with a high school diploma, compared to the OECD average that scores 33 points higher (OECD, 2018[38]).
In addition, the quality of skills of higher education graduates lags behind market needs. On-the-job training
and life-long learning are not yet frequent in Greece. In combination with outmigration, about 50% of firms
report missing workers with skills they need to operate (OECD, 2018[38]).
In the aftermath of the economic crisis, employment outcomes for graduates are still poor. Greece also
employs the lowest share of its tertiary-educated workforce among OECD countries. In 2017, only 72% of
Greeks with a university degree were in employment, compared to 85% in OECD countries. Similarly, the
employment situation of those with secondary education was at the last place in OECD countries. Only
59% of those with secondary education had a job, compared to 76% in OECD countries.
The lack of employment opportunities seems to have incentivised a switch from employment to education
across regions. Between 2013 and 2018, educational attainment rose across all regions, with the highest
increase of those with a university degree in Crete and Western Macedonia by 5-6 percentage points to
about 27% and 26% of the population between 25 to 64 years of age. In turn, the share of the population
with secondary education rose from 37% to 47% in the North Aegean and from 29% to 39% in Western
Macedonia. Only the North Aegean region had a higher share of university degrees in 2013 than in 2017,
falling from 27% to 25%.
Despite large increases in areas outside Attica, the region still concentrates a much larger percentage of
the highly educated workforce. Attica’s labour force is the most educated among Greek regions with 39%
of the labour force holding a university degree (Figure 2.45). This is comparable to the most educated
regions in Germany and Slovenia (Berlin region and Slovenia’s West region), and countries such as
Estonia and Lithuania, but also other countries’ regions whose distribution of educated population is not
concentrated in one region, such as Belgium, the Netherlands, Spain and the United Kingdom. On the
other hand, the South Aegean region has about one-half of the share of university-educated workforce of
Attica and only 53 out of 233 OECD regions with available data had a lower-educated workforce than the
Ionian Islands. Other OECD countries with similar regional variation in shares of educated workforce
include Denmark; Germany, Norway and Turkey.
Although the relatively high availability of educated workers in some regions could facilitate the speed of
hiring, high qualification mismatches threaten possible benefits to productivity (see Box 2.10).
Box 2.10. Qualification mismatches in Greece in an OECD context
Greece is among the OECD countries with the highest qualification mismatch rates of their workforce
While the large number of unemployed persons means that the vacancy can be filled quickly, skill
mismatch implies smaller productivity and slower firm growth. In 2016, 44% of workers in Greece did
not match the qualification requirement of their position. Only Chile, Ireland and Mexico had a higher
mismatch of qualifications.
Out of all workers, 23.6% were overqualified and therefore had a higher level of education than required
by their job. Similarly, underqualified employees filled 20% of positions. Greek public employment
service (OAED) engaged with about one-quarter of the unemployed and 4% of the newly employed
found a job via the employment service (OECD, 2018[7]). Strengthening and supporting the role of
OAED and similar job matching agencies can enhance the capacity to match the skills with available
vacancies.
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81
Figure 2.45. Share of university-educated workforce in OECD regions in 2018
Lowest
%
80
70
60
50
40
30
Highest
20
10
Attica
South Aegean
0
Note: Latvia and Luxembourg have only one large region, thus a single observation.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167258
Higher education opportunities are concentrated in Athens and Thessaloniki
Higher education opportunities are concentrated in Athens and Thessaloniki. Out of the 22 universities in
Greece in the academic year 2014/15, 7 were in the Athens-Piraeus metropolitan area. Two out of 14
Technological Educational Institutes (TEIs) were located in the Athens-Piraeus area in the same academic
year. Thessaloniki hosted three universities, with the highest-ranked university being the Aristotle
University of Thessaloniki, and one TEI.
The National and Kapodistrian University of Athens, the Aristotle University of Thessaloniki and the
National Technical University rank between the 300 and 500 best universities in the world in 2018,
according to the Academic Ranking of World Universities (ARWU), based on the criteria of quality of
education, quality of faculty, research output and per capita performance indicators (ShanghaiRanking,
2018[40]).
The number of higher institutions with presence across regions recently changed because of a reform to
the higher education system that allows universities to offer two-year technical or professional education
programmes. Within this transformation, the majority of TEIs were merged with existing universities in 2018
and 2019. As part of the reform, TEIs in Attica and Crete were transformed into new universities. The
additional measures of this transformation of the education system include reduction of academic
departments. In the academic year 2014/15, before the reform, 191 000 students attended universities and
100 000 TEIs. About one-quarter of 18- and 19-year-olds attended the first year of higher education in
university and about one-tenth attended a TEI (OECD, 2018[3]).
Attendance grew faster than public expenditure in higher education in the post-crisis period
Expenditure in higher education in Greece sits below the OECD average and has decreased since 2010.
In 2015, the share of higher education in R&D expenditure in GDP was 0.37%, below the OECD average
of 0.43% (OECD, 2017[41]). About 70% of public spending on R&D was allocated to universities in the same
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82
year. However, fiscal consolidation introduced since 2010 reduced the budget allocated to higher
education by 13.2% between 2009 and 2010, and an additional drop of 6% in the following year. Public
expenditure per student fell by an estimated 50% between 2009 and 2015. These measures imply the
reduction in faculty and personnel, reduction of salaries and a considerable reduction of operational
expenses.
In parallel, the share of students in higher education in the 18 to 24 year-old population increased across
all Greek regions over the period 2008 to 2012. Across regions, Western Greece increased the share of
its university students from 104% in 2008 to 183% in 2012, the highest share of students in education as
a proportion of university-age population in Greece. Epirus followed with a 40% increase to 162%. The
lowest rates of student attendance are in the South Aegean region, at 21% (Eurostat, 2020[42]).
The decrease in funding had repercussions on the availability of teachers. University attendance increased
between the academic years 2008/09 and 2014/15 by about 12% while teaching staff decreased by about
18%. TEI student enrolment fell by 12% in the same period and the teaching staff fell by 62% during the
crisis period (OECD, 2018[3]).
Regions in Greece are among the least innovative across OECD regions
Besides human capital, R&D investment and an educational system conducive to innovation are the basis
of a regional development strategy based on knowledge. In terms of R&D expenditure, regional levels are
very low with the exception of Attica, where more than half (57%) of the national R&D expenditure in 2015
was concentrated. Despite their dissimilar shares of R&D investment, Epirus and Western Greece have
similar shares of personnel working in R&D activities compared to Attica. These regions have about 3% of
the total workforce employed in R&D in 2015 and have a 6% and 2.8% share in total Greek R&D spending
respectively (Figure 2.48). Business enterprise is a major source of R&D expenditure growth in Greece,
increasing by about 46% between 2014 and 2016.
Figure 2.46. R&D intensity in Greek regions in 2015
Share of R&D personnel in total workforce (left axis)
R&D total expenditure (right axis)
%
3.5
EUR millions
1 200
3
1 000
2.5
800
2
600
1.5
400
1
200
0.5
0
0
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167277
The availability of higher educational institutions, R&D investment and human capital in regions translates
into a small and highly concentrated production of knowledge. Greek regions belong to the least innovative
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
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OECD regions and can compare to regions in Chile, Mexico and Poland. As expected from the
concentration of human capital and R&D investment, patent generation is also highly concentrated in
Attica: the region generates about 20 patents per million inhabitants, the least innovative region by this
standard, Western Greece, generates only 1.5. Yet, the least innovative regions in more than a dozen
OECD countries produce more patents per capita than Attica (Figure 2.47).
Figure 2.47. Innovation intensity across OECD regions, 2015
Regions with the lowest and highest share of patent applications
Patents per 1 million inhabitans
800
700
600
500
400
300
200
100
0
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167296
Health and safety indicators remained relatively high despite worsening economic
conditions
The worsening economic conditions reflect on well-being dimensions of jobs, income and life satisfaction,
in which Greek regions perform at the lowest level among OECD regions. Still, safety indicators for regions
in Greece were high compared to other OECD regions. All regions in Greece are in the upper half among
395 OECD regions in terms of safety, measured by the homicide rate. South Aegean belongs to the top
10% safest regions and Epirus to the 10% healthiest OECD regions (Figure 2.48). Safety indicators
actually improved or remained unchanged compared to their 2000 levels across regions.
Health is another dimension in which Greek regions fare relatively strong compared to OECD regions, both
in availability and outcomes indicators. Regions in Greece have more physicians per capita than an
average OECD region (Figure 2.50). Attica had 7.9 physicians per 1 000 inhabitants in 2017. Physician
presence in Continental Greece, South Aegean and Western Macedonia is around its OECD regional
average, with about 3 physicians for each 1 000 people, the lowest presence among the Greek regions.
Attica and Thessaly also have the highest hospital beds per 10 000 people, with 51 and 54 beds in 2015.
Other regions have on average 34 beds, which is below the average of 46 beds across OECD regions.
Life expectancy, a broad measure of health outcomes, is high across all regions in Greece. Life expectancy
varies from 81 years in Attica to 83.4 years in Epirus. The life expectancy in Greek regions is similar to
regions in Austria, Iceland, Norway and Sweden (Figure 2.51). The difference in life expectancy between
the best and worst region in Greece is smaller than the average difference of OECD countries.
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Figure 2.48. Regional well-being indicators for Greece, 2016
Bottom region
Attica
Regions
Epirus
South
Aegean
Attica
Western Greece
Attica
Attica
South
Aegean
South Aegean
Central
Macedonia
North Aegean
Ionian Islands
North Aegean
East Macedonia
Thrace
bottom 20%
Ranking of OECD regions (1 to 402)
top 20%
middle 60%
Top region
Attica
Western Greece
North
Aegean
Safety
Education
Health
North
Aegean
Civic
Community Environment
Engagement
Attica
Central
Greece
South Aegean
Income
South Aegean
Western Macedonia
Life
Satisfaction
Access to
services
Jobs
Housing
Note: Relative ranking of the regions with the best and worst outcomes in the 11 well-being dimensions, with respect to all 395 OECD regions.
The 11 dimensions are ordered by decreasing regional disparities in the country. Each well-being dimension is measured by the indicators in
the table below. For access to services and safety, Greek regions correspond to a higher geographic aggregation.
Source: (OECD, 2020[43]), Regional Wellbeing (database), www.oecdregionalwellbeing.org, (Accessed on 13 March 2019).
Figure 2.49. Individual well-being indicators outcomes in Greek regions, 2016
Safety
Homicide Rate (per 100 000 people), 2016
Education
Labour force with at least upper secondary education (%), 2017
Health
Life Expectancy at birth (years), 2016
Age adjusted mortality rate (per 1 000 people), 2016
Civic engagement
Voters in last national election (%), 2017 or lastest year
Community
Perceived social network support (%), 2013
Environment
Level of air pollution in PM 2.5 (µg/m³), 2015
Income
Disposable income per capita (in USD PPP), 2016
Life Satisfaction
Life satisfaction (scale from 0 to 10), 2013
Access to services
Households with broadband access (%), 2017
Jobs
Employment rate 15 to 64 years old (%), 2017
Unemployment rate 15 to 64 years old (%), 2017
Housing
Rooms per person, 2016
Greek regions
Country
Average
OECD median
region
Top 20%
Bottom 20%
0.8
1.3
0.3
1.0
76.7
81.7
86.9
65.6
81.5
7.5
80.4
8.1
82.3
7.0
81.0
7.8
63.6
70.9
69.5
54.9
81.1
91.4
85.5
74.7
18.4
12.4
15.5
22.1
12 958
17 695
14 978
11 130
5.6
6.8
5.9
5.0
65.0
78.0
67.5
60.1
53.7
21.8
67.7
5.5
55.8
18.1
50.7
25.4
1.5
1.8
1.5
1.5
Note: Data in the first two columns refer to average values in regions at the top and the bottom 20% of the national ranking. OECD 34 weighted
average.
Source: (OECD, 2020[43]), Regional Wellbeing (database), www.oecdregionalwellbeing.org, (Accessed on 14 March 2019).
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
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Figure 2.50. Availability of healthcare in Greek regions
Active Physicians (left axis)
Hospital beds (right axis)
Avg Physicians in OECD regions
Avg hospital beds in OECD regions
Rate for 10 000 inhabitans
60
Rate per for 1000 inhabitans
9
8
50
7
6
40
5
30
4
20
3
2
10
1
0
0
Note: Data for hospital beds are from 2015, data on active physicians are from 2017, OECD averages are calculated for 2011. The average rate
for hospital beds in 208 OECD regions in Austria, Canada, Chile, the Czech Republic, Denmark, Germany, Greece, Hungary, Israel, Japan,
Korea, Mexico, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden and Switzerland. The average rate of physicians in OECD
regions is based on 172 regions in the same countries and Latvia and with an exception of regions in Canada, Denmark, Japan and Sweden.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167315
Figure 2.51. Life expectancy at birth in OECD regions, 2018
Highest
Lowest region
Age in years
88
86
84
82
80
78
76
74
72
70
68
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167334
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Despite recent improvements, Greek cities are amongst the most polluted in Europe
Athens and Thessaloniki remain among the most polluted European metropolitan areas despite recent
improvements. Both cities decreased the pollution exposure of their population between 2000 and 2016
by 18% and 21% respectively. Pollution decreased by about 20% across metropolitan areas around the
OECD countries, where North American cities show the highest percentage fall in exposure to fine particles
pollution (Figure 2.52). Thessaloniki faced similar pollution exposure as Berlin and Prague, with an average
level of fine particles (PM2.5) of about 14.8µg/m³ in 2016, down from 18.8 µg/m³ in 2000. Athens had
higher levels of pollution, at 17.4µg/m³ in 2016, comparable to Budapest and lower than metropolitan areas
in Colombia, Italy, Korea, Mexico and Poland.
Car emissions and residential heating are two major sources of ambient PM pollution that determine air
quality of cities. Between 1991 and 2011, Greece put in place a ban on diesel cars in metropolitan areas,
paving the way to lowering nitrogen dioxide emissions from traffic in Athens and Thessaloniki. Since lifting
the ban, diesel car sales in Greece increased rapidly from 4% in 2010 to 40% of all new cars sold with a
diesel engine in 2012, increasing even further to 63% in 2015 (ACEA, 2017[44]).
The economic downturn reflected negatively on the environmental performance of cities in Greece. The
rising cost of heating oil, a common way of residential heating in Greece, resulted in a rise in burning
biomass for heating during the winter months (Amato et al., 2016[45]). Further air quality checks during the
winter months determined the presence of toxic chemicals, indicating the use of previously treated wood
or combustible waste as heating fuel.
Figure 2.52. Air pollution experienced by the population in metropolitan areas, 2000-16
Average level of PM2.5 pollution intensity
% in 2016
45
40
35
30
25
Rome
20
Athens
Prague
London
15
Berlin
New York
10
Thessaloniki
Paris
Madrid
5
0
0
5
10
15
20
25
30
35
40
45
% in 2000
Note: The 45-degree line indicates the unchanged exposure to pollution.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167353
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Pollution across Greek regions is high but decreased since 2010
Regional air pollution is not exclusive to metropolitan areas in Greece. Crete and South Aegean have had
the highest pollution levels across regions over time, with a 25.1 µg/m³ of PM2.5 pollution level in Crete in
2017 and only slightly less, 23.7 µg/m³ in 2017, in the South Aegean Islands region (Figure 2.53). Other
Greek regions experience considerably smaller exposure to pollution, with Continental Greece, the Ionian
Islands and Thessaly being the least air-polluted regions in Greece, with the average pollution level
between 12.7 to 13.5 µg/m³ in 2017. Yet, in 2017, all Greek regions have higher air pollution levels than
an average OECD region.
A positive trend of reducing the air pollution is common across all regions in Greece by an average
2.7 µg/m³ drop, yet still lower than the decrease seen across OECD regions, 2.8 µg/m between 2010 and
2017. The 2 most polluted regions and the Ionian Islands saw an increase of pollution between 1990 and
2010, while other regions experienced a decrease in pollution by 6% on average, with Eastern Macedonia
decreasing 1990 levels of pollution by the highest margin (12%). In this earlier period, Greece reduced
pollution at a higher pace than an average OECD region and about half of Greek regions faced pollution
levels close to the OECD average (Figure 2.53).
Figure 2.53. Air pollution in PM2.5 in Greek regions, 1990-2010
2017
1990
2010
2017 OECD Average
1990 OECD Average
μg/m3
30
25
20
15
10
Note: The OECD 2017 average is calculated with 338 OECD regions. The 1990 average is across 323 OECD regions.
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167372
Almost all emissions in Western Macedonia come from the energy sector. Western Macedonia is
specialised in mining and energy production with 35% of value-added in 2015. Similarly, the energy sector
is the main emitter of CO2 emissions in Peloponnese. In Attica, Central Macedonia, Crete, Epirus, the
Ionian Islands, the North Aegean Islands and Western Greece, between 30% and 51% of emissions come
from the transport sector, with the energy sector counting for 17% or less of the emissions in these regions
(Figure 2.54). There are about three cars per four inhabitants of the Attica region, compared to one car per
five inhabitants in Peloponnese. Car presence is also quite dominant in Central Macedonia, Crete and the
Ionian Islands, all with about four cars per ten inhabitants in 2014
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Figure 2.54. CO2 emissions share by type of sector and region, 2008
As a percentage of total CO2 emissions
Energy sector
Transport sector
%
120
100
80
60
40
20
0
Source: OECD (2020[8]), Regions and Cities (database), https://stats.oecd.org/ (accessed on 19 February 2020).
StatLink 2 https://doi.org/10.1787/888934167391
The allocation and macroeconomic effects of EU funds
Since the early 1980s, the European Union Structural and Investment Funds (ESIF) have provided
financing aid to EU member countries to upgrade public infrastructure, strengthen human capital,
accelerate the convergence between the EU regions but also lower poverty and inequality. Greece has
been a large beneficiary of these funds as, according to data from the Ministry of Development and
Investments, between 2000 and 2017, the EU structural funds disbursement to Greece amounted to
EUR 66 billion.
This section assesses to what extent EU structural funds have helped the Greek economy during the long
crisis. The evaluation of the impact used data since 2009 and therefore refers to the fourth and fifth
programming periods of ESIF. 2009 is the first year when projects were financed in the context of the
National Strategic Reference Framework 2007-13. The study includes the distribution of EU capital inflows
to Greece and of amounts of EU co-financing (including state participation).
The remainder of the section is organised as follows: the second part includes a review of the literature on
the effectiveness of EU funds with specific reference to Greece; the third part focuses on descriptive
statistics about EU funds in Greece during the programming periods 2007-13 and 2014-20; the fourth starts
with the presentation of the econometric models for estimating the impact of EU funds on the Greek
economy. Then, the outputs of the estimations are presented, including the calculation and depiction of
the impact of EU co-funded projects with a focus on the 2009-17 period.
EU Structural and Investment Funds represent an important share in Greek public
investments
Public investments fell since the crisis, as Greece targeted debt reduction through a consolidation
programme. Greece has received support from the European Commission through EU Structural and
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Investment Funds (ESIF) (Table 2.6). During the crisis, EU funding in the fourth programming period
represented the largest share of total public spending in Greece.
Table 2.6. EU Structural and Investment Funds in Greece
2nd period
(1994-99)
3rd period
(2000-06)
4th period
(2007-13)
5th period
(2014-20)
ECU thousands
1994 prices in
ECU thousands
2000 prices in
EUR thousands
2007 prices in
EUR thousands
2014 prices in
EUR thousands
3 481 933
14 342 054
29 721 300
42 000 000
29 500 000**
25 565 000
National public
contribution
695 740
5 802 196
7 069 900
9 700 000
2 600 000**
5 182 684
EU contribution
2 576 000
7 193 241
13 980 000
22 700 000
24 400 000
20 382 316
210 193
1 346 617
8 671 400
9 600 000
7 500 000
N/A
Total budget
Private
contribution
MIP*
1st period
(1986-89)
(1989-93)
1986 prices in
ECU thousands
1989 prices in
Note: MIP refers to Mediterranean Integrated Programmes. After 1989, MIP was included in the first structural funding. In the fourth period, due
to the crisis and delays in executing spending plans, the national co-financing was reduced from EUR 11.5 billion to EUR 1.6 billion, reducing
the total budget to EUR 29.5 billion.
Source: G. Petrakos. Compiled from http://www.hellaskps.gr and https://www.espa.gr/ 2019.
StatLink 2 https://doi.org/10.1787/888934167410
Box 2.11. Priorities of EU Structural Funds in Greece
Since the early 1980s, European Union Structural Funds (SF) provided financing opportunities to EU
member countries with the main aim of redressing regional inequalities. In the beginning, these funding
initiatives were undertaken through the Mediterranean Integrated Programmes (MIP) (1986-89). Since
the beginning of the 1990s, they are provided in the context of the so-called “programming periods”.
Specifically, these comprise the first Community Support Framework (CSF) (1989-93), the second CSF
(1994-99), the third CSF (2000-06), the National Strategic Reference Framework (ΕΣΠΑ in Greek)
(2007-13) and the current Partnership Agreement for the Development Framework (also ΕΣΠΑ in
Greek) (2014-20).
In the last 30 years, Greece has been a major ESIF beneficiary, with tens of thousands of projects
financed all over the country, in almost every sector of the economy, ranging from the construction of
motorways to activities in the agricultural sector. These projects were mainly financed by the European
Regional Development Fund, the European Social Fund, the Cohesion Fund and EU funds providing
support to the agricultural sector. Specifically, in per capita terms, Greece is the EU country that
received the highest amounts of ESIF between 1996 and 2015 (Tzifakis, Liargovas and Huliaras,
2015[46]).
Source: Tzifakis, N., P. Liargovas and A. Huliaras (2015[46]), Beyond “Absorption”: The Impact of EU Structural Funds on Greece,
http://www.kas.de/greece.
Between May 2010 and August 2018, Greece underwent three Economic Adjustment Programmes, aiming
to eliminate severe fiscal imbalances and improve the functioning of markets and international
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competitiveness. The structural reforms implemented in the context of the adjustment programmes have
started to improve competitiveness and conditions for starting new businesses (OECD, 2018[47]). The fiscal
adjustment was unprecedented as the state budget primary balance improved by 14.5% of GDP between
2010 and 2018. In the process, GDP fell by 23% between 2009 and 2013, stabilised from 2014 to 2016
before rising by 1.4% in 2017 and 1.9% in 2018. These developments, along with the inability of Greek
governments to access financial markets from the second quarter of 2010 until 2017 and the Private Sector
Involvement Programme in April 2012, led to a severe dearth of liquidity that persists. From May 2010 to
October 2018, the outstanding amount of bank credit to the private sector of the Greek economy
(businesses, households and non-profit institutions) almost halved, from EUR 259.9 billion to
EUR 174.5 billion. In this context, ESF may have at least provided liquidity that would not be available
otherwise.
On the expenditure side, the average annual total amount of EU and national co-financing in the period
2009-18, including investment, other projects and transfers to the agricultural sector, was EUR 8.0 billion,
with the highest value, EUR 10.1 billion, recorded at the beginning of this period (Figure 2.55). In 2012,
co-funded spending recorded a significant decline year-over-year by almost 26% to EUR 7.5 billion. It then
rose by 17.2% in 2013. In the following 3 years, EU co-financing declined moderately, reaching
EUR 7.7 billion in 2016. The downward trend intensified in 2017-18, with the relevant spending recording
the lowest levels since 2009.
The uneven distribution over time of the spending of EU funds in countries where they account for a
significant share of total public investment, as in Greece, makes macroeconomic management challenging
(OECD, 2018[47]). That is because EU Structural Funds are not a tool of macroeconomic management and
high spending in some years (such as 2010 in Greece) may be followed by low spending in the following
years.
Figure 2.55. Total amount of EU co-funded expenditure per annum, 2009-18
EUR billion
12
10.15
10
9.14
8.81
7.58
8
8.43
8.06
7.52
7.74
6.85
5.75
6
4
2
0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Note: Amounts include capital and current spending.
Source: Ministry of Finance, State Budget review (2009-2018) – SGAAP (ΕΛΕΓΕΠ) balance sheets. Data processing: FEIR/ΙΟΒΕ.
StatLink 2 https://doi.org/10.1787/888934167429
EU co-financing through the regional administrations amounted on average to EUR 706.5 million spanning
the period 2009-18. Only, in 2015, this amount exceeded EUR 1.0 billion, recording its highest value in the
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
91
examined period (EUR 1.03 billion). On the contrary, in 2017, the lowest amount of co-funded spending
from regions was recorded, approximately EUR 445 million.
The share of EU co-financing through the regional administrations via the respective Operational
Programmes (OPs) to total EU co-spending fluctuated significantly during 2009-18. Specifically, it stood
on average at 8.8% (Figure 2.56). In 2010, the relevant share accounted only for 5.2% of total EU
co-spending in Greece, the lowest value in the examined period and almost two-thirds of the previous
year’s proportion (8.9%). Subsequently and up until 2015, the share of expenditure made by regional
administrations remained on an upward trend. In 2015, it reached its highest level (12.8%) but, as of 2010,
it exhibited a sharp decline in the following year (6.5%) to its 2018 value of 9.1%.
Figure 2.56. Share of EU funds to regional administrations
%
15
12.8%
11.2%
10
8.9%
11.5%
9.1%
8.7%
7.5%
6.5%
6.5%
2016
2017
5.2%
5
0
2009
2010
2011
2012
2013
2014
2015
2018
Source: Ministry of Finance & Ministry of Development and Investments, Data processing: FEIR/IOBE.
StatLink 2 https://doi.org/10.1787/888934167448
Regarding the allocation of EU capital inflows with respect to EU fund of origin, their major part – almost
on average 48% during the period 2009-18 – was disbursed from the European Agricultural Fund for Rural
Development (EAFRD) and European Agricultural Guarantee Fund (EAGF) (Figure 2.57). A significant
amount of financing was drawn from the European Regional Development Fund (ERDF), with the
respective average proportion to total EU funding amounting to 28.2% throughout the examined period.
The respective average proportions to total EU funding from the European Social Fund (ESF) and the
Cohesion Fund (CF) amounted to 10.9% and 9.0% respectively. However, the share of ESF inflows
fluctuated considerably, whereas that of CF was relatively more stable.
The share of financing from the ERDF declined considerably through time, from 36.2% in 2011 to 16.4%
in 2018. On the contrary, the participation of ESF resources recorded a significant increase, reaching
13.0% in 2018 from 2.9% in 2009. This development possibly linked to the urgency of tackling the social
problems that the long and strong recession in Greece during 2008-13 caused. In 2018, the capital inflows
from both the EAFRD and the EAGF amounted to 58.7% of total resources originating from the EU, the
largest share since 2009.
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Figure 2.57. Distribution of EU funds for investment projects
Regional Development Fund
Cohesion Fund
European Social Fund
Other funds**
EAFRD & EAGF*
Maritime Fisheries Fund
%
100
90
80
70
60
50
40
30
20
10
0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Note: EAFRD: European Agricultural Fund for Rural Development; EAGF: European Agricultural Guarantee Fund (EAGF).
Source: Ministry of Finance, State Budget Review, Data processing: ΙΟΒΕ.
StatLink 2 https://doi.org/10.1787/888934167467
Concerning the allocation of total co-financing to activities and sectors of the Greek economy, on average
the primary sector of the economy held the highest share, at a significant distance from the sector with the
second highest share. Specifically, the primary sector’s share of total EU funding was on average 43%
during the period 2009-18. This mainly comprised subsidies granted by the EAGF (Figure 2.58). A
significant amount of EU funds was allocated to the construction of transport infrastructure, with its average
share reaching 23%. These capital inflows from EU funds were used mainly for the construction of highway
networks. Τhe share of EU funds allocated to projects concerning transport fluctuated significantly,
reaching 18% in 2018, one of the lowest in the examined period, following a 35% share in 2016. Capital
resources concerning the primary sector varied between 40%-45% of total EU funding but recorded a
significant increase in 2018, to 54%.
Co-funded projects in the industry-energy sector, and in education and research are next in the
classification with respect to absorption of EU funds, with an average share of 12% and 11% respectively.
EU capital resources for the support of public administration amounted to 3% between 2009 and 2018.
Public administration projects covered various purposes, such as digitalisation of public services,
e-governance, restructuring of public services, etc. The smallest shares to EU capital flows were recorded
in the health sector, as well as in the tourism-culture sector, with a magnitude of on average 1% for both,
spanning the period 2009-18.
In order to assess the implementation of EU co-funded investment planning in Greece during the fourth
and fifth programming periods, one can examine the absorption rate of capital resources per EU fund and
in total. This information is derived from the ratio of disbursed co-financing to beneficiaries to the approved
EU co-funding amounts. Concerning the National Strategic Reference Framework (NSRF) 2007-13, the
average absorption rate among EU funds was 106.3%. Analytically, the absorption rate for EFRD reached
106.6%, for ESF reached at 106.2%, while for the Cohesion Fund, the absorption rate stood at 105.3%.
Similarly, concerning the Partnership Agreement 2014-20, up to the first semester of 2017 (latest data
available), the absorption rate amounted to 9.9%. The absorption rate of EU funds from the EFRD, the
ESF and the CF was 10.1%, while the respective rate for EAFRD amounted to 9.1%.
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Figure 2.58. Distribution of EU investment co-financing by sector
Transportation
Tourism - Culture
Industry - Energy
Education & research
Primary sector
Public administration
Health
Other sectors
%
100
90
80
70
60
50
40
30
20
10
0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Source: Ministry of Finance, State Budget review – Public Investment Division (Ministry of Economics) - General Government Accounting
Division (Ministry of Finance), Data processing: FEIR/ΙΟΒΕ.
StatLink 2 https://doi.org/10.1787/888934167486
To increase the absorption and use of EU funds in Greece, the technical support of the European
Commission's Structural Reform Support Service (SRSS) – now DG Reform – is providing help to improve
administrative capacity for the design and implementation of reforms concerning the use of EU funds.
Moreover, simplification measures were carried out in the legislation and implementation of EU structural
funds, including clarifying the demarcation between political and administrative tasks, enhanced
co-ordination of funds as well as reinforcement of anti-fraud measures. Greece also set up an interministerial committee with the aim to lift bottlenecks in the implementation of projects and took legislative
action to simplify the payment circuit of projects in order to increase absorption. A number of countries
have passed reforms to improve the management and spending effectiveness of EU funds. These
experiences indicate that improving capacity, greater use of electronic applications, simplified processes
and greater co-ordination can help to speed up implementation (Box 2.12).
Box 2.12. Selected example of reforms to improve the spending of EU funds
Bulgaria
Initial weakness resulted in a low absorption rate, which was mitigated by increasing advanced
payments, applying electronic application and reporting procedures, simplifying and unifying tender
processes, and strengthening the role of international financial institutions and banks in project
preparation, evaluation and monitoring.
Czech Republic
Significant steps have been taken to improve co-ordination, capacities and framework conditions for
the 2014-20 period. “Standing conferences” have been established at the national and regional levels
(using the eight regional groupings channelling EU funding). These conferences include important
territorial stakeholders and will prepare action plans that form the basis for calls for tender. There is also
a stronger focus on integrated strategies within regions and community-led local development. The
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
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number of programmes has been reduced, procedures for managing the programmes have been
simplified and a uniform methodology applied across all programmes.
Poland
A forum has been introduced for the co-ordination of strategic planning for the EU-funded investments.
Project management and transparency of execution have improved as part of efforts to better absorb
EU funds. Technical assistance funds have been used to train regions and beneficiaries of project funds
in performance monitoring. An information system for monitoring and controlling structural and cohesion
funds was put in place to highlight the financial and physical progress of projects co-financed by EU
funds throughout their implementation, which was meant to facilitate the certification process for release
of EU funds. Each such project was also assigned a monitoring committee that carried out systematic
progress assessments over the life of the project.
Slovak Republic
Some steps have been taken to improve the administration of EU funds, such as the semi-annual
publication on the implementation of EU funds that allows the authorities to react promptly in case of
identified problems regarding absorption of the funds. Administrative procedures have also been
simplified and allow the managing authority to request only partial project documentation upon the
application submission, the rest of the documentation being required only after projects are selected.
Following 2014 and 2015 government resolutions, it was decided to significantly increase the number
of employees working in entities responsible for ESIF. The Analytical Unit of Central Coordination Body
was created in June 2015. The main aim of this body is to provide input for evidence-based
policymaking, with a special emphasis on the study of the effectiveness of EU funds. An electronic
system to exchange data between managing authorities and EU fund beneficiaries has been put in
place to monitor and evaluate the whole process. The managing authorities started to collaborate with
regional offices to offer technical assistance and free consultations to help applicants with the
application process. The recently adopted National Public Procurement Package is supposed to
facilitate the application and disbursement process.
Slovenia
The government has implemented inter-ministerial co-ordination, which organises meetings with
potential applicants and advises smaller companies. Slovenia has also simplified procedures for
payments and improved the timeliness of public tender announcements.
Lithuania
Since joining the EU in 2004, Lithuania has taken steps to improve planning and implementation of
public investment projects, particularly those financed by EU funds. To deal with an expanding pool of
potential project applications to use EU funds, a competition-based project selection procedure was
introduced, which meant that public entities and public service providers had to apply for financing on
an equal basis and follow well-defined criteria and procedures.
Source: OECD (2018[47]), OECD Economic Surveys: European Union 2018, https://dx.doi.org/10.1787/eco_surveys-eur-2018-en;.
EU funds have significantly increased Greek economic performance
In order to analyse the impact of cohesion policy, some studies have used the QUEST III5 model,
developed and used by the Directorate-General for Economic and Financial Affairs (DG ECFIN),
supplemented by a second model, RHOMOLO. 6 The latter is designed to estimate the impact of policy at
the NUTS 2 regional level. The results of this model for the programming period 2000-06 show an
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
95
unambiguously positive impact of EU Structural Funds financing on the GDP of member states, especially
in the Greek economy. Specifically, the results of the model simulation suggest that co-funded investments
during the period 2000-09 have potentially on average increased GDP in Greece by up to 1.4% annually,
relative to the baseline scenario on (Figure 2.59).
Box 2.13. Literature analysing EU funding impact on the economy
Disentangling the effect of EU funds from other factors driving economic growth is not evident. It should
be recognised, however, that in many countries – Greece included-, financing from the EU structural
funds has amounted to a high share of public investment, which is a key driver of economic growth in
less developed regions (EC, 2018[48])
Many studies on the impact of Cohesion Policy funding on growth have found significantly positive
effects (Puigcerver-Penalver, 2007; Lima & Cardenete, 2008). A small part of these studies has found
positive but only mild effects (Mohl & Hagen, 2010) while some other studies found an either small or
statistically insignificant impact (Ederveen, Groot, & Nahuis, 2006; Bradley, Morgenroth, Untiedt,
Bradley, & Morgenroth, 2003). Most of the studies carried out after 2005 usually rely on larger datasets
that could capture the long-run effect of Cohesion Policy and find that EU co-funding has had broadly
positive results
Starting with the impact of the second CSF 1994-99 on Greece, EU funds contributed to the creation of
nearly 400 000 jobs (Beutel, 2002[49]). The effects of capital inflows in the context of the EU Cohesion
Policy on the Greek Economy during the period from 2000 to 2006 were positive, contributing to an
increase in GDP by 2.8% (Tzifakis, Liargovas and Huliaras, 2015[46]). They also boosted technological
innovation, through investment in 23 000 enterprises and 7 000 start-ups. Moreover, it was estimated
that EU funds in the third programming period generated 14 000 new jobs per year, provided vocational
training for 257 000 people and improved infrastructure and accessibility to the labour market.
During the 2007-13 programming period, EU funds provided Greece with EUR 6 billion to improve
transport infrastructure, EUR 5.5 billion to boost environmental condition, EUR 3.6 billion to support
R&D and EUR 2.2 billion for vocational training. These financial resources led to the creation of more
than 2 400 businesses and contributed to investment in over 30 000 small- and medium-sized
enterprises (SMEs) (Tzifakis, Liargovas and Huliaras, 2015[46]). Moreover, 21 000 job positions were
created, most of them in SMEs. Thanks to EU funding, 800 000 citizens gained access to broadband
Internet and there was an improvement in urban transport, to the benefit of over 86 000 people.7
Investment in water supply and management benefitted 450 000 people (REMACO, 2014).8
Source: (Beutel, 2002[49])The Economic Impact of Objective 1 Interventions for the Period 2000-2006, https://opus.htwgkonstanz.de/frontdoor/deliver/index/docId/21/file/FH-orschung9.pdf (accessed on 25 July 2019); Tzifakis, N., P. Liargovas and A. Huliaras
(2015[46]), Beyond “Absorption”: The Impact of EU Structural Funds on Greece, http://www.kas.de/greece; (Puigcerver-Penalver, 2007[50]),
(Lima & Cardenete, 2008[51]), (Mohl & Hagen, 2010[52]), (Ederveen, Groot & Nahuis, 2006[53]), (Bradley & Morgenroth, 2003[54]), (REMACO,
2014[55]).
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
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Figure 2.59. Estimated impact of Cohesion Policy financing on GDP for the 2000-06 period (3rd CSF)
2000-2009 (annual change)
2015
% difference from baseline
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Source: QUEST European Commission macroeconomic model 2014. Data computation with WebPlotDigitizer.
StatLink 2 https://doi.org/10.1787/888934167505
In the programming period 2007-13, funding was provided to many companies helping them to overcome
the tight borrowing conditions, because of the sovereign crisis in Greece. For example, in the context of
the JEREMIE financial instrument scheme, 1 300 SMEs were financed. Almost 730 000 people were given
access to broadband Internet as a result of ERDF financing, the majority of them in the Macedonia and
Thrace regions, which are 2 of the least developed in Greece, thus contributing to the narrowing of digital
hysteresis. Using the aforementioned model, Cohesion Policy co-funded investments in Greece during the
period 2007-13 were estimated to have average growth potential of 0.5 GDP percentage points annually,
relative to the baseline scenario (
Figure 2.60). Although a boost to economic activity was estimated, this is significantly milder compared to
that of the previous programming period. This outcome is partly attributable to GDP contraction due to the
2010 sovereign crisis in Greece.
ESIF can also positively impact environmental and social outcomes. During the 2007-13 programming
period, an additional 5.9 million people were connected to new or improved water supply networks,
1.6 million of whom were in EU‑12 countries and 3.7 million in convergence regions in the 4 southern
EU‑15 member states (Table 2.7). The majority were living in Spain and Greece, 1.93 million and
1.4 million respectively. Additionally, 6.9 million more people were connected to new or upgraded
wastewater treatment facilities, 1.9 million of whom were in EU‑12 countries and 4.6 million in the
4 southern member states, of which 370 800 in Greece.
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
97
Figure 2.60. Estimated impact of Cohesion Policy on GDP for the 2007-13 period
2007-16 (annual average)
2022
% difference from baseline
6.0
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
LV
LT
PL
SK
EE
BG
CZ
RO
PT
SI
MT
HU
EL
CY
ES
IT
DE
Source: QUEST European Commission macroeconomic model 2014. Data computation with WebPlotDigitizer.
StatLink 2 https://doi.org/10.1787/888934167524
Table 2.7. Additional population served by water and wastewater projects co-financed by the ERDF
and Cohesion Fund, 2007-13 (up to end of 2014)
Water projects (thousand)
Wastewater projects (thousand)
Czech Republic
371.3
490.3
Estonia
13.7
15.8
Hungary
478.1
Lithuania
78.5
Latvia
672.2
90.1
Poland
262.2
537.3
Slovenia
291.6
194.2
Slovak Republic
33.0
44.2
Spain
1 929.0
2 172.3
Greece
1 455.5
370.8
Italy
Portugal
825.0
359.8
Germany
1 270.0
213.0
France
514.6
101.4
EU-12
1 644.0
1 928.5
EU-4
3 744.3
4 638.1
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
98
Water projects (thousand)
EU-15 Other
EU
Wastewater projects (thousand)
514.6
314.4
5 902.9
6 880.9
Note: EU-4 = Greece, Italy, Spain and Portugal.
Source: DG-REGIO. Derived from Annual Implementation Reports for 2014.
StatLink 2 https://doi.org/10.1787/888934167543
In the current programming period 2014-20, with means of a RHOMOLO model estimation, GDP in EU‑13
countries in 2015 was estimated to be 2.8 percentage points higher than it would have been without EU
co-funded projects (Figure 2.61). In terms of the magnitude of the impact until 2023, Greece ranks among
the middle range of EU countries, with a 1.6 percentage points higher GDP growth rate compared with the
case of absence of ESIF for the programming period 2014-20. The year 2023, beyond the fifth
programming period, was chosen as a benchmark, because some cohesion funding, such as that for
innovation process, has medium- or even long-term impact on the economy, which in some cases is higher
than its short-term impact.
Figure 2.61. Impact of 2014-20 EU funding on member states’ GDP, until 2023
% addition to GDP
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Source: QUEST European Commission macroeconomic model 2014. Data computation with WebPlotDigitizer.
StatLink 2 https://doi.org/10.1787/888934167562
A characteristic of the impact of ESIF is the hysteresis effect these projects can have on the local economy.
Some categories of interventions have an immediate impact on employment, such as transport
infrastructures, but others could affect the economy in the medium and long terms, such as R&D projects
or education (Plaskovitis, 2006[56]; Tzifakis, Liargovas and Huliaras, 2015[46]). Financial support for this type
of project is higher in Greece in the context of the 2007-13 and 2014-20 programming periods compared
with previous ones. This may lead to higher GDP growth rates in the long run. The impact of EU
co-financing on Greece’s real GDP reached 6% for the period 2000-06 (Funck and Pizzati, 2003[57]). This
result came from using Hermin model simulations and comparing the GDP growth rate of the Greek
economy versus a baseline scenario GDP growth rate, not including the effect of EU funds. In this study,
it is assumed that structural funds had a beneficial impact on social and institutional capital, as well as
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
99
through increasing the efficiency of public administration. However, it is not easy to capture the latter effect
on the economy.
Τhe impact of EU funds on GDP is sizeable and robust
The effects of the EU co-funded projects on the Greek economy were approached by means of
two econometric models, a Vector Error Correction Model (VECM) developed by the Foundation for
Economic and Industrial Research (IOBE) and a version of the Global Integrated Monetary and Fiscal
(GIMF) model. For the calibration of the latter, recent simulation results of the National Institute Global
Econometric Model (NiGEM) for Greece, produced by the OECD, were taken into account. The former
model was used for estimating the one-off short-term impact of EU funds on GDP during 2009-18, whereas
the latter for calculating the medium-term multiplier for the same period and the long-term multiplier of EU
co-funded projects (2009-23).
Specifically, assuming that the average share of national (state) participation to all EU co-funded projects,
for investment and consumption purposes, was 20% over the period 2000-18, the VECM estimation result
was that each euro of EU co-financing, excluding national participation, has led on average to another
64 cents of GDP (at 2008 values). This is equivalent to a claim that each euro of EU funds, including
national participation, has led on average to 51 cents of GDP creation. Accordingly, 0.51 is the value of
the short-term growth multiplier of EU funds. In the event the average national participation share was
14%, then the impact of each euro of co-funding on GDP would be 59 cents. Assuming that the average
national participation rate is 20% and the confidence interval is close to 95% (+/- 2 standard deviations),
the result is that each euro of EU funds increased GDP by a range between 17 and 111 cents (or a range
between 16 and 103 cents if the average national participation was 14%).
During the whole period 2000-18, the average one-off short-term contribution of EU co-funded projects to
Greek GDP was 2.0 percentage points. This outcome results in a cumulative boost of GDP by
EUR 76.9 billion (in 2008 volumes), without accounting for the impact of the private sector capital
resources that were mobilised due to EU co-funded projects. Τhe impact of EU funds on GDP is robust
and of similar magnitude when focusing on the sub-period 2009-18, which relates to the disbursements in
the context of the fourth (2007-13) and fifth (2014-20) programming periods. Due to the lower average
level of GDP during 2009-18, the average first-year contribution of co-funded projects to economic activity
has been slightly higher during 2009-18, around 2.1 percentage points of Greek GDP (circa EUR 4.0 billion
in 2008 chain-linked volumes [CLVs]). This translates into a cumulative increase of GDP by
EUR 40.0 billion during 2009-18.
According to the GIMF estimation output, the medium-term cumulative effect of the EU co-financed
investment on the Greek GDP (period 2009-18) was EUR 71.0 billion in 2008 chain-linked volumes.
Therefore, given that total EU co-financing of investment and other projects for this period was
EUR 79.1 billion, the average multiplier of the EU funds on the Greek GDP over this period is 0.9, implying
that each euro of EU funds boosted on average the country’s GDP by 90 cents. The medium-term multiplier
is higher than the short-term multiplier because it inter alia captures the cumulating positive effect from
productivity gains.
The same cumulative amount of EU funds was estimated to cause a cumulative increase of the Greek
GDP in the entire period 2009-23 equal to EUR 122.3 billion in 2008 CLVs. This implies a long-term
multiplier close to 1.55, which is more than double the short-term effect.
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
100
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Economics, Vol. 4/2, pp. 179-208.
[50]
REMACO (2014), Annual implementation report for the Operational Programme Environment
and Sustainable Development Programme 2007-2013.
[55]
Roinioti, A. and C. Koroneos (2019), “Integrated life cycle sustainability assessment of the Greek
interconnected electricity system”, Sustainable Energy Technologies and Assessments,
Vol. 32, pp. 29-46, http://dx.doi.org/10.1016/J.SETA.2019.01.003.
[15]
ShanghaiRanking (2018), Academic Ranking of World Universities (2018),
http://www.shanghairanking.com/ARWU2018.html (accessed on 28 March 2019).
[40]
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Tagkalakis, A. (2016), “Unemployment dynamics and the Beveridge curve in Greece”, IZA
Journal of European Labor Studies, Vol. 5/1, p. 13, http://dx.doi.org/10.1186/s40174-0160063-4.
[5]
Thanasis, K. (2017), “A Vector Error Correction Forecasting Model of the Greek Economy”,
Hellenic Fiscal Council working paper, Vol. 2017/2.
[61]
Tzifakis, N., P. Liargovas and A. Huliaras (2015), Beyond “Absorption”: The Impact of EU
Structural Funds on Greece, Konrad-Adenauer-Stiftung e.V., http://www.kas.de/greece.
[46]
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[16]
Notes
1
Values from the Greek Tourism Organisation. Numbers can vary with island size definition.
“Refugees” are those who have successfully applied for asylum and have been granted protection in their
host country, including those who are recognised on the basis of the 1951 Geneva Convention Relating to
the Status of Refugees but also those benefitting from national asylum laws or EU legislation (Directive
2011/95/EU), such as the subsidiary protection status. “Asylum seekers” are those who have submitted a
claim for international protection but are awaiting the final decision. (OECD Glossary of statistical terms).
2
3
Only the following countries with available data are considered: Austria, Belgium, the Czech Republic,
Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania,
Luxembourg, the Netherlands, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain and
Sweden.
4
In some countries the leading region accounts for a small percentage of the total workforce. Where this
is the case, the frontier is the weighted average of regions with the highest labour productivity levels
accounting for 10% of the country’s total employment (OECD (2018), Productivity and Jobs in a Globalised
World: (How) Can All Regions Benefit).
5
The model used to carry out this impact assessment is an extension of Quest III containing a
representation of the effect of investment in human capital and endogenous technological change, which
makes it particularly suitable for the evaluation of cohesion policy type of structural interventions. It also
includes explicit cross-country linkages through bilateral trade relationships to capture spill-over effects
and the interaction between EU member states.
6
RHOMOLO is used extensively for impact assessments of the European Structural and Investment
Funds, such as ERDF and ESF, and it is used together with the European Investment Bank (EIB) for the
evaluation of the macroeconomic impact of the EIB group. This model has been developed by the Joint
Research Centre-Institute for Prospective Technological Studies and the DG Regional Policy.
7
Executive Unit of ESPA of the Ministry of Infrastructure and Transport: i) Annual Report 2013 of the
Operational Program for Environment and Sustainable Development; an ii) Final Report of March 2017 of
the Operational Programme of the Attica Region.
REMACO (2014), “Annual implementation report for 2013 for the Operational Programme Environment
and Sustainable Development Programme 2007-2013” or, in Greek “Ετήσια Έκθεση Υλοποίησης
8
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
105
Επιχειρησιακού
Προγράμματος
Περιβάλλον
και
Αειφόρος
http://www.epper.gr/el/Documents/ethsia_ekthesi_2013_epperaa.pdf.
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
Ανάπτυξη
2007
–
2013)
106
Annex 2.A. New estimations of the effects of EU
funds on the Greek economy
VECM estimation of EU funds’ effects
Data set
The choice of variables for this section’s empircal estimation builds upon existing literature on VECM
calibration to a country’s macroeconomic outlook, including (Anderson et al., 2002[58]) on the United States
economy, (Christofides et al., 2006[59]) on Cyprus, (Lyhagen et al., 2015[60]) on Sweden, and (Thanasis,
2017[61]) on Greece. This calibration considers long-term relationships among real GDP, inflation rate and
employment, while adding proxies for labour productivity and the intensity of the Greek sovereign debt
crisis, as measured by the government bond spread. The model assumes that all macroeconomic variables
are endogenously determined and allows examining how exogenous shocks stemming from EU funds
affect each endogenous variable. The data set consists of variables on a quarterly frequency during the
period 2000-18. Those are presented in Annex Table 2.A.1. The proxy for EU funds is derived from the
total amount of spending for EU co-funded projects, as they are mainly recorded in the state budget and
state budget review.1 The EU funds series hence comprises both national and EU contribution to EU cofunded projects (expenditure codes 8300, 5300 and 5400, classified mostly under the Public Investments
Programme, as well as transfers to the agricultural sector, disbursed by the Payment and Control Agency
for Guidance and Guarantee Community Aid [ΟΠΕΚΕΠΕ in Greek]), while it excludes private sector
investment for these projects. Such co-financing data is available annually; we hence construct its quarterly
path following the within-year seasonality of public investment, proxied by the general government’s gross
capital formation.
Annex Table 2.A.1. Variable definitions for VECM estimation
Variable
Abbreviation
Definition
Source
Real GDP
GDP
Constant prices 2008, n.s.a.
ELSTAT
Inflation
CPI
Consumer Price Index, 2009=’100’
ELSTAT
Employment
Empl
Number of persons employed, n.s.a.
ELSTAT
Labour Productivity
lp
Real GDP/number of hours worked
Eurostat
GGB spread
GGB
10-year Greek Government Bond (GGB), spread over bond
ECB
EU funds
EUfunds
Public spending for EU co-funded projects, cash basis,
budget codes 8300, 5300 and 5400,
agricultural transfers through EAGF & EAGGF
Ministries of Finance,
Economics, PCAGGA
(ΟΠΕΚΕΠΕ)
Note: n.s.a.: Not seasonally adjusted.
Source: ELSTAT, European Central Bank, Ministry of Finance, Ministry of Economics, Special Agricultural Products Guarantee Account
(ELEGEP) balance sheets. Data processing: FEIR/IOBE.
Descriptive statistics for the main variables are presented in Annex Table 2.A.2. For the purpose of the
Vector Error Correction Model estimation (VECM), the variables’ quarterly percentage change (quarterover-quarter) was used, measured by the first difference of their logarithmic values. For the government
bond spread (GGB variable), the first difference of its percentage level across quarters was used. In Annex
Figure 2.A.1, the annualised variables’ trend during the examined time span is presented.
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
107
Annex Figure 2.A.1. VECM variables trend during 2000-18
GDP
CPI
EUR million, 12-months rolling
260 000
2009=100, 12-months rolling
120
115
250 000
110
240 000
105
230 000
100
220 000
95
90
210 000
85
200 000
80
190 000
180 000
75
2000
2002
2004
2006
2008
2010
2012
2014
70
2016
2000
2002
2004
Employment
2006
2008
2010
2012
2014
2016
2012
2014
2016
2012
2014
2016
Labor productivity
Thousands of persons, 12-months rolling
5 000
EUR/hour worked
25
25
4 800
24
24
4 600
23
4 400
23
22
4 200
22
21
4 000
21
3 800
2000
2002
2004
2006
2008
2010
2012
2014
20
2016
2000
2002
2004
2006
2008
2010
EU funds
10-year GGB spread over Bund
%
25
EUR million, 12-months rolling
11 000
10 000
20
9 000
15
8 000
7 000
10
6 000
5
5 000
0
2000
2002
2004
2006
2008
2010
2012
2014
2016
4 000
Source: Foundation for Economic and Industrial Research (IOBE) estimates.
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
2000
2002
2004
2006
2008
2010
108
Annex Table 2.A.2. VECM quarterly data set descriptive statistics
Variable
Units
Mean
Units
Mean
Standard deviation
Δ(GDP)
EUR million (2008 prices)
50 843
q-o-q (%)
0.11%
0.06
Δ(CPI)
Index 2009=100
96.92
q-o-q (%)
0.49%
0.01
Δ(Empl)
Number of persons (million)
4.41
q-o-q (%)
-0.02%
0.01
Euros/hour worked
22.92
q-o-q (%)
0.10%
0.02
Percent
4.61
q-o-q
0.04 ppts
1.65
EUR million
2 051
q-o-q (%)
0.51%
0.60
Δ(lp)
Δ(GGB)
Δ(EU funds)
Note: q-o-q: Quarter-over-quarter.
Source: FEIR/IOBE estimates.
Model specification
In order for the VECM estimation to be well specified, a necessary condition is for the endogenous
variables to be cointegrated. The general formulation of a VECM expresses a dynamic relationship
between the vector 𝑌𝑡 of endogenous variables that are cointegrated (long-run relationship) and the vector
of exogenous variables 𝑋𝑡 affecting the endogenous variables.2 Indicatively, a VECM can be written in the
following algebraic form:
𝑝
𝛥𝑦𝑡 = 𝑐 + A𝑦𝑡−1 + 𝛣 ∑ 𝛥𝑦𝑡−𝑖 + 𝛤𝛥𝛸𝑡 + 𝑒𝑡
𝑖=1
𝑝
where A𝑦𝑡−1 depicts one or more cointegration relationships among the endogenous variables, 𝛣 ∑𝑖=1 𝛥𝑦𝑡−𝑖
expresses the short-term adjustment coefficients and 𝛤𝛸𝑡 represents the contemporaneous impact of
exogenous variables.
Following Johansen’s cointegration rank test, we find that our set of endogenous variables exhibits
one cointegrating relationship at the 95% confidence level, concerning the GDP (maximum eigenvalue
criterion). We choose two as the number of optimal lags for the endogenous variables following a
combination of information criteria (FPE, AIC, LR, Schwarz Information Criterion, Hannan-Quinn). Hence,
the VECM specification including one cointegrating relationship among the endogenous variables and
two lags is written as follows:
𝛥𝐺𝐷𝑃𝑡 = 𝑐𝐺𝐷𝑃 + 𝛼1,1 (𝜇1,0 + 𝜇1,1 𝐺𝐷𝑃𝑡−1 + 𝜇1,2 𝐶𝑃𝐼𝑡−1 + 𝜇1,3 𝐸𝑚𝑝𝑙𝑡−1 + 𝜇1,4 𝑙𝑝𝑡−1 + 𝜇1,5 𝐺𝐺𝐵𝑡−1 )
+ 𝛽1,1 𝛥(𝐺𝐷𝑃)𝑡−1 + 𝛽1,2 𝛥(𝐶𝑃𝐼)𝑡−1 + 𝛽1,3 𝛥(𝐸𝑚𝑝𝑙)𝑡−1 + 𝛽1,4 𝛥(𝑙𝑝)𝑡−1 + 𝛽1,5 𝛥(𝐺𝐺𝐵)𝑡−1
+ 𝛽1,6 𝛥(𝐺𝐷𝑃)𝑡−2 + 𝛽1,7 𝛥(𝐶𝑃𝐼)𝑡−2 + 𝛽1,8 𝛥(𝐸𝑚𝑝𝑙)𝑡−2 + 𝛽1,9 𝛥(𝑙𝑝)𝑡−2 + 𝛽1,10 𝛥(𝐺𝐺𝐵)𝑡−2
+ 𝛾1,1 𝛥(EUfunds)𝑡 + 𝑒𝑡𝑅𝐺𝐷𝑃
𝛥𝐶𝑃𝐼𝑡 = 𝑐𝐶𝑃𝐼 + 𝛼2,1 (𝜇1,0 + 𝜇1,1 𝐺𝐷𝑃𝑡−1 + 𝜇1,2 𝐶𝑃𝐼𝑡−1 + 𝜇1,3 𝐸𝑚𝑝𝑙𝑡−1 + 𝜇1,4 𝑙𝑝𝑡−1 + 𝜇1,5 𝐺𝐺𝐵𝑡−1 )
+ 𝛽2,1 𝛥(𝐺𝐷𝑃)𝑡−1 + 𝛽2,2 𝛥(𝐶𝑃𝐼)𝑡−1 + 𝛽2,3 𝛥(𝐸𝑚𝑝𝑙)𝑡−1 + 𝛽2,4 𝛥(𝑙𝑝)𝑡−1 + 𝛽2,5 𝛥(𝐺𝐺𝐵)𝑡−1
+ 𝛽2,6 𝛥(𝐺𝐷𝑃)𝑡−2 + 𝛽2,7 𝛥(𝐶𝑃𝐼)𝑡−2 + 𝛽2,8 𝛥(𝐸𝑚𝑝𝑙)𝑡−2 + 𝛽2,9 𝛥(𝑙𝑝)𝑡−2 + 𝛽2,10 𝛥(𝐺𝐺𝐵)𝑡−2
+ 𝛾2,1 𝛥(EUfunds)𝑡 + 𝑒𝑡𝐶𝑃𝐼
𝛥𝐸𝑚𝑝𝑙𝑡 = 𝑐𝐸𝑚𝑝𝑙 + 𝛼3,1 (𝜇1,0 + 𝜇1,1 𝐺𝐷𝑃𝑡−1 + 𝜇1,2 𝐶𝑃𝐼𝑡−1 + 𝜇1,3 𝐸𝑚𝑝𝑙𝑡−1 + 𝜇1,4 𝑙𝑝𝑡−1 + 𝜇1,5 𝐺𝐺𝐵𝑡−1 )
+ 𝛽3,1 𝛥(𝐺𝐷𝑃)𝑡−1 + 𝛽3,2 𝛥(𝐶𝑃𝐼)𝑡−1 + 𝛽3,3 𝛥(𝐸𝑚𝑝𝑙)𝑡−1 + 𝛽3,4 𝛥(𝑙𝑝)𝑡−1 + 𝛽3,5 𝛥(𝐺𝐺𝐵)𝑡−1
+ 𝛽3,6 𝛥(𝐺𝐷𝑃)𝑡−2 + 𝛽3,7 𝛥(𝐶𝑃𝐼)𝑡−2 + 𝛽3,8 𝛥(𝐸𝑚𝑝𝑙)𝑡−2 + 𝛽3,9 𝛥(𝑙𝑝)𝑡−2 + 𝛽3,10 𝛥(𝐺𝐺𝐵)𝑡−2
𝐸𝑚𝑝𝑙
+ 𝛾3,1 𝛥(EUfunds)𝑡 + 𝑒𝑡
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
109
𝛥𝑙𝑝𝑡 = 𝑐𝑙𝑝 + 𝛼4,1 (𝜇1,0 + 𝜇1,1 𝐺𝐷𝑃𝑡−1 + 𝜇1,2 𝐶𝑃𝐼𝑡−1 + 𝜇1,3 𝐸𝑚𝑝𝑙𝑡−1 + 𝜇1,4 𝑙𝑝𝑡−1 + 𝜇1,5 𝐺𝐺𝐵𝑡−1 ) + 𝛽4,1 𝛥(𝐺𝐷𝑃)𝑡−1
+ 𝛽4,2 𝛥(𝐶𝑃𝐼)𝑡−1 + 𝛽4,3 𝛥(𝐸𝑚𝑝𝑙)𝑡−1 + 𝛽4,4 𝛥(𝑙𝑝)𝑡−1 + 𝛽4,5 𝛥(𝐺𝐺𝐵)𝑡−1 + 𝛽4,6 𝛥(𝐺𝐷𝑃)𝑡−2
+ 𝛽4,7 𝛥(𝐶𝑃𝐼)𝑡−2 + 𝛽4,8 𝛥(𝐸𝑚𝑝𝑙)𝑡−2 + 𝛽4,9 𝛥(𝑙𝑝)𝑡−2 + 𝛽4,10 𝛥(𝐺𝐺𝐵)𝑡−2 + 𝛾4,1 𝛥(EUfunds)𝑡
𝑙𝑝
+ 𝑒𝑡
𝛥𝐺𝐺𝐵𝑡 = 𝑐𝐺𝐺𝐵 + 𝛼5,1 (𝜇1,0 + 𝜇1,1 𝐺𝐷𝑃𝑡−1 + 𝜇1,2 𝐶𝑃𝐼𝑡−1 + 𝜇1,3 𝐸𝑚𝑝𝑙𝑡−1 + 𝜇1,4 𝑙𝑝𝑡−1 + 𝜇1,5 𝐺𝐺𝐵𝑡−1 )
+ 𝛽5,1 𝛥(𝐺𝐷𝑃)𝑡−1 + 𝛽5,2 𝛥(𝐶𝑃𝐼)𝑡−1 + 𝛽5,3 𝛥(𝐸𝑚𝑝𝑙)𝑡−1 + 𝛽5,4 𝛥(𝑙𝑝)𝑡−1 + 𝛽5,5 𝛥(𝐺𝐺𝐵)𝑡−1
+ 𝛽5,6 𝛥(𝐺𝐷𝑃)𝑡−2 + 𝛽5,7 𝛥(𝐶𝑃𝐼)𝑡−2 + 𝛽5,8 𝛥(𝐸𝑚𝑝𝑙)𝑡−2 + 𝛽5,9 𝛥(𝑙𝑝)𝑡−2 + 𝛽5,10 𝛥(𝐺𝐺𝐵)𝑡−2
+ 𝛾5,1 𝛥(EUfunds)𝑡 + 𝑒𝑡𝐺𝐺𝐵
Estimation Results
The model’s estimation output is presented in Annex Table 2.A.3. In relation to the endogenous variables,
the cointegrating equation reveals a positive long-term relationship between real GDP on one hand and
employment, labour productivity but also government bond spreads, and a negative relationship between
real GDP and inflation. Annex Figure 2.A.2 shows how shocks of one standard deviation magnitude on the
endogenous variables affect GDP over 10 quarters. The results are intuitive in the sense that shocks in
inflation and spreads negatively affect real GDP, as opposed to shocks in employment and labour
productivity, which positively affect GDP.
Annex Table 2.A.3. VECM estimation output
Cointegration relationship
GDP(-1)
1
CPI(-1)
0.046
Empl(-1)
-1.600
***
lp(-1)
-0.759
***
GGB(-1)
-0.008
***
c
4.775
Error correction
GDP
CPI
lp
GGB
Cointegr. Rel.
0.125
0.084
***
0.199
Empl
***
0.154*
5.751
GDP(-1)
-0.428
***
-0.081
**
-0.215
***
-0.058
-4.545
CPI(-1)
-0.758
***
-0.188
***
-0.115
-0.030
16.265
Empl(-1)
1.042
***
-0.075
lp(-1)
0.403
***
0.133
GGB(-1)
-0.001
GDP(-2)
-1.009
CPI(-2)
0.351
Empl(-2)
***
0.276
***
-0.185
0.223
***
-0.221
0.001
-0.001
***
-0.008
-0.191
0.567
***
0.920
***
-0.187
*
lp(-2)
0.709
***
0.062
GGB(-2)
0.002
c
0.002
EUfunds
0.020
R^2 (%)
86.3
LogL
827.8
-3.257
0.001
0.693
-0.086
-3.239
-0.142
-0.088
15.160
-0.038
0.122
5.959
***
0.117
*
0.001
-2.268
*
0.001
*
0.001
-0.196
0.003
**
0.001
0.002
-0.116
0.005
***
0.003
0.007
-0.569
73.8
13.9
40.5
0.001
***
-7.126
*
78.4
Note: The asterisks *, **, *** denote the parameters’ statistical significance at the 90%, 95% and 99% confidence levels respectively.
Source: FEIR/IOBE estimates.
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
***
110
The Variance Decomposition Analysis reveals that shocks in labour productivity and government spreads
explain an increasing share of real GDP variance over time, accounting for up to 10% and 23% of GDP
variance respectively after 10 quarters. The share of GDP variance, which is due to shocks in its lagged
values dissipates over time, to reach 61% after 10 quarters.
After controlling for the model’s predictions in relation to the endogenous variables, the main question of
interest is how does EU funding affect GDP? The estimation output (Annex Table 2.A.3) reveals that EU
funds have a significant positive short-term impact on GDP. Every 1% increase of EU co-funded projects
to Greece during the 2000-18 period increased on average its contemporaneous real GDP by 0.02%.
Given that the average annual spending on EU co-funded projects was EUR 8.2 billion during the
examined period, one can approximate the impact of EU funds in terms of the value of GDP per annum.
The VECM estimation shows only the one-off short-term impact of EU funds on GDP and does not capture
any dynamic effects.3
Assuming that the average share of national participation to EU co-funded projects was 20% over the
period 2000-18,4 then each euro of EU inflows, excluding national participation, has led on average to
64 cents of GDP creation (at 2008 prices). This is equivalent to claim that each euro of EU funds including
national participation, has led on average to 51 cents of GDP creation. 5 If the average national participation
share was 14%,6 then the impact of each euro on GDP, combined with the attached national funds, would
be 59 cents. Based on an average national participation rate of 20% and a confidence interval of close to
95% (+/- 2 standard deviations), we conclude that 1 euro of EU funds, combined with national participation,
increased GDP by a range between 17 and 111 cents (or a range between 16 and 103 cents if the average
national participation was 14%). The low and high range estimates stemming from the VECM on the impact
of EU funds in percentage points of annual GDP are depicted in Annex Figure 2.A.3.
During the whole period 2000-18, the average annual contribution of EU co-funded projects to Greek GDP
was 2.0 percentage points. This translates into a cumulative boost of GDP by EUR 76.9 billion (at 2008
prices), without accounting for their dynamic effects or the impact of the private sector capital resources
that were mobilised due to the EU co-funded projects. Importantly, the positive impact of EU funds on GDP
is robust and of similar magnitude when focusing on the sub-period 2009-18, which relates to the
disbursements from the fourth (2007-13) and fifth (2014-20) programming periods. Due to the lower
average level of GDP during 2009-18, the average annual contribution of co-funded projects to economic
activity has been slightly higher, around 2.1 percentage points of GDP. This translates into a cumulative
increase of GDP during 2009-18 of EUR 39.5 billion (at 2008 prices). On average, during this period, the
one-off short-term effect of EU funds on real GDP was around EUR 4.0 billion (2008 prices) per annum.
Besides the findings on GDP, the results in Annex Figure 2.A.3 point out on a positive impact of EU funds
on employment and labour productivity, as well as a negative impact on government bond spreads.
However, these results are not statistically significant (they are significant at an 80% confidence level only).
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
111
Annex Figure 2.A.2. GDP impulse response to shocks on the endogenous variables
Response of GDP to shocks on CPI
Response of GDP to shocks on GDP
0.02
0.04
0.03
0.01
0.02
0.01
0
0
-0.01
-0.02
-0.01
-0.03
-0.04
1
2
3
4
5
6
7
8
9
10
-0.02
1
2
3
Response of GDP to shocks on EMPL
0.02
0.01
0.01
0
0
-0.01
-0.01
1
2
3
4
5
6
7
8
5
6
7
8
9
10
9
10
Response of GDP to shocks on LP
0.02
-0.02
4
9
10
9
10
-0.02
1
2
3
4
5
6
7
8
Response of GDP to shocks on GGB
0.03
0.02
0.01
0
-0.01
-0.02
-0.03
1
2
3
4
5
6
7
8
Note: GDP impulse responses are estimated during an interval of ten quarters, following one standard deviation shock on each of the
endogenous variables, following Cholesky’s method.
Source: FEIR/IOBE estimates.
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Annex Figure 2.A.3. EU co-funded projects’ estimated contribution to annual GDP (in GDP ppts)
Low range
High range
Average 2000-18
Average 2009-18
5%
4%
3%
2.1%
2.0%
2%
1%
0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Source: FEIR/IOBE, VECM estimation.
GIMF estimation of EU funds’ effects
Τhe effects of EU funding on the Greek economy were also approached by means of a structural
macroeconomic model. Specifically, a simulation of the Global Integrated Monetary and Fiscal (GIMF)
model, which is a dynamic stochastic general equilibrium macroeconomic model developed by the IMF,
was carried out.7 A version of the model with three regions was applied, calibrated to represent Greece,
the rest of the Euro Area (i.e. the Euro Area excluding Greece) and the rest of the world. The simulation
was carried out in Matlab, with DYNARE. In order to examine the impact of EU financing that Greece
received over the period 2009-18, that is during the previous and the current EU programming period, on
the Greek GDP, the capital inflows from the EU funds headed towards co-financing projects in Greece
were treated as part of the Greek Public Investment Programme.
Simulation setup
In order to capture the effect of the EU funds on the Greek economy after 2009, the model was first
calibrated to the parameters of economic activity in Greece, the rest of the Euro Area and the rest of the
world, as they were in the year 2008, the last year before the period of interest, using national accounts
data, trade data and other statistics from Eurostat, data from the calibrations of (Kumhof et al., 2010[62])
(Anderson et al., 2013[63]), while also taking into account recent simulation results for Greece produced by
the OECD using the National Institute Global Econometric Model (NiGEM). 8 Throughout this exercise, just
as in the VECM estimation in the previous section, EU funds are defined as the total public expenditure for
projects co-financed by the EU, including both capital resources transferred from the EU Structural Funds
to Greece and Greek state resources tied to these EU transfers.
To account for the fact that Greece used EU funds in 2008, the state in which the Greek economy would
have been had there not been any EU funds in the country in 2008 was calculated. This state of the
economy is the base, against which comparisons will be made later in the analysis. Starting from the base
state, the response of the Greek economy to an exogenous change to Greek public investments, by the
amount of EU co-financing in the years 2009-18 was calculated.9 The estimation of the effect of the EU
co-funded projects to the Greek economy was approximated by the difference of the model-calculated
Greek GDP, prompted by this exogenous shock, from the GDP in the base state.
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In specific, the state in which the Greek economy would have been in 2008, had there not been for that
year’s EU co-financed projects, was calculated and this hypothetical state of the economy was used as
the base state.10 The model was simulated starting from the base state of the economy (a steady state)
and treating public investments in Greece as an exogenous variable. Public investments were initially set
to be equal in 2009 to the base level plus the annual amount of EU co-financing in that year. The same
methodology was followed for 2010 and so on, up to 2018.
For each year in the simulation, the model-calculated GDP approximates the level of activity embodying
the impact of EU co-financed projects and transfers. The difference between this level and the base level
of GDP depicts the response of the Greek economy to EU co-financing. Annex Figure 2.A.4 illustrates the
amounts of EU co-funded investment added to the base level of public investments over the ten-year
period of interest.
Annex Figure 2.A.4. EU project co-funding including national co-financing quota, 2008 chain-linked
volumes
EUR billion
12
10
8
6
4
2
0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Source: FEIR/IOBE.
Simulation results
The effects of the EU funds on the Greek economy over the period 2009-23 were examined. This period
includes years 2009-18, for which it is assumed that Greece receives EU funds, as well as years 2019-23,
during which it is assumed that no EU funds are disbursed to Greece. Extending the period examined from
2018 to 2023 and assuming that Greece stops receiving transfers after the former year, allows for the
estimation of the long-term effects of the EU funds disbursed during 2009-18 on the Greek economy.
Annex Figure 2.A.6 illustrates the effect of EU co-funded projects on GDP over the period examined, as
well as the amounts of EU co-financing. The effect on the Greek GDP increases remarkably after the first
few years of the examined period, reflecting the productivity gains in the Greek economy due to the
accumulated additional public investments triggered by the investment and other projects co-financed by
the EU. The cumulative effect of EU funds on the Greek GDP over the period 2009-18 was estimated at
EUR 71.0 billion, in 2008 based chain-linked volumes. Since the total amount of EU co-financed projects
over the period 2009-18 in 2008 based chain-linked volumes was EUR 79.1 billion, the average multiplier
of the EU funds on the Greek GDP over this period is 0.9, implying that each euro of EU funds boosted on
average the country’s GDP by 90 cents. This medium-term multiplier is higher than the short-term multiplier
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of 0.51 estimated in the previous section (VECM) because it inter alia captures the cumulating positive
effect from productivity gains.
Annex Figure 2.A.5. EU co-financing and effect on the Greek GDP, in the period 2009-23
2008 chain linked volumes
EU funds
Effect on GDP
EUR million
12 000
10 000
8 000
6 000
4 000
2 000
0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Source: FEIR/IOBE
Both short-term and medium-term multiplier estimates can be compared with a long-term multiplier,
calculated over the entire period 2009-23. The same cumulative amount of EU funds (EUR 79.1 billion in
2008 chain-linked volumes) was estimated to cause a cumulative increase of the Greek GDP in the entire
period 2009-23 equal to EUR 122.3 billion in 2008 CLVs. This implies a long-term multiplier close to 1.55,
which is higher than both short-term and medium-term multipliers due to the dynamically cumulating
positive effect of EU funds. The sustained increase of the Greek GDP, even after the Greek economy is
assumed to stop receiving financing aid from the EU, is caused chiefly by the productivity gains achieved
by the increased economic activity made possible by EU financing.
Annex Figure 2.A.6. Actual Greek GDP versus the counterfactual of the estimated level of the Greek
GDP
Without the effects of the EU co-financing in the period 2009-18
GDP
Projections
GDP without the effect of EU funds
EUR billion
250
240
230
220
210
200
190
180
170
160
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: FEIR/IOBE.
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Notes
1
Data for 2000-18 are based on ex-post state budget evaluations.
2
For the appropriate VEC model specification, a stability test was applied on the underlying VAR
specification, White test for the heteroscedasticity of residuals and LM test for autocorrelation.
3
The dynamic effects of EU funds on GDP growth are estimated in the following section, which presents
a dynamic stochastic general equilibrium framework.
4
According to data from the Ministry of Economy, the effective national participation rate for EU co-funded
projects during the 2000-06 programming period was 31%, while the arithmetic average of national
participation for co-funded projects approved up to July 2018 for the 2014-20 programming period is 23%.
During the 2007-13 programming, due to considerable pressure in the budgets of some countries (Greece,
Hungary, Ireland, Latvia, Portugal and Romania), the European Commission provided in August 2011 an
option for increasing the co-financing rate to 95% (http://europa.eu/rapid/press-release_IP-11942_en.htm). This option was activated by Greece, thus reducing national participation to 5%. The equally
weighted average participation rate across the 3 programming periods is 19.7%.
5
The value of 0.65 can hence be interpreted as the short-term growth multiplier of the EU funds series.
6
According to data from the Ministry of Finance, if one excludes the 2000-06 programming period, the
equally weighted average of national participation rate during the fourth and fifth programming period is,
up to July 2018, 14%.
7
For the detailed description of the model, see (Kumhof et al., 2010[62]). For an extensive study of the
properties of the model, see (Anderson et al., 2013[63]).
8
The NiGEM is an estimated New-Keynesian macro-econometric model developed by the British National
Institute of Economic and Social Research on behalf of the OECD, and regularly used by the OECD for
macroeconomic assessment and forecasting. In this study, NiGEM results were used primarily for
consistency checks, e.g. see (Barrel et al., 2012[67]) for estimated fiscal multipliers for Greece.
9
Data for 2009-18 are based on ex post state budget evaluations.
10
The estimation of the base state of the economy was the result of a separate simulation of the model,
starting from the calibration for 2008 (a steady state), treating public investments in Greece as an
exogenous variable, setting public investments at a level equal to their 2008 actual level minus the amount
disbursed in that year for EU co-funded projects and keeping public investments steady for a large number
of periods, so that a new steady state is reached.
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3 Policies and strategies for placebased development and inclusive
growth
Greece has undertaken an impressive number of nation-wide structural
reforms since the 2008 global financial crisis. New development priorities
for Greece include fostering digitalisation, improving entrepreneurial and
business ecosystems, and addressing environmental challenges.
Addressing these challenges will contribute to tackling existing social issues
and mitigate rising inequalities. However, this ambitious national strategy
should be complemented by a new place-based development strategy. This
chapter examines how territorial policies in Greece are currently delivered,
the place-based impacts of sectoral policies both in terms of design and
delivery and how they could be strengthened both now and post 2020.
Integrated actions to foster business development and innovation, including
maritime, blue growth and sustainable tourism, to support quality
employment and social inclusion as well as enhance connectivity and
sustainable development, would indeed sustain Greece’s economic
recovery from the global financial and COVID-19 crisis and seize long-term
development opportunities.
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Summary
All aspects of Greek society, economy and policy have been under immense stress since the 2008
economic crisis. Successive structural reforms have sought to stabilise the economy while at the same
time Greece has ushered in an entirely new architecture for regional policymaking by establishing regions
as an independently elected level of government. Greece has implemented a large number of reforms
under extremely adverse conditions in a short period of time – from pension and tax reforms to justice,
labour market policies, public investment, infrastructure and privatisation, education, social policy, energy
and environmental policies. The rapid pace of administrative and regulatory reform alongside fiscal
austerity has presented a challenging environment for governments, businesses and society.
Although the effects of the crisis have been felt by all Greeks, some regions have weathered the effects of
the crisis better than others. In particular, the capital region, Attica, Greek’s main engine for growth,
experienced an important brain drain during the aftermath. Restoring the competitiveness of Attica will be
key to accelerate the national recovery period and this will necessitate a co-ordinated place-based
approach. Equally important will be to develop a strategy for remote but also rural and intermediate regions.
Territorial policy in Greece is now at a turning point. Greece exited the fiscal bailout conditions in
August 2018 and has recently prepared its own National Growth Strategy to guide the country’s
development (Hellenic Republic, 2018[1]). Although the current COVID-19 outbreak is slowing down
Greece’s recovery efforts, in the coming years, as the economy improves, Greece needs to stimulate
investments, improve entrepreneurial and business ecosystems, build resilient labour markets and address
environmental challenges while tackling pressing social challenges, reducing inequalities and improving
the inclusiveness and quality of jobs and education. Delivering on these objectives requires a deep
understanding of how policies interact at different levels and how different policy levers can be combined
for maximum impact. Regions, municipalities and rural communities have an active role to play in meeting
these objectives by delivering quality public investments and services that fit local needs and the public,
private and third sector1 need to pool know-how to galvanise local development. This is a central challenge
for the future.
European Union (EU) co-financed projects have been the largest part of public investment expenditures
in Greece and will remain important in the coming years. However, going forward, national resources need
to be better leveraged alongside private investments and foreign direct investment (FDI). Regional
governments also need to further develop their own strategies and ensure they are co-ordinated with
national priorities. Institutional capacity and effective multilevel governance are fundamental to deliver
effective place-based policy. This chapter examines how territorial policies in Greece are currently
delivered, the place-based impacts of sectoral policies both in terms of design and delivery and how they
could be strengthened both now and post 2020.
How is regional policy organised in Greece and why is it important
As highlighted in Chapter 2, looking through a regional lens has implications for national recovery and
sustainable development. The crisis had sizeable consequences for Greece’s economy and it has not
come equally across Greek regions. The greatest declines in productivity occurred in remote islands but
also in Attica and Western Greece, where the economic decline was so sharp that lagging regions are now
converging to Attica’s current productivity, a “wrong kind” of convergence. Restoring productivity in Attica
and Central Macedonia and, more generally, encouraging the benefits of agglomeration in Greece’s urban
areas and cities to create additional economic hubs generating positive spill-overs into neighbouring
regions and territories is key to foster Greece’s regional economies and national growth. Recovery,
however, must go beyond a simple focus on Attica. The concentration of the crisis’ effects on the Athens
region has revealed the Greek economy’s vulnerability to structural adjustment and demonstrates the
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importance of promoting a more balanced growth model. It is thus critical to develop differentiated and
tailored regional development strategies to address different needs.
A number of factors are affecting the growth and productivity potential of Greek regions with a number of
explanations and solutions to low economic growth or high unemployment, notably: heavy regulatory
procedures, scarce integration in global value chains, credit constraints for small- and medium-sized
enterprises (SMEs), skills mismatch with market requirements (particularly at the local level). Greece’s
unique geography (e.g. islands and remote locations) and composition of the population (e.g. low
population densities) create challenges for accessibility and service provision. Rural (and remote) regions
can benefit from “borrowing” agglomeration benefits from nearby cities if they are well-connected. This
includes but is not limited to physical transport connections, as digital and information and communication
technologies (ICT) connections, for example, are crucial (OECD, 2018[2]).
To address many of these challenges, a full-scale place-based development policy is needed. The
combination of regional policies and structural reforms will enable Greece’s regions to capitalise on their
strength and fully contribute to national performance. To achieve this, it will be crucial to advance in a
number of parallel tracks to foster productivity and competitiveness in Greek regions according to their
characteristics and needs. Actions to foster the outward orientation of the regional economies, such as the
agricultural, agro-food, tourism, transport, logistics and high-tech sectors, including through the full
development of regional smart specialisation strategies and the transition to a “digital state”, would indeed
help foster regional growth and well-being in Greece.
This section examines the institutional environment for regional policy including its central challenges, the
main strategic priorities, how policies are elaborated and delivered and actors involved. It summarises how
the policy environment has been evolving in Greece in recent years and the main directions of reform.
National priorities for regional development in Greece
Emerging from the crisis, new development priorities are taking shape
Across the country, EU funding for cohesion policy has been making an important contribution to improving
Greece’s economic performance and EU funds continue to make up a major share of public investments.
Between 2010 and 2018, three successive bailout programmes set Greece’s strategic priorities for
development. Those Economic Adjustment Programmes are aimed at eliminating severe fiscal imbalances
and improve the functioning of markets and international competitiveness. Structural reforms have
primarily focused on the labour market and controlling pension spending. Since 2017, reforms have gained
pace, especially in product markets and social protection, and there have been improvements to
competitiveness and conditions for creating new businesses.
In 2018, Greece exited the bailout conditions and prepared a National Growth Strategy to set the country’s
overarching development objectives. The strategy seeks to build on recent reforms to deliver growth and
competitiveness across all regions, setting out a range of measures to address social and economic
challenges. In line with those goals, the current Greek government is determined to pursue a strong
pro-growth and investment policy agenda in concert with EU-funded measures. Although EU policies and
Structural and Investments Funds (ESIF) remain critical for Greece’s development in the coming years,
there are opportunities to strengthen domestic policies, placed-based policies and the capacities of
regional and local actors to elaborate and implement them.
EU Cohesion Policy in Greece – Delivering on the Europe 2020 Strategy
Cohesion policy2 remains the European Union’s main investment policy to enhance economic and social
development, eliminate regional imbalances and contribute to meet the targets outlined in the Europe 2020
Strategy for smart, sustainable and inclusive growth.3 Approximately 32.5% of the EU budget 2014-20
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(equivalent to EUR 351.8 billion over 7 years at 2014 prices) is allocated to the financial instruments which
support the cohesion policy and which invest large sums (up to 4% of gross domestic product [GDP] in some
countries) that are managed and delivered in partnership between the European Commission (EC), the member
states and stakeholders at the local and regional levels, within specific regulatory frameworks.4
Within the EU Cohesion policy framework, there is scope for country members to determine their own
complementary priority areas and as such, Greece’s policies are a mix of both EU and national priorities
(involving the co-financing and co-management of funds). Two strategic documents mainly guide Greece’s
national development – the EU Partnership Agreement with Greece for 2014-2020 (ESPA 2014-2020) and
the recently adopted National Growth Strategy. 5 Both strategies have important implications for territorial
policy and investments across the country.
Cohesion policy intervention is financed by the ESIF6 and it is translated into priority targets which have been
elaborated in Partnership Agreements between the EC and EU countries 7 (Figure 3.1). The Partnership
Agreement with Greece 2014-2020 (ESPA 2014-2020) presents a vision for the country’s growth based
on “outward-looking, innovative and competitive entrepreneurship and on the basis of reinforcing social
cohesion and the principles of sustainable development”.
Figure 3.1. EU Cohesion Policy in Greece, 2014-20
EU Cohesion Policy
Europe 2020 strategy
•
•
•
Sustainable growth
Smart growth
Inclusive growth
EU Partnership Agreement with Greece, 2014-20
European Structural and Investment (ESI) Funds
European Regional
Development Fund
(ERDF)
European
Social Fund
(ESF)
European Maritime
and Fisheries Fund
(EMFF)
European
Agricultural Fund for
Rural Development
(EAFRD)
Cohesion Fund
Given that a central purpose of EU Cohesion Policy is to promote social and economic cohesion and to
address regional inequalities, EU Structural Funds8 are targeted at different regions depending on their
levels of development, with those that are less developed receiving more support. According to their level
of development, regions in Greece can be ranked as follows:
Less developed regions (Central Macedonia, Eastern Macedonia and Thrace, Epirus, Thessaly,
Western Greece).
Transition regions (Continental Greece, Crete, Ionian Islands, North Aegean Islands,
Peloponnesus, Western Macedonia).
More developed regions (Attica, South Aegean Islands).9
The Partnership Agreement (ESPA 2014-2020) also defines the financial allocations for Cohesion policy
in the country. For 2014-20, Greece has been allocated approximately EUR 16.5 billion (2014 prices) as
follows: EUR 7.1 billion for less developed regions, EUR 2.8 billion for transition regions, EUR 2.5 billion
for more developed regions, EUR 3.2 billion from the Cohesion Fund, EUR 0.37 billion for European
Territorial Cooperation, EUR 0.51 billion for the Youth Employment Initiative. In addition, for the same
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period, the European Agricultural Fund for Rural Development has allocated EUR 4.7 billion, whereas the
allocation under the Fisheries and Maritime Policy amounts to EUR 389 million.10
In the current Cohesion policy programming period, which covers the years 2014-20, the ESIF funds are
targeted at 11 thematic objectives. Allocation of funding across thematic areas is partly a reflection of
Greek priorities and partly a reflection of the thresholds set by the EC. Some of these thematic targets do
not explicitly aim to enhance the competitiveness of the regions but address overall development
objectives (Table 3.1).
Table 3.1. European Structural and Investment Funds (ESIF), by thematic priority, Greece, 2014-20
Thematic area
Sum of total funding in EUR (EU and national)
Percentage out of total
Environment Protection and Resource Efficiency
5 713 447 678
21
Competitiveness of SMEs
3 551 113 681
13
Network Infrastructures in Transport and Energy
3 099 940 798
12
Low-Carbon Economy
2 703 542 276
10
Sustainable and Quality Employment
2 639 205 340
10
Social Inclusion
2 013 240 984
8
Educational and Vocational Training
1 822 491 064
7
Climate Change Adaptation and Risk Prevention
1 635 369 665
6
Research and Innovation
1 370 112 034
5
ICT
1 098 627 767
4
799 797 077
3
Technical Assistance
Efficient Public Administration
Total
333 465 294
1
26 780 353 657
100
Source: ESIF (2019[3]), Open Data Portal for the European Structural Investment Funds, https://cohesiondata.ec.europa.eu/countries/GR
(accessed on 20 May 2019).
The overarching strategic objectives agreed in the Partnership Agreement (ESPA 2014-2020) are broken
down into 7 sectoral Operational Programmes (OPs) – 4 of them are multi-fund, 1 is specific to the
European Social Fund, 1 is specific to the European Maritime and Fisheries Fund (EMFF) and 1 to the
European Agricultural Fund for Rural Development (EAFRD) – and 13 (multi-fund) Regional Operational
Programmes (Figure 3.2). These OPs identify investment priorities, specific objectives and concrete
actions. National OPs typically include horizontal project types, multi-regional projects or large national
interest projects, while Regional Operational Programmes include the projects and initiatives that apply
only in the geographical boundaries of a region. Greece also participates in European Territorial
Cooperation programmes which are held in co-operation with the countries bordering Greece as well as
others.11
For each national or regional OP, the Ministry of Development and Investments,12 as the National
Co-ordination Authority, has appointed one Managing Authority, which manages the OP, ensures that
conditions for awarding grants have been met and regularly checks that spending plans are adhered to.
Managing Authorities lay down selection criteria, organise selection committees and – via a project
tendering procedure open to all – decide which projects will receive European funding (within the structure
set by the corresponding OP). Private firms and public institutions can apply for project funding and the
managing authorities select promising projects. A more in-depth discussion is provided in Chapter 4.
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Figure 3.2. Operational Programmes of the EU Structural and Investment Funds, 2014-20
ERDF
ESF
Competitiveness, Entrepreneurship &
Innovation
Transport Infrastructure, Environment &
Sustainable Development
Human Resources Development, Education &
Lifelong Learning
CF
EAFRD
EMFF
Public Sector Reform
Technical Assistance
Regional Operational Programmes (13)
“European Territorial Co-operation” OPs
Rural Development
Fisheries & Maritime
Multi-fund programmes
Single-fund programmes
Source: National Co-ordination Authority for ESIF, Ministry of Development and Investments.
The national Growth Strategy of Greece – Reversing deindustrialisation and restoring
productivity growth and competitiveness
In the wake of successive bailout programmes, a central prerogative for the future is to leverage a
combination of national and EU funds in order to maximise the impacts of investments and to activate
regions and municipalities and other actors (private and third sector) in meeting national, regional and local
development objectives. In June 2018, Greece introduced a new National Growth Strategy to help deliver
on these objectives. The strategy aims to build on the momentum of recent reforms and to deliver growth
and competitiveness across all regions. The strategy offers a prescient assessment of the central
challenges facing Greek society and its economy, and proposes a range of measures to address them. It
has five main policy objectives and multiple sub-goals (Table 3.2). Greece’s next Partnership Agreement
with the EU for Cohesion Policy (ESPA 2021-2027) shall be informed by these development objectives.
The national government’s main priorities for regional development are to reduce regional inequalities (as
described in the National Growth Strategy) (Hellenic Republic, 2018[1]). Engaging regional and local
governments and the third sector 13 is central to releasing these aims and to this end, the national
government is establishing 13 regional conferences on “production reconstruction” in order to identify and
elaborate sustainable growth enhancing-measures based on the comparative advantages of each region.
Once the regional conferences have been completed, a number of follow-up measures will be developed
in order to integrate local and regional actions into the national strategy. Beyond this, the strategy
emphasises the specific needs of Greek islands as part of its regional development priorities. It identifies
the need to improve the islands’ accessibility, protect their unique natural environments, upgrade
infrastructure (including broadband connectivity), develop the farming and fisheries sector, build on
Greece’s maritime tradition and strategic advantages and improve access to healthcare.
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Table 3.2. Greece’s National Growth Strategy
Main policy goal
Sub-goal
Ensuring fiscal sustainability
Public finance reforms and sustainability
Tax policy and tax administration
Debt sustainability
Fostering sustainable growth
Creating more and better jobs
Enhancing productivity
Improving the business environment and boosting investment
Structural conditions for growth
Infrastructure and networks
Management of state assets
Fair and inclusive growth
Promoting a socially-oriented economy
Guaranteeing regional development and cohesion
Ensuring inclusive education
Providing universal and effective healthcare
Strengthening and upgrading social protection
Focusing on youth
Financing growth
Public investment programme
Mixed funding
New Development Law
Establishing a development bank
Financial sector
Source: Hellenic Republic (2018[1]), Greece: A Growth Strategy for the Future, http://www.mindev.gov.gr/wp-content/uploads/2018/09/GrowthStrategy.pdf (accessed on 2 June 2019).
The National Growth Strategy will inform the negotiation of the Partnership Agreement for the next
programming period of the EU (2021-2027) and will be used to harmonise national and EC goals and
national policy directions. A strong view on regional policy must be part of this since there is a wide range
of sectoral strategies that are important to regional development and that have place-based impacts across
culture, tourism, digital technologies, etc.
Greece’s Public Investment and National Development Programmes
The Public Investment Programme
The Public Investment Budget (PIB) is a discrete category of the state budget, which is voted on in
parliament plenary and is executed through the Public Investment Programme (PIP), according to the legal
framework under the jurisdiction of the Ministry of Development and Investments. The PIP aims to finance
the development policy of the country and consists of: i) the national part; and ii) the co-financed part. The
latter concerns co-financed projects, in particular the ones relating to the financing of Cohesion Policy in
Greece (ESPA) by the ESIF and has been adapted to the EU’s programming rules. The PIP’s national part
is financed solely from national resources.14
Regardless of the (limited) amount of national resources available, the PIP is a crucial instrument for
national and regional development in Greece, since it: i) implements national and regional growth policies;
ii) complements the ESIF intervention allocating resources to objectives or sectors non-eligible for EU
financing; and iii) targets inequalities in particular between island and continent regions/municipalities. 15 In
2019, the Ministry of Development and Investments has taken a legislative initiative to reform the
operational framework for the national resources of the PIP, in order to support growth by fully utilising the
funds available for public investment (Law 4635/2019).
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The National Development Programme
The National Development Programme (NDP) is a new policy framework scheduled to become operational
from January 2021 and intends to provide the mid-term policy planning for the national part (non-EU) of
the resources dedicated to finance the PIP.16
The planning, management and monitoring/control system of the NDP will follow the procedures applied
for the EU co-financed programmes. The Ministry of Development and Investments has a key role in
planning and co-ordinating the NDP, to whose preparation and implementation line ministries, regions and
other (public and private) entities have been called to contribute, e.g. drawing and submitting sectoral and
regional development plans, which will complement the ESIF intervention. The operational budget for these
plans will be allocated to “managing authorities” in competent ministries/regions, which will work under the
guidance of the Ministry of Development and Investments. The NDP will also include Special Purpose
Programmes of Development or Investment Interventions targeting specific development needs or
opportunities.17
Greece’s development laws
In 2016, Greece adopted a new development Law 4399/2016 “Regulatory framework for the establishment
of state aid schemes for private investments for the regional and economic growth of the country”,
proposed by the Ministry of Economy, Development and Tourism (now Ministry of Development and
Investments), which sets out rules and regulations for national public investments that complement the
ESIF. The law, which is funded by the PIP, provides incentives to the private sector (e.g. risk equity
financing, tax exemptions and cash grants, leasing or job creation subsidies) and promotes investments
to encourage efficiencies and higher-value-added activities in Greek firms (e.g. mergers, investments in
innovation and extroversion).18 Law 4399/2016 also established a “development council” in the Ministry of
Economy, Development and Tourism tasked with advising on development planning and policies. 19
In 2019, Greece partially amended Law 4399/2016 with a new Law 4635/2019 entitled “Invest in Greece
and other provisions”, also proposed by the Ministry of Development and Investments, and funded by the
PIP. The law introduces reforms covering a wide range of fields with the scope to improve the business
environment and facilitate productive investments.20 The law is expected to become operational and be
fully implemented by the end of 2020.21
Regionally-led development in Greece
Beyond the national priorities for regional development, there are those strategies that are developed by
the regions themselves. Decentralisation in Greece is relatively new and responsibilities are evolving,
including responsibilities for elaborating and delivering regional policy.
The EU Cohesion Policy is a major force driving regional policy in Greece and was a primary reason for
the creation of regions in 1986 with Law 1622/1986, evolved with the more recent reforms in 2010
(Kallikratis) and 2018 (Kleisthenis). A more in-depth discussion is provided in Chapter 4. Throughout the
five EU programming periods (1989-2020), the regions have elaborated their own Regional Operational
Programmes (ROPs) with increasing responsibility. This allowed a learning time to get to their new
functions, including the management of ROPs, which were assigned to the regions for the 2014-20
period.22 The decentralisation reforms were undertaken during the crisis and as such, elements of
centralisation remained due to the key role of the national government in managing all aspects of
responses the crisis (Hlepas, 2018[4]).
Greece is one of many countries across the OECD that exhibits the trends towards regionalisation. The
central logic underpinning these reforms is for regions to take advantage of economies of scale in public
service provision, better respond to widening functional labour markets, improve co-ordination between
municipalities and intermediary levels of government, and increase competitiveness. Relative to local
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governments, regions are expected to have more resources to implement effective regional development
strategies, and the ability to foster intra-regional co-ordination and implement integrated territorial planning.
They should be able to better target regional comparative advantages through access to local knowledge
as compared to the national government, or smaller local governments.
Regional Development Strategies vs. Regional Operational Programmes vs. Regional
Spatial Frameworks
The Partnership Agreement (ESPA 2014-2020) foresees 13 ROPs, one for each Greek region. They are
the regional component of the Cohesion Policy of Greece and form the de facto regional development
strategies in the country. They set the strategic objectives for regional development over the programming
period 2014-20, present an assessment of the central challenges facing the region and provide an overview
of how investments should be targeted. In some EU countries, it is common to have both ROPs and a
separate overarching regional development strategy that is not directly tied to the use of EU funds but, in
Greece, the ROP acts as the main regional strategy.
ROPs resemble regional strategic planning documents but differ from them in a few important ways. Like
regional strategic plans, ROPs present a diagnosis of central challenges and opportunities in a region.
While they guide development in their respective regions, they differ in scope and content from overarching
regional strategic plans that set strategic objectives in the medium and longer terms. Such strategies are
commonly elaborated through a large public engagement process in order to set a vision for the future and
build a consensus for action. ROPs are relatively short-term (seven-year timeframe) technical documents
focused on the use of the ESIF and associated regulations. Overall, ROPs focus on covering European
regulation requirements; they do not represent (or should not substitute) an integrated development
strategy for the region.
In addition to the ROPs, each region analyses its spatial structure and provides guidelines for land use
planning and the development of urban transport networks. A 2016 law (4447/16) has mandated that both
national and regional spatial plans must contain forward-looking elements. As such, they will need to be
updated with population and planning scenarios and the spatial visions should be complementary to the
regions’ development objectives. This planning framework is implemented under the framework of the
Ministry of the Environment and Climate Change.23
Regional Smart Specialisation Strategies
Both the national government and each region in Greece also elaborate a Research and Innovation
Strategy for Smart Specialisation (RIS3).24 The smart specialisation’s approach combines industrial,
educational and innovation policies to suggest that countries or regions identify and select a limited number
of priority areas for knowledge-based investments, focusing on their strengths and comparative
advantages. The concept of smart specialisation is grounded in the idea that public investments for
research, technology and innovation should be focused on regional knowledge strengths in order to
mobilise those assets and transform them into higher-value‑added activities. The ultimate aim is to
leverage private research and innovation expenditure and enable co‑ordination among the above‑average
performing actors of national and regional research and innovation systems.25
In Greece, the results of the consultation exercises in each region and the respective regional RIS3
strategies were combined into the national RIS3 strategy. The National Research and Innovation Strategy
for Smart Specialisation 2014-2020 was introduced in 2014 as the successor of the National Strategic Plan
for Research and Development 2007-2013. National co-ordination is ensured by a Smart Specialisation
Strategy Board, which is directly involved in the design and implementation of RIS3, consisting of
representatives of ministries26 (at the level of General Secretaries) and Greek regions.
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The new National Smart Specialisation Strategy of Greece aims to promote links between research and
industry and accelerate the dissemination of innovation. According to the strategy, gross expenditure on
research and development (R&D) is expected to amount to 1.2% of GDP by 2020. The strategy has
identified 8 target sectors for development: agro-food; ICT; environment and sustainable development;
energy; health and pharmaceuticals; materials and construction; transport and logistics; culture, tourism
and creative industries (GGET, 2019[5]). Regionally, the priorities may differ but are generally aligned with
the national strategy.
Box 3.1. Success factors for Smart Specialisation Strategies: Evidence from across the OECD
The process of designing a specialisation strategy is normally initiated by lead actors or institutions that
are strongly committed and well-positioned to mobilise other stakeholders and resources and to set the
strategic framework for further actions. These lead actors may arise, for example, from companies,
research institutions, national or regional authorities. The mobilisation and empowerment of key
stakeholders and institutions to realise their potential as leading contributors are essential elements to
transform traditional regional innovation strategies into regional innovations strategies for smart
specialisation.
Research on the successful adoption of Smart Specialisation Strategies in the OECD finds that the key
success factors needed to ensure an efficient contribution from all relevant socio-economic actors
involved in the designing of the smart specialisation strategy include:
1. The participation of the leading institutions of knowledge: universities and institutions of
research and innovation with sound expertise for the skills, scientific and technology frontiers
that exist in a country or region.
2. The participation of highly skilled experts in the process, given the increasingly cross-sectoral,
cross-technology and cross-border dimension of entrepreneurship and innovation activities.
3. The need to build trust and reciprocity among all socio-economic actors involved.
4. The need to increase transparency on how stakeholders are selected and involved and,
especially, what role (empowerment) they are provided during the process.
Source: OECD (2013[6]), Innovation-driven Growth in Regions: The Role of Smart Specialisation, https://www.oecd.org/sti/inno/smartspecialisation.pdf.
Delivering investments through project-based funding
The priority areas identified in all ROPs in Greece are translated into various actions that are then set out
in calls for proposal/tenders in order to be delivered. These calls can be answered by a variety of actors;
they may be regional or municipal governments, social organisations, universities, colleges or businesses,
among others. Managing Authorities (MAs) in each region are responsible for managing this process, are
separate entities from the elected regional governments (although they report to them) and refer for their
work to the Ministry of Development and Investments which co-ordinate and monitor the implementation
of ESIF across the country. MAs can in some cases shape the types of projects that are funded due to
their role in determining the calls for proposals. There are regular checks, monitoring, audits and
evaluations in order to ensure that funds are being spent appropriately. This is a short summary of what is
in fact a very complex process, which is described in Chapter 4.
The EU Cohesion Policy has been critical for regional development in Greece. According to OECD
estimates, between 2009 and 2018, each euro of Structural Funds in Greece, excluding national
participation, generated an extra 64 cents of GDP (in the short term at 2008 values) (Chapter 2); regions
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have very limited funding to undertake initiatives beyond those funded through the ROP (European Social
Fund [ESF] and European Regional Development Fund [ERDF]). However, the reliance on cohesion policy
for regional development and the absence of other core funding leads to some specific characteristics:
Time lags in delivering investments: Between one programming period and the next, there is a time
lag (mainly as an effect of the EU regulatory framework) wherein the new architecture is being set
up. Thus, the seven-year programming period is not in fact fully used to deliver projects and calls
for proposals can take place two or even three years into that period. This can make it hard for
organisations that are reliant on this funding to manage the in-between periods and to deliver
initiatives in a timely way.
Challenge to build organisational capacity and longevity: Local organisations that deliver
programmes often speak of funding precarity. While some have institutional longevity and have
built capacity over time, it is hard for many to have long-term staff and build capacity due to a
reliance on project-based funding. Beyond this, regional and local governments express that MAs
hold disproportionate control in shaping requests for proposals which in effect drives much of the
subnational public investment in the country.
Delivering impactful projects: Greece has commonly received the critique in past programming
periods that actions have focused too much on delivering basic infrastructure investments and not
enough on competitiveness and social cohesion actions (Bartzokas, 2007[7]). The quality and
complexity of projects are related to the robustness and capacity of local institutions and this is
something that is built over time. Also, the tendering process entails many reporting requirements
and can be quite complex and lengthy – requirements that increase the more complex the project
is. Given this environment, it can be challenging to put together complex initiatives, particularly for
actors that are new to the field. As previous experience matter, incumbents have an advantage.
As regional policy in Greece evolves and the economic environment improves, regions will likely go down
the path of other countries of being able to target complementary actions with own-source revenues and
strengthen local institutions and local capacity. This will reinforce the effectiveness of Cohesion policy.
A new place-based approach to regional development
Delivering growth to all regions
The crisis and long recovery period had sizeable consequences for the economy and its regions so that
Greece’s GDP is today one-fourth smaller than in 2007 and young people have left their country to seek
better opportunities elsewhere; poor economic conditions have had a very hard impact on all aspects of
peoples’ lives (Chapter 2). The central challenges facing Greece are well known: businesses have low
value-added activities, limited innovation and are poorly integrated into regional and external markets. Post
crisis, enterprises indebted with limited access to finance and low FDI attraction. Furthermore, with the
exception of Attica and Thessaloniki, there is a very low level of investment in R&D (both private and public)
and low levels of innovation. Traditional business organisations dominate, especially in farming and SMEs
(OECD, 2018[8]). Finally, long-term unemployment has increased, especially among those with less
education and skills (Chapter 2) (OECD, 2018[8]) and a poor skills match in many regions (OECD, 2019[9]).
Regional policy supports job creation, competitiveness, economic growth, improved quality of life and
sustainable development. Mainstreaming regional, urban and rural development policy approaches with
economy-wide structural policies, including better targeting and implementation of public investment is key
to national strategies and shall be a priority for the years to come.
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Box 3.2. The territorial impact of the current COVID-19 pandemic
In less than 3 months in the first quarter of 2020, the COVID-19 crisis developed into a global pandemic,
contaminating almost all countries and infecting more than 1 million people around the world. Half of
the world’s population experienced a lockdown with strong containment measures. Schools and
universities were closed for around one billion students of all ages. Beyond the health and human
tragedy of the coronavirus, the crisis has already profoundly affected economies, unemployment and
the sustainability of public finance. All economic sectors are affected though disrupted global supply
chains, weaker demand for imported goods and services, a decline in international tourism and a
decline in business travel. SMEs and entrepreneurs will be particularly hard hit by measures to contain
the virus’ spread. Unemployment and the number of aid seekers have started to increase significantly.
The OECD estimates that for each month of strict containment, there will be a loss of 2 percentage
points in annual GDP (OECD, 2020[10]).
The COVID-19 global crisis has a strong territorial dimension. First, the regional and local impact of the
crisis has been highly asymmetric within countries – some regions have been harder hit than others, at
least during the early stage of the pandemic. In economic terms, the impact of the crisis will also differ
across regions depending on their exposure to tradable sectors, exposure to global value chains and
type of specialisation. Overall, regions specialised in tourism and metropolitan regions seem at higher
risk of job disruption than other regions. Second, subnational governments – municipalities and regions
– have been at the frontline of managing the crisis, as they are responsible for critical aspects of
contention measures, healthcare, social services, economic development and public investment. The
management of the public health aspect shows that the combination of national and subnational
measures and an ability to work together are fundamental for an effective response in a context of
emergency. Managing the economic and social crises also requires effective co-ordination, adequate
regional policy responses and robust governance and finance tools. The combined economic, social
and political challenges related to the COVID-19 outbreak make effective multilevel governance and
finance mechanisms more important than ever before.
Note: The OECD has created a Digital Hub on Tackling the Coronavirus (COVID-19), which includes policy briefs and country-by-country
COVID-19 economic measures and it is intended to grow and be continuously updated. Consult www.oecd.org/coronavirus/en.
Source: OECD (2020[10]), The Territorial Impact of COVID-19: Managing the Crisis Across Levels of Government,
http://www.oecd.org/coronavirus/policy-responses/the-territorial-impact-of-covid-19-managing-the-crisis-across-levels-of-governmentd3e314e1/.
Greece’s new National Growth 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 document. While the national strategy’s section on regional development stresses how
regions need to identify their own strengths and opportunities, the diagnosis of challenges focuses solely
on the unique characteristics of the island regions. There are other regions in Greece – e.g. mountainous
regions, those experiencing industrial transition – who equally require targeted solutions and unique policy
instruments. As such, the strategy does not offer a comprehensive view of regional development and does
not discuss the various policy mechanisms that can be used to implement regional policies. Moreover,
there is a wide range of sectoral policies for which a territorial lens is absent.
However, beyond the National Growth Strategy, a regional development policy does not seem to be
explicitly stated at the national level. In the absence of a specific document, regional development is
implicitly served through the regional allocations and programmes of the European Structural and
Investments Funds (ESIF) and to some extent, Greece’s own Public Investment Programme (PIP), as
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articulated in 2016 “Development” Law (4399/2016) and 2019 “Invest in Greece” Law (4635/2019). While
the first is a scheme financed by PIP which provides incentives to enterprises for investments, the latter
covers a wide range of fields but with the single purpose to improve the business environment. However,
there is no predefined allocation of resources for each region associated with this funding and limited
resources have been available, with most being used for the national co-financing support of ESIF Funds.
Thus, at present, the national government’s Public Investment Programme (PIP) does not play a large role
in delivering targeted regional investment policies, though it may evolve to take on this role in the future
and, as a permanent mechanism for dialogue between local and regional authorities and social partners,
will submit proposals on development planning. Greece’s approach to regional development is thus most
similar to Cyprus, Ireland, Malta, Portugal and Slovenia – smaller countries, with GDP below the EU
average per capita, for which regional development policy is focused on national development and
competitiveness, and wherein internal disparities (e.g. peripherality, insularity) may be significant and are
gaining policy attention (Bachtler, Méndez and Vironen, 2014[11]).
Effective territorial policies are key to delivering on Greece’s growth objectives. Actions are required on
multiple fronts. The analysis from Chapter 2 shows that although Greek regions each have their specific
strengths and weaknesses, there are a number of regions with similar economic characteristics that require
different policy responses. In broad terms they can be divided into four main categories accordingly:
1. Metropolitan regions with developed research and technology capabilities and a potential to further
diversify knowledge-intensive manufacturing and services (Attica, Central Macedonia). Greece’s
two metropolitan regions concentrate most of the country’s population and economic activity. Yet,
these areas were less resilient than others during the economic crisis. Attica went from leading
productivity growth in the pre-crisis period to dragging the recovery in the post-crisis period and it
has lost ground with all other OECD cities of similar size, including those over which it held an initial
advantage (e.g. Barcelona, Manchester and Naples). While these regions experience the benefits
of agglomeration, they are also suffering the negative impacts (e.g. air pollution, traffic congestion,
sprawl) and growing segregation/spatial inequality (Balampanidis et al., 2019[12]).
2. Regions with a manufacturing base, gathering traditional industry sectors with a low level of
innovation capabilities (Continental Greece, East Macedonia-Thrace, West Macedonia). These
resource-rich regions face the challenge of modernising their industrial base, in order to generate
higher-value activities and quality jobs and diversifying their economies. These regions are also
rich in environmental amenities which have not been fully exploited (e.g. ecotourism).
3. Rural regions with local services and primary activities, including livestock and aquaculture, food
processing and potential for innovation in the agro-food industry (Epirus, Peloponnese, Thessaly,27
Western Greece). These regions also have a growing presence in tourism with opportunities to link
the development of the food sector to tourism.
4. Insular regions with strengths in quality tourism and specialised agricultural products (Crete, Ionian
Islands, North Aegean, South Aegean). These regions are well known worldwide as tourism
destinations. A central challenge of these regions is to diversify their economies, to prolong the
tourism season and to enhance the quality of visitor experiences (attracting higher-value activities).
These regions need to manage seasonal populations in delicate ecosystems. Moreover, as insular
regions, it can be very challenging to provide adequate services and infrastructure to some parts
of the territory.28
Table 3.3 identifies economic opportunities and policy priorities for these four categories of regions, taking
stock of the analysis undertaken in Chapter 2.
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Table 3.3. Economic opportunities and policy priorities across four categories of regions in Greece
Economic opportunities
Metropolitan regions
Regions with a manufacturing base
Rural regions
Insular regions
Policy priorities
Restoring economies of agglomeration
Promoting functional linkages to nearby
areas to spread agglomeration benefits
to the surrounding area
Mobilising pool of talent with low cost in
European markets
Capacity to attract professionals in
creative industries
Linking universities and research
institutes to local firms
Reskilling and internationalisation
support for SMEs
Value chain integration of SMEs
Promoting entrepreneurship and
competition, access to finance
Adding more value in primary activities
(agro-food, mining) and focusing on highvalue niche markets (e.g. in tourism,
healthcare services)
Upscaling and modernising local
services, especially in tourism activities
Physical and digital connectivity
Developing ecosystem of remote service
delivery
Managing seasonality
Upscaling and modernising local
services, especially in tourism activities
Integrating transportation, housing and
spatial planning at the functional scale
Ensuring access to quality and affordable
housing in cities
Improving transport accessibility inside
the functional urban area
Ensuring the relevance of university
training for specific skills needs of
regional employers
R&D support for industries with growth
potential
Support for the regional innovation
ecosystem
SME support services and incubators
Better match of training and job
candidates with local opportunities that
utilise their skills
Land consolidation
Digital infrastructure
Bringing the technology of higher
education institutions to rural areas
Support services to rural firms
Improving the quality of education
delivery to reduce the number of school
drop-outs in rural areas and vocational
education and training (VET)
Investing in digital and physical
infrastructure
Forward planning for delivery of quality
services
Support for social innovation and other
alternatives for service delivery
Physical infrastructure
Enabling locally-led development through modern regional policy
Greece’s regional development strategies 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.
Modern place-based regional policy is characterised by a set of co-ordinated policy measures involving a
broad range of stakeholders that is adapted to the specific conditions of a region (OECD, 2019[13]). Instead,
modern regional policies should enable regions to reach their economic potential by focusing on their
comparative strengths and ensuring the right framework conditions are in place. Table 3.4 provides an
overview of the key characteristics of modern place-based policies for regional development.
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 modern regional policies.
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Table 3.4. Characteristics of modern place-based regional policy
Regional policy characteristics
Problem recognition
Low productivity (levels and growth); underused regional potentials; lack of regional competitiveness; inter-regional
and inter-personal inequality
Objectives
Increasing productivity growth; delivering high quality of life and well-being to people across economic, social and
environmental dimensions
General policy framework
Tapping underutilised regional potentials through regional programming; building on existing strengths; developing
regional innovation systems
Spatial orientation
All regions within a country are targeted with policies adapted to each region
Actors
All levels of government; relevant non-governmental stakeholders (public, private, academia, non-governmental
organisations [NGOs])
Unit for policy intervention
Interventions should consider both administrative and functional geographies where appropriate. Functional
geographies cover the areas in which people live, work and interact (e.g. rural-urban linkages, functional urban
areas, cross-border regions, etc.)
Time dimension
Should provide a stable long-term policy environment while responding adequately to newly emerging challenges
and opportunities
Policy fields
Context-specific; considering all relevant policy areas and regional characteristics (economic, geographic,
demographic, social, cultural, etc.)
Focus
Endogenous development based on local assets and knowledge
Instruments
Broad range of instruments, including targeted investment in human capital (e.g. higher education, vocational
training, early childhood education, etc.); infrastructure investments; support for business development
(e.g. business incubators, credit provision, etc.); research and innovation support; co-ordination between
non-governmental actors (businesses, universities, etc.)
Operational approach
Encourages policy co-ordination across sectors, levels of government and jurisdictions; and promotes participation
and dialogue with private stakeholders and citizens
Source: Revised and updated from OECD (2010[14]), The OECD Innovation Strategy: Getting a Head Start on Tomorrow,
https://dx.doi.org/10.1787/9789264083479-en.
Policies that either target or impact “place”
Place-based policies – differentiating between two main forms: i) those policies that intentionally target
“place”; and ii) the wide range of policies that do not intentionally target place but that have important placebased consequences (Figure 3.3). Within those set of policies that intentionally target place, territories can
be targeted in different ways. Policies may be targeted at an entire region based on some characteristics
(as Greece has done with its “Islands’ policy”); targeted at a type of settlement such as rural or urban
areas; targeted at functionally connected territories (e.g. labour market commuting zones); or targeted at
a specific territory within a region such as cluster policies or innovation parks. They can also be elaborated
by regional or local governments directly. Greece has a wide range of policies that target place such as
special investment policies for mountain areas, places facing population decline and islands. There is also
the wide range of EC policies which target place by allocating more funds to disadvantaged regions or by
targeting functional territories (e.g. labour market communising zones).
In terms of policies that do not intentionally target place but for which there are place-based impacts –
these take many forms, for example: tax incentives for home ownership which can lead to an increase in
urban sprawl; education funding based on student thresholds which can make it harder to provide services
to rural areas; and national renewable energy policies which may only be feasible in some places due to
natural endowments.
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A key point for policymakers is to not be “space blind” in the design of sectoral policies but to inherently
consider how policies may impact different places differently within the incentives or the criteria that they
establish. Delivering on this requires an understanding of local and regional conditions. It requires quality
territorial data and a reflection on how different local communities and economies work.
Policy complementarity – combining investments to have a greater impact and be mutually reinforcing – is
thus an important element of place-based policy. For example, a region that bases its development strategy
on a culinary tradition needs to ensure that the right infrastructure is in place to ensure that perishable
goods can reach important markets on time. It also has to adapt its education system to train skilled
workers in the food processing industry. In parallel, it might have to offer advice and training to small food
producers on how to export; and it needs to foster the creation of business associations that can market
food from the region nationally and internationally. Successfully delivering on this requires a deep
knowledge of local institutional actors and conditions, and necessarily involves a wide range of
stakeholders from within and outside the region. Thus, institutional capacity and effective multilevel
governance are fundamental to delivering effective place-based policy.
Figure 3.3. A typology of place-based policies
Policies that are targeted to place
Multilevel governance framework
Supra-national
National
• Targeted to a whole region based on some
criteria (e.g. administrative region,
disadvantaged region, mountainous region)
• Targeted to a type of settlement area across
a whole territory (e.g. rural or urban)
• Targeted to functionally connected
territories (e.g. labour market commuting
zone)
Regional
Local
Policies targeted to people or firms with
place-based impacts
For example, sectoral policies for:
• Agriculture
• Education
• Health
• Transportation
• Public finance
• Trade
• Innovation
• Digitalisation
• Targeted to specific territory within a region
(e.g. cluster policies, innovation parks)
• Policies developed by regional governments
• Policies developed by local governments
The importance of institutions for regional and local development
Institutional capacity and well-functioning multilevel governance are fundamental to delivering effective
place-based policy. Regions need greater responsibility and accountability, that is, there needs to be
greater ownership of policies at the regional and local levels. Place-based policies require governance
arrangements that facilitate co-ordination and integration of sectoral policies, as well as co-ordination
arrangements that allow delivering regional policies and investments at the relevant scale and bring
together relevant public, private and civil society actors. Regions and municipalities need to have sufficient
capacities – administrative, financial and professional – to deliver (OECD, 2019[15]).
Table 3.5 provides an overview of the distribution of responsibilities between local and regional
governments. Chapter 4 will provide an in-depth discussion of multilevel governance and ESIF
management and control systems in Greece.
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Table 3.5. Distribution of powers, local and regional governments
Deconcentrated
administration
authorities
Metropolitan
regions
Insular
municipalities
Mountain
municipalities
Development
Spatial planning and
urban regeneration
Works, urban and
spatial planning and
environment
Support for local
community and
economy
Public works, spatial
planning,
environment
Environment
Environment and
quality of life
Natural resources,
energy and industry
Energy, water and
forestry
Agriculture, livestock,
fishery
Rural developmentlivestock – fisheries
Civil protection and
security
Agriculture, livestock
and fishery
Agriculture and
livestock
Citizenship policy
Natural resources,
energy-industry
Quality of life and
proper functioning of
cities and
settlements,
including municipal
transport
Transport and
communication
Transport and
communication
Migration policy
Employment, trade,
tourism
Employment
Transport and
communication
Social protection and
solidarity
Health, education,
culture, sports
Education, culture
and sports
Civil protection,
logistics
Civil protection
Regions
Municipalities
Planning,
development
Environmental policy
Forest policy
Town and urban
planning
Employment, trade
and tourism
Source: Elaborated from Council of Europe (2012[16]), Structure and Operation of Local and Regional Democracy - Greece - Situation in 2012,
https://www.eetaa.gr/en_pages/Structure_and_operation_Greece_2012.pdf (accessed on 14 May 2019).
In an effort to address these issues, Greece has ambitiously developed a new architecture for regional
policy and new regulations that aim to simplify processes and make government at all levels more efficient
and effective. In the coming years, it is critical to continue in this direction, finalise the ongoing reforms and
that regional and local governments continue to build their internal capacity so that they can help catalyse
local development efforts. They need the right data and skillsets to fulfil this role. There is work to be done
to galvanise networks of public, private and third sector actors and to build economies of scale in
programmes and services. Regional policies are not just the sum of policy instruments – they are about
building a culture of working together to leverage local development. This is a new role for them and it will
take time to develop.
Given this, some of the central issues that regional policy in Greece needs to tackle in the coming years
are:
Strengthening institutional and administrative capacity. Greece has low planning capacity,
cumbersome bureaucratic procedures and lack of experienced staff (Huliaras and Petropoulos,
2016[17]). Regional and local governments have weak administrative capacity and insufficient
human and financial resources with which to undertake investments and deliver services
(Oikonomou, 2016[18]). Almost all European Union Structural Fund /ESIF evaluations in Greece
have noted that beneficiaries such as municipalities have insufficient expertise and that this has
led to delays or even projects being cancelled (Huliaras and Petropoulos, 2016[17]). This is a
common issue across many EU states and efforts are made to address it through initiatives under
the Technical Assistance Operational Plan. In the case of municipalities, a lack of the right technical
expertise among staff is well acknowledged and they have been struggling under rules limiting the
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hiring of permanent public service staff that have been imposed since 2010. 29 One consequence
of a lack of internal capacity has been an overreliance on external consultants. Public bodies
urgently need to build internal capacity to carry out their functions. A reliance on external
consultants is one of the reasons that regional and local development has been delivered on a
project by project basis absent of connections to integrated medium- to longer-term development
strategies. Another factor is the tendency of Managing Authorities to choose mature projects over
the more significant ones to sustain absorption and, in the long run, avoid the n+2 rule resulting in
decommitment of funds.
Strengthening the public legitimacy of regional policies and delivering them on a comprehensive
and strategic medium- to long-term planning. In the past decade, many policies have been imposed
on the Greek state through bailout conditions and this has impacted public trust in politicians and
European institutions alike.30 Greece’s current National Growth Strategy also notes the negative
impacts of certain political clientelism on the country’s development – a finding echoed by others
(Hellenic Republic, 2018[1]).31 The current regional and local policies are mainly shaped by EU
policies but are often delivered through the sum of many small projects which leads to duplication,
high administrative costs and lack of co‑ordination – including a lack of co-ordination between local
and regional governments (Oikonomou, 2016[18]; Huliaras and Petropoulos, 2016[17]). This is
because local and regional 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. Local and regional development cannot be driven by government alone.
Building local and regional institutional capacity for responsive and engaged governance forms a
central challenge for the future. At the national, regional and local levels, there are efforts to build
a stronger culture of regional development planning and public engagement supported by open
data and online consultations. This needs to continue and, despite ongoing budgetary pressures,
should be viewed as a worthwhile investment, fundamental to the success of many policies and
reforms.
Shifting away from an overreliance on EU funds. Greek national and regional authorities have been
relying almost exclusively on EU fund revenues for infrastructure projects in absence of incentives
to seek better ways of raising development finance (Huliaras and Petropoulos, 2016[17]). ESIF
funds are sometimes being used to provide services that should instead be part of core government
public expenditures. For example, the ESF has been used to cover the long-term funding needs of
Greek childcare centres which is a part of basic social welfare, “thus freeing up significant state
funds to be utilised in areas often related to clientelist ends” (Huliaras and Petropoulos, 2016[17]).
The reduction of nationally funded public investment constitutes one of the reasons for the
reduction in the total volume of public investment in Greece (Psycharis, Tselios and Pantazis,
2018[19]). As a society that is just now coming out of austerity, the high degree of reliance on EU
funds for regional policy is understandable and necessary. However, it will be important to break
this logic going forward because these funds have restrictions imposed upon their use, they flow
on a project by project basis and can be a poor fit to meet the needs of cities and regions. In the
words of one Greek mayor interviewed for this project: “it is as if we have been given a suit to wear
with all of the wrong measurements”.
Better data for regional policymaking
Greece has been working to improve the quality and usefulness of its public data across various levels of
government (e.g. ministries, regional administrations, municipalities, etc.). However, the quality of data to
understand local and regional issues and to support decision-making remains underdeveloped. Dedicated
action is needed. Examples include:
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The Hellenic statistical authority should improve the quality and accessibility of its territorial data
sets to ensure common structure, consistency and transparency. For example, the structure across
types of data should be harmonised (a system is in place but not across all types of data and,
according to the majority of interviewees, not user-friendly). The consistency of the data sets over
time should need to be improved e.g. so that the name of regional units does not change over time.
Also, many datasets are not ready to be statistically processed, especially for disaggregated data
(e.g. often entries are not filled with all variables/identification field). In terms of transparency and
usability, more and better information should be provided, e.g. on how measures are defined,
collected, aggregated and what they refer to.
The Hellenic statistical authority’s firm-level and employee-level database should keep track of
individuals. Doing so would help to understand what policy works, where the gaps are, what the
conditions to grow and develop are, what can help, etc. The aggregation of correct data gives a
precise value for the full economy. Harmonised identifiers could be used across all individuals and
firms. For example: i) individuals from social security registers reported by firms (such as in France)
or by social security agencies (Germany, Hungary); ii) firm-level identifiers (e.g. financial
statements of the firm from business registers or income statements); iii) import/export data
(e.g. the traditional reporting includes value and volume of exports and imports of highly
disaggregated products [8-digit level] per country of origin or destination and firm).
The thematic range of existing open government data sources needs to be expanded. Presently it
mostly focuses on economic/financial datasets and, to a lesser extent, social and natural resources
and legal datasets). More data is needed on government spending, economic activity and firms
and on agriculture, tourism and the environment (Alexopoulos et al., 2018[20]).
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. More emphasis should be placed on the use of structured and machine-processable file
formats in publishing datasets, and metadata (adopting existing metadata standards) (Alexopoulos
et al., 2018[20]). Doing so would enable more effective browsing and discovery of datasets, and
also linking and combining open government data from multiple sources. Positively, the national
government’s website to track the implementation of the National Strategic Reference Framework
(NSRF) 2014-2020.32 The website provides information on the number of projects that have been
approved to date and their budgeted amounts by region. It also includes helpful summary data
visualisations on the thematic areas and beneficiaries by region and the source data are
downloadable. However, the utility of this data is diminished because “regional” data and thematic
summary data is not readily available through its interface.
Strengthening the territorial dimension of Cohesion policy
As described in Chapter 2, Greece’s settlement structure and mountainous and islands geography present
unique challenges for urban and rural policies. Its two metropolitan areas, Athens and Thessaloniki,
concentrate most of the country’s population and economic activity. About 33% of the national population
lives in metropolitan Athens (with 3 562 538 people); 10% in the metropolitan Thessaloniki (with
1 054 673 people); 6% in 6 medium-sized urban areas (250 000 to 0.5 million inhabitants); and 8% in
6 small urban areas (50 000 to 250 000 inhabitants). The remainder of the population – around 43% – live
in small municipalities with a population of around 50 000 people or less. Thirty-two percent of the
population in Greece lives in rural regions, while the average in the rest of the OECD countries is 25%.
Greece has the third-largest share of the rural population in remote regions across OECD countries
(Chapter 2, OECD regional typology).33 Long-term population trends suggest that the larger cities will grow
somewhat but that medium-sized and smaller ones will lose population over time, with the greatest declines
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expected in intermediate and rural regions. A combination of population ageing, low fertility rates and
negative net migration flows have heightened these trends.
While the metropolitan areas of Athens and Thessaloniki dominate in terms of economic activity, they were
less resilient than others during the economic crisis, which aggravated urban degradation – particularly in
the core – as investment declined and people migrated elsewhere for jobs. Between 2000 and 2012,
Greece experienced a strong pattern of sub- and peri-urbanisation (OECD, 2017[21]). Already in the
pre-crisis phase, deindustrialisation had led to the formation of abandoned brownfields, often in the
immediate vicinity of degraded housing areas. Similarly, rural areas have been under intense economic
and social stress. Many firms and activities that existed post-crisis may not return to rural areas or may
take new forms. Meanwhile, some areas are facing industrial transition such as Western Macedonia where
the lignite industry is being phased out.
Given these trends, a diversity of strategies or integrated strategies are needed. In some places, there will
be a need to deliver services in new ways – e.g. mobile services, e-services – in order to more effectively
meet the needs of this population and ensure that older persons can effectively age in place. In other
places, rural areas may need strategies to consolidate services and manage decline as existing capital
assets and infrastructure are not used. Intentional strategies are needed to make the most of public
investments and plan for the future.
Integrated strategies for urban development
The OECD defines “urban policy” as a co-ordinated set of policy decisions to plan, finance, develop, run
and sustain cities of all sizes, through a collaborative process in shared responsibility within and across all
levels of government, and grounded in multi-stakeholder engagement of all relevant urban actors, including
civil society and the private sector.34
Urban development policies play an important role in delivering smart, sustainable and inclusive growth.
Greece’s urban policy is mainly focused on spatial planning considerations, along with sustainable
development. Urban policy is also implemented through the ESIF, aiming at the sustainable economic and
social development of cities (OECD, 2019[13]).
Box 3.3. The impact of COVID-19 on cities
In less than three months in the first quarter of 2020, the COVID-19 crisis developed into a global
pandemic, which brings with it a halt in production in affected countries, hitting supply chains across the
world, a steep drop in consumption and, finally, a sharp decline in services that reflects the
consequences of lockdowns and social distancing, especially in urban settings. More than half of the
global population live in cities and this share is expected to rise to 70% by 2050. Cities may be better
equipped than the rest of their country to respond to the COVID-19 crisis due to their well-developed
healthcare facilities. However, cities are densely populated places where people live and gather, thus
at risk of spreading the virus due to the close proximity among residents and challenges in implementing
social distancing. Large and secondary cities, in particular, often act as hubs for transnational business
and movement, with the potential to amplify the pandemic through increased human contact. In addition,
cities marked with inequalities and a high concentration of urban poor are potentially more vulnerable
than those that are better resourced, less crowded and more equal.
The OECD is collecting policy responses in cities experiencing the outbreak to help other cities prepare
for the spread of the virus. As of April 2020, few observations can already be derived from a number of
policy responses. These will be further developed to draw lessons and enhance cities’ resilience and
capacity to recover from shocks. They are:
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Cities are not equal in their capacity to respond to the COVID-19 crisis, across and within
countries. This uneven capacity depends on various factors including the allocation of public
service delivery (e.g. healthcare tends to be more centralised), population size (cities of a
smaller size seem to have paid greater attention to inclusion), regulatory frameworks, fiscal
capacity or the infrastructure in place.
Cities are undertaking a wide range of responses, from immediate measures to provide
information, protect their citizens (e.g. hygiene), minimise social contacts and support
businesses (e.g. finance) to measures designed to address a longer-term impact
(e.g. workplace reforms).
COVID-19 provides a unique opportunity to upscale innovation and the use of online/digital tools
in cities. From many examples, Internet and smartphone applications are playing a critical role
in communication, awareness-raising, teleworking but also learning and skills development.
Although most actions focus on short-term crisis management, some cities are already looking
beyond the crisis to the recovery efforts that will be required after the COVID-19 outbreak.
Note: The OECD has created a Digital Hub on Tackling the Coronavirus (COVID-19), which includes policy briefs and country-by-country
COVID-19 economic measures and it is intended to grow and be continuously updated. Consult www.oecd.org/coronavirus/en.
Source: OECD (2020[22]), Cities Policy Responses, http://www.oecd.org/coronavirus/policy-responses/cities-policy-responses-fd1053ff/.
Land use planning and spatial development
Land use and spatial planning are one of the two main pillars of Greece’s urban development policy. Spatial
planning systems structure how policies interlink at the local level through development investment and
land use regulations. These activities are connected to much broader agendas such as the transition to a
low-carbon economy, reducing social-spatial inequality and creating opportunities for economic growth
and prosperity. Spatial planning is therefore linked to policy ambitions at multiple scales, extending across
sectoral issues and involving an ever-wider array of actors in structures of governance. A challenge for
planning systems in this context is to adapt both formal institutional rules and informal roles and ways of
working to take a comprehensive view of how spatial considerations are linked to a wide range of policy
issues important for urban development.
The 2014 and 2016 spatial planning reform in Greece
The Second Economic Adjustment Programme for Greece 35 included, under the heading "Planning
Reform" (Law 4024/2012), the obligation for Greece to revise the spatial and urban planning legislation in
order to ensure greater flexibility in private investments in real estate and simplify and accelerate the
implementation of spatial plans. A new law for “Spatial and Urban Planning Reform” (Law 4269/2014) was
instituted in 2014 and, after a short period of partial implementation, in December 2016, it was substituted
by Law 4447/16, which made minor revisions to the previous law and which came into force under the
push of the Third Economic Adjustment Programme36 in an attempt to accelerate spatial planning
implementation in the country.
Law 4447/16, which is currently in force, organises spatial planning in Greece in a four-level top-down
hierarchical framework where the two first levels (national-regional) have a strategic role and the third and
fourth ones, the local, have a regulatory character (Figure 3.4). Thus, the current legislation provides for:
The National Spatial Strategy, which is a policy text of principles and includes basic directions of
spatial organisation, the main axes, medium- and long-term spatial development objectives at the
level of the general government and its individual bodies, as well as the proposed development
measures and actions for its implementation. The National Spatial Strategy is the basis for the
co-ordination of the strategic spatial frameworks, the individual investment plans and programmes
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of the state, of the local authorities and plans and programmes that have significant impacts for the
development and cohesion of the national space. 37
The Special Spatial Frameworks, which are meant to provide directions for the national growth
poles and axes, the urban system, the spatial organisation of specific economic sectors or
infrastructure of national importance and the spatial development of specific categories of space,
(coastal zones, maritime spatial planning, zones with growth problems etc.) and the promotion of
programmes and projects of major importance. These will be binding on lower-level frameworks
and plans.
The Regional Spatial Frameworks, which promote the developmental and spatial characteristics of
each region for its equal integration into national, EU and international space, setting out guidelines
for the spatial organisation model, for the spatial structure of the productive sectors, for the
transport and infrastructure networks, for the residential network, for the protected areas, including
also approved large-scale public or private investment plans. For the Attica region, the New Master
Plan of Athens-Attica (Law 4447/16) replaces the Regional Spatial Framework.
Local Spatial Plans (LSPs), setting specific regulations and defining the allowed land uses and
planning restrictions in urban and rural areas; these should be aligned with the directions of the
upper strategic level frameworks.
Special Spatial Plans (SSPs), a new category of plans, to facilitate and speed up investments.
SSPs are at the same hierarchical level as LSPs but on a smaller scale, focusing on specific sectors
to attract strategic investments. SSPs concern territories across administrative boundaries, of a
supra-scale or strategic importance. SSPs can also be developed for urban regeneration or
environmental protection programmes or for dealing with the consequences of natural disasters.
Urban Implementation Plans.
Moreover, a reform of the categories of land uses for urban space and the establishment of uses
for rural areas institutionalised in 2018.
Additional restrictions on activities or land use also derive from sector-specific and environmental
protection regulations (e.g. in relation to the natural, cultural or manmade environment).
Box 3.4. Maritime spatial planning
Greece currently lacks a legally binding national maritime spatial plan. Maritime planning issues are
addressed in the national Spatial Planning Framework. Sectoral plans for aquaculture and tourism
(under modification) include spatial planning guidelines for coastal and marine segments of each sector.
Additionally, the renewables framework sets strategic guidelines for offshore wind parks.
A new spatial planning framework for marine and coastal areas was adopted in 2018, and maritime
spatial plans are expected to be completed by 2021. Revised Regional Spatial Planning Frameworks
(for 8 out of 13 regions) have been broadened to include protection of coastal areas. Evaluation of all
regional spatial planning frameworks has been completed. Evaluation of sectoral-specific spatial
planning frameworks is underway.
The development of the National Maritime Spatial Strategy in 2020, along with the updated Spatial
Planning Framework for Tourism, could lead to the more effective management of coastal and marine
areas.
Source: (OECD, forthcoming[23])
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Responsibilities in the current planning system
In the four-tier spatial planning system, the national government has the most important competencies as
it approves all spatial frameworks and plans, with the “decentralised administrations” being responsible for
the approval of lower-level plans, the implementation of urban plans and their modifications. The regions
and the municipalities have an advisory role in the approval of spatial and land use plans (OECD, 2017[24];
Vezyriannidou and Portokalidis, 2019[25]). In this context, the region of Attica is an exception as its spatial
plan is approved by law by the Greek parliament.
A special role is played by Enterprise Greece (the official business promotion agency of the Greek state,
under the auspices of the Ministry of Foreign Affairs) that has the authority to fast track strategic investment
projects. It is involved in the preparation and approval of Special Spatial Development Plans of Public
Properties and Special Spatial Development Plans of Strategic Investments. Both plans can override
regular plans and can also speed up environmental licensing. Due to these functions, Enterprise Greece
is arguably more important for land use decisions than any level of subnational government in Greece
(OECD, 2017[24]).
Significant lags exist in the transition to the new planning system
To date, all the institutionalised Strategic Spatial Frameworks are under amendment for the necessary
updating. Until these new frameworks are in place, the older ones remain in force. Also, as of June 2019,
although a number of Special Spatial Plans have been adopted and are being implemented, no plan has
been completed, 2 are underway and 353 remain to be executed (EC, 2019[26]).
While the objective to facilitate private investments was achieved through the establishment of Special
Spatial Plans, the second objective to simplify and accelerate the spatial planning process has been
seriously delayed. The time needed for the completion of the sequence of plans which define binding land
uses inside town plan boundaries is extremely lengthy and the large number of different types of plans can
lead to overlapping responsibilities and contradictions. Moreover, several aspects of the planning system
are ineffective.
For example, an important issue in Greek land use governance is the question of enforcement. Generally,
a large number of illegally constructed buildings exist in Greece. In most cases, developers face no or only
mild fines and it is unusual that the demolishment of illegally constructed structures is enforced. Partly, the
reason for this is the absence of any administrative permitting procedure that confirms that a new
construction is in accordance with existing land use plans (OECD, 2017[24]). Density increments have been
established as a form of value capture mechanism 38 to legalise irregular construction and channel the
resulting fines into a “Green Fund” (Law 3889/2010) in order to finance urban environmental improvement
projects. A drawback of this approach is that developers and property owners may continue to choose to
ignore planning and building regulations and simply pay the fines (Karadimitriou and Pagonis, 2019[27]).
The General Secretariat for Regional Planning and Urban Development is setting up regional observatories
and an e-database of construction to monitor for illegal construction, however, this action does not address
the matter of lax enforcement. The timeframe has been set, within which the cycle of arrangements for
arbitrary constructions will be closed (Laws 4178/2013 and 4495/2017). In order for the settlement to take
effect, the interested parties must also proceed with the electronic registration of their property, in the
electronic register, i.e. in the acquisition of electronic identity. After 30 June 2020, an electronic ID will be
a prerequisite for completing the settlement process.
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Figure 3.4. Spatial planning in Greece: Law 4447/16
Source: Ministry of the Environment and Energy, Directorate of Spatial Planning (2020).
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Box 3.5. Spatial planning challenges: Example of Crete
The island of Crete, which has delicate environmental areas, ancient historical sites and a large
seasonal tourism industry, urgently needs to more effectively manage its space. Crete has a regional
spatial framework from 2003 (the first such plan to be approved in Greece) that was last updated in
2017 and which describes the key sectors of tourism, industry and energy. However, only a third of
municipalities have approved land use plans. Local spatial plans are needed for all of Crete and if there
is a new regional framework approved, all of the statutory urban plans will need to be updated. There
is also an urgent need to organise old industrial areas into modern business parks and to address
growing land use conflicts in the coastal areas of the island.
A challenge in developing and implementing this new spatial planning system is the lack of financing
for urban designs and modern surveying. Another challenge is the length of time and sequencing of
plans. Zoning plans take many years to be approved at present as does the regional spatial framework
(6 years). The sequencing between plans at the different scales in Greece has meant that upper-level
plans have not been in place to inform lower-order ones. For example, the regional zoning planning for
Crete was approved in 2003; the strategic spatial frameworks in 2001, 2008, 2009 and 2011 and the
national spatial framework in 2008; but this should have occurred in the opposite order so that the
higher-level plans can inform the lower-level ones. Some efforts are currently being made to digitise the
local spatial plans in Crete with vector models and there are efforts to develop a geographic information
system (GIS) with the statutory land uses in order to inform citizens of the services for environmental
licensing.
Source: Territorial Review: Regional Policy for Greece post-2020 – Answers to questionnaires and research interviews Crete, 2019.
Recent reforms strengthen some aspects of the planning system but the implementation
of integrated perspectives remains lacking
In the wake of the economic crisis, Greece has adopted a number of laws to help spur large-scale
investments to support recovery. There were two central pillars to this strategy: i) the establishment of
institutions for the sale of public property; and ii) revisions to the spatial planning framework to open up
areas of public property to private investment (Vitopoulou and Yiannakou, 2018[28]). The newly created
Hellenic Republic Asset Development Fund’s (TAIPED) strategy to attract private investment has focused
on “transferring property rights (ownership, surface) to and/or adopting long-term leases and concessions
by the private sector (sale and leaseback, leasing, etc)” (Vitopoulou and Yiannakou, 2018[28]). Greece has
established a fast track approval process for projects of strategic importance. These reforms have
established a parallel planning framework that bypassed the existing planning system and that transfers
power to central government (Ministry of Finance, Ministry of Development and Investments and Prime
Minister’s Office) (Karadimitriou and Pagonis, 2019[27]). Greece has also made efforts to streamline its
building permits process by applying strict time limits for handling permit applications at the municipality
level and is developing a national cadastre (Box 3.6).
While these reforms seek to enhance efficiencies in the planning system, there remains a need to better
connect spatial planning to overarching development objectives and sectoral investments (e.g. housing,
transportation, energy, water, agriculture, tourism, economic development – all of these sectoral issues
affect how land is used).
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Box 3.6. The development of cadastral registration in Greece
The lack of basic land management tools and reliable data to inform policy decisions, such as a national
cadastre, has for a long time plagued the Greek planning system. Despite considerable effort from both
the Greek government and the European Union, only 40% of the national territory is currently covered
by the national cadastre. In the remaining 60% of the national territory that has yet to be surveyed, a
very heterogeneous property system exists with no certainty that private property is administered
correctly, while coastal and forest zones and public property are not registered at all. The incomplete
land registry often delays land acquisition. For instance, in 2016, delays in issuing permissions, relating
for instance to archaeological reviews, halted works in the Ionian Highway and triggered hefty penalty
payments from the government to contractors (OECD, 2018[8]).
In 2014, work started again towards the completion of the cadastral registration in Greece and is
scheduled to be completed by 2020. The necessary information technology (IT) infrastructure was been
set up, using EU funding for the digital conversion of Greece. Some 126 older survey projects are now
being implemented and 28 new survey projects were tendered in October 2013. A new board and
management have been put in place at the National Cadastre and Mapping Agency. The total cost of
the project is estimated at EUR 1.5 billion, which will not be entirely publicly funded since an owner also
pays EUR 35 per registered deed and 1 per mille over the value of the property. A new feature will be
added in order to enable all transaction prices to be recorded in the cadastral database. A link is also
being built between the cadastral database and the taxation database in order to develop a more
comprehensive and fair taxation system, with an expected improvement of property tax revenues. As
of June 2019, 42 cadastral offices are operating throughout the country to serve persons that are unable
to declare their properties electronically and a major cadastral office has opened in Athens to facilitate
the process (EC, 2019[26]).
Source: OECD (2015[29]), "Athens-Attica, Greece", https://doi.org/10.1787/9789264226500-8-en; EC (2019[26]), Enhanced Surveillance
Report, http://dx.doi.org/10.2765/93517; OECD (2018[8]), OECD Economic Surveys: Greece 2018, https://doi.org/10.1787/eco_surveys-grc2018-en.
Sustainable economic and social development of cities
The second set of Greece’s urban policy actions stem from the EU Cohesion Policy under the general
co-ordination of the Ministry of Development and Investments.
In 2014-20, the EU enhanced the urban agenda,39 strengthening the urban dimension of Cohesion policy
by earmarking a minimum amount of resources (set at 5%) under the ERDF to be spent on integrated
projects in cities – on top of other spending in urban areas.40 In addition, the Common Provision Regulation
(CPR) for the 2014-20 programming period of ESIF introduced the Integrated Territorial Investment (ITI)
instrument to deliver investments under more than one thematic priority or more operational programme
for a certain territory or functional areas. This investment strategy – bundling funding from several priority
axes and programmes – can take the form of an integrated strategy for urban development or intermunicipal co-operation. The implementation can be delegated from the managing authority to a local
authority to ensure that investments are undertaken in a complementary manner.41
The main targets of sustainable urban development projects in Greece are:
Integrated development interventions in urban centres for economic revitalisation.
Reversing the social and environmental degradation of urban areas, especially in areas where
there is a concentration of disadvantaged social groups, the degraded shopping centres of major
cities and abandoned industrial, craft and professional areas.
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Directly tackling the social consequences of the crisis, revitalising SMEs that create jobs and
reconstructing social infrastructure.
Promoting the link between innovation and entrepreneurship in the urban environment.
Reversing urban sprawl by promoting “compact cities” and the integration of the central core,
suburban and peripheral regions.
Recovering public space, developing the social economy and housing structures with the active
involvement of citizens.
ITIs were applied in Greece in a flexible manner in order to better fit the needs of smaller places. This is a
successful example of adapting policies to local needs and conditions. ITI funding requires two documents
to apply for funds – a strategic diagnosis of the issues facing the area and a joint development strategy. In
Greece, these kinds of actions are planned through Sustainable Urban Development Plans. However, in
practice these plans are often conducted for a specific area in a city as opposed to the whole city due to
budget limitations; this has limited their effectiveness as an integrated planning tool (URBACT, 2017[30]).
While a major rationale behind ITIs is for them to tackle joint projects across functionally connected
municipalities, many projects in Greece have not been based on this functional view. Regional authorities
could provide a template for partnership contracts between municipalities applying jointly for such funding
in order to ensure a clearer division of tasks and responsibilities and thus reduce the risks involved for the
project leader. This might strengthen the functional perspective and help institutionalise these practices in
the future (beyond the use of ITIs). Beyond this, it is noted that lengthy preparatory phases at the start of
the programme period and the unfamiliarity of new mechanisms have led to delays in the implementation
of ITIs in Greece; some ITI strategies still await approval as of 2018 (Ferry, Kah and Bachtler, 2018[31]).
Municipalities need increased capacity to deal with the functions that have been allocated to them.
Furthermore, while there are ongoing efforts to streamline services for businesses and residents, the
national government needs to consider the consequences of overly onerous regulatory burdens
(Antonopoulos, 2018[32]).
Policy challenges
Overall, Greece is not making the most of its spatial planning system and instruments,
and integrated perspectives are not being implemented
An integrated planning perspective should be reflected in national, regional and local spatial planning
documents and good planning principles such as the prevention of urban sprawl, the need for the balanced
development of the urban system with the creation of regional development poles, the need to develop
brownfield sites over greenfield and strategies to manage population decline in small towns should be
widely reflected in spatial strategies.
As has been noted, Greece has established a new spatial planning framework, which should help better
set strategic spatial objectives and link them to economic development; however, this planning system has
not yet been adequately implemented.
Actions are needed on multiple fronts:
Developing and implementing regional spatial frameworks as “living” documents. Greece has set
the framework for a new approach to integrated regional spatial planning. These strategic
documents set development ambitions and help to co-ordinate and prioritise public investments. It
is important that all regions transition to this new 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. The new Regional Spatial Frameworks have been subject to a consultation process
at the central, regional and broader public levels. A Strategic Environmental Assessment was also
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conducted for the spatial regional frameworks. Nevertheless, formal concrete tools are needed to
mobilise the knowledge of all relevant stakeholders around a shared set of policy priorities on an
ongoing basis. Planning should be viewed as an integral part of economic and social development
and should meaningfully engage a wide range of stakeholders, including the broader public.
Delivering integrated spatial strategies for urban development. Integrated spatial strategies
combine a range of factors impacting urban development for a comprehensive view of how to
connect spatial planning considerations with broader economic, social and environmental goals
and objectives. Doing so can help align strategic investments in a wide range of policy areas –
health, education, transport, energy investments and infrastructure – with land use considerations.
Such strategies can also play an aggregation role calling for the co-ordination of actions of
functionally connected municipalities around common policy objectives. While an integrated
perspective is apparent in regional spatial frameworks, implementation is weak and this type of
strategic planning is underdeveloped in many municipalities across Greece.
Co-ordinating land use with ROPs. Contradiction sometimes arises between the eligibility criteria
for financing private and public projects through ROPs and the spatial frameworks and plans (both
strategic and detailed land use plans). This lack of co-ordination can make it difficult to promote
projects that are eligible for financing due to non-permitting land uses.
Aligning policy instruments with spatial planning objectives. Many developments remain
uncoordinated leading to costly and inefficient outcomes – e.g. sprawl, land use conflicts, higher
transport and infrastructure costs. Tax policies can provide incentives on how to use land and affect
patterns of development (Worrall, Leah; Runkel, 2017[33]). For example, property taxes could be
used to steer land use, e.g. differentiating between desirable and undesirable land uses. Other
fiscal instruments dedicated to steering land uses (such as brownfield redevelopment incentives,
transfers of development rights and historic rehabilitation tax credits) are presently underused in
Greece. As the economy recovers, there is a growing potential to employ land value capture
instruments which can be used to help build welfare-enhancing infrastructure.
Managing vacant and unused properties. Greece has a large number of vacant and unused
properties as a result of the crisis, where up to 1 million people have been impacted by foreclosures
(Hope, 2018[34]). These empty properties form a blight and detract from the attractiveness of an
area and pose environmental costs. In some cases, these assets may be turned to productive uses
but are left empty because of many reasons, often because ownership cannot be determined. The
auctioning of foreclosed assets, which was an imposed condition of the bailout programme, is a
very contentious issue in Greece. The Greek government created a system of e-auctions to
accelerate the process, replacing sales in specially convened courts, but there have been large
protests against this system.
A key point for Greece is to develop an explicit and well-targeted national urban policy,
strengthening the role of municipalities in economic development
A clearly formulated national urban policy can help ensure policy cohesion at the national level. Of all
150 national urban policies around the world, economic development together with spatial structure are
the most commonly addressed thematic priorities (OECD/UN-Habitat, 2018[35]).
Actions are needed on different fronts:
Making the most of Greece’s metropolitan areas. Athens and Thessaloniki have been less resilient
in the wake of the crisis and exhibit some of the negative aspects of agglomeration such as growing
congestion and sprawl (Chapter 2). More effective metropolitan governance and integrated
planning are needed in order to deliver multi-sectoral strategies that would help to strengthen their
resilience and foster development. The 2010 Kallikratis law established both Athens and
Thessaloniki as metropolitan areas. Athens has a spatial plan but not a metropolitan plan. 42 After
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the abolition of ORSA (Organisation for Planning and Environmental Protection of Athens), there
are no co-ordinating bodies in Athens. One possibility to address this is to integrate the multiple
bodies currently invoked in metropolitan planning within the region of Attica’s metropolitan
committees to consolidate both inter-municipal and cross-sectoral co-ordination. This could also
serve to strengthen their role as an interface with the national and EU levels. Thessaloniki’s
metropolitan plan covers 8 municipalities and is governed by a 12-member monitoring committee
(the mayors of 8 municipalities and 3 regional representatives). However, the municipalities
involved have limited capacity to implement the metropolitan plan and as such, it is being
implemented by the intermediate body – which puts out requests for funding to fulfil the mandate
of the plan.
Enhancing the network of small- and medium-sized cities. 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. Greece’s dispersed settlement structure
highlights the importance of the network of small- and medium-sized cities for the country’s
development. These hubs provide key economic and service delivery functions across the territory,
including linkages between rural and urban areas. These cities face diverse pressures such as
managing population decline and enhancing services for ageing populations and they need
instruments in place to successfully address them. Thus, strengthening incentives for intermunicipal co-operation becomes essential. As a general delineation, such co-operation may entail
informal partnerships or more formal ones embedded in legal-institutional arrangements. Municipal
and regional authorities can create co-operation networks and sign: i) inter-municipal contracts;
and/or ii) inter-municipal co-operation agreements. However, there are no strong incentives to use
these tools. Small municipalities can create common technical services among themselves (joint
technical units) but many report needing support the implementation. The regional and national
governments should provide more financial incentives whereby municipalities can access higher
funding amounts for joint projects/shared services. Other than the aforementioned mechanisms in
national laws, the main mechanisms supporting inter-municipal co-operation and rural-urban
partnerships is EU-driven Community-Led Local Development (CLLD) and Integrated Territorial
Investments (ITIs). Both can be jointly funded by the ERDF and EAFRD and can thus support ruralurban linkages. But broader institutionalised practices are needed beyond these funding
mechanisms.
Box 3.7. The need for improved metropolitan governance in Athens
Athens-Attica is the largest metropolitan area of Greece with a functional urban area (FUA) of around
3.5 million inhabitants (according to the OECD definition). It consists of 53 municipalities, with the
municipality of Athens only hosting about 19% of the metropolitan area’s total population while the rest
is distributed in multiple small- and medium-sized urban municipalities. The metropolitan area of
Athens-Attica encompasses about 90% of the population of the region of Attica, which includes semiurban and rural areas as well as islands.
In the face of rapid urbanisation, the role of urban planning has traditionally been weak in Greece,
limited until the country’s EU accession to “a posteriori rationalisation of informally developed areas
through their subsequent incorporation within the official town plan boundaries with an additive logic”
(Pagonis, 2013[36]). Waves of internal migrants in search of employment opportunities settled
predominantly in the western suburbs, close to the industrial plants. Uncontrolled growth of small selfpromoted housing in a car-dependent model led to traffic congestion, air pollution and the degradation
of the urban environment.
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Effective metropolitan planning is essential to the region’s success. While mechanisms for metropolitanwide co-ordination and planning currently do exist, they all face specific institutional and operational
limits.
The Regional Association of Municipalities of Attica (PEDA) 43 offers a platform for dialogue
and exchange of information among all municipalities in the region but it has generally not
played an active role. It brings together 66 municipalities of the region of Attica and from the
islands of the Saronic Gulf. PEDA is run by a 25-member governing council formed by mayors
of member municipalities. A few other specialised thematic associations of municipalities also
exist, such as the Association of Municipalities in the Attica Region which oversees solid waste
management but that has failed to bring about inter-municipal consensus on new landfill sites.
The Organisation for Planning and Environmental Protection of Athens (ORSA)
(established in 1985) is a special agency of the Ministry of the Environment which serves as an
advisory council to municipalities. One of its main responsibilities consisted of the
implementation and revisions of the Regulatory Master Plan of Athens (1985) and its
subsequent update (Law 4277/2014). Despite its unique metropolitan-wide mandate, ORSA
had limited formal competencies, insufficient implementation powers and the structural
deficiencies of the Greek planning system (Chorianopoulos I. et al., 2010[37]). Recently, parallel
to the new Law on Regulatory Master Plan of Athens/Attica, ORSA was abolished as an
organisation and its responsibilities were transferred to the Ministry of the Environment and
Energy (Directorate for Designing Metropolitan, Urban and Suburban Areas). The Athens
Master Plan is approved by the parliament and, as a result, all municipal plans in Attica must
be compatible with it.
The region of Attica operates four sectoral “metropolitan committees” (environment and
quality of life; spatial planning and urban renewal; transport and networks; civil protection and
security). These committees meet on an ad hoc basis for deliberative purposes, but they hold
no decision-making power. In addition, municipalities are not systematically represented in the
committees, although they are occasionally requested to provide data on relevant topics under
discussion.
Despite these efforts to guide urban growth at a more functional and comprehensive scale of planning,
there remains a gap between spatial planning and socio-economic planning. At the central government
level, the General Spatial Plan is disconnected from the major national economic plans and the
partnership agreement (ESPA 2014-2020). At the regional level, the Regulatory Master Plan of AthensAttica was elaborated with little co-ordination between the economic development strategy at a
corresponding scale. At the municipal level, the General Urban Land Use Plan must be sent to the
Ministry of the Environment for approval and remains disconnected from the five-year local economic
strategic plan that municipalities are expected to elaborate at the beginning of the municipal political
mandate.
One possibility to address some of these issues is for the region of Attica to integrate or strictly connect
all the existing metropolitan committees and agencies in order to consolidate both inter-municipal and
cross-sectoral co-ordination, while serving as an interface with the national and EU levels. Concrete
tools to mobilise the knowledge of all relevant stakeholders around a shared set of policy priorities will
be instrumental to build and implement a coherent strategy for a more competitive, attractive and
liveable region of Athens-Attica.
Source: OECD (2015[29]), "Athens-Attica, Greece", https://doi.org/10.1787/9789264226500-8-en; (Pagonis, 2013[36]); (Chorianopoulos I. et
al., 2010[37]).
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Developing more and better data for municipalities and communities to understand their functional
linkages and monitor trends. Local governments need better knowledge about the conditions in
surrounding communities in order to identify and prioritise areas of joint action. Upper-level
governments have a role to play in facilitating this by establishing the platforms to share such
information and encouraging its use. For example, many countries in the OECD have digitised their
planning documents (e.g. France, the Netherlands) – a move which benefits residents and
investors as well. France’s urban planning agencies provide advice and expert assessment on
planning and land management issues and develop planning documents. They are a centre of
expertise on spatial planning and are linked to a national federation which shares best practices,
tracks major trends and provides opinions on major national and European debates related to spatial
planning. This type of expertise is particularly important for smaller municipalities that have more
limited capacity. This issue of needing better local data is further addressed in the final section of
this chapter.
Further developing smart cities. Greek cities are increasingly focusing on becoming “smart cities”
(using technology to improve services, increase transparency and become more efficient) and on
pursuing urban development in an integrated way – across the multiple elements of well-being
(social, environmental, cultural, and economic) (Box 3.8). As such, they are moving beyond the
role of service and infrastructure providers towards integrated development strategies. This is the
aim. However, the tools with which to realise these actions are sometimes limited. For example,
most Greek municipalities do not have the purview to attract investment or to create conditions for
research and innovation. Instead, their actions tend to focus on promoting general conditions for
such development, such as sustainable urban mobility, the enhancement of digital networks, the
provision of public spaces, the organisation of land use, etc.
Strengthening capacity across municipalities of all sizes. Greek cities have been under a great deal
of financial and institutional stress in recent years, needing to deliver actions on multiple fronts
while adapting to ongoing administrative and policy reforms. Under the Law for Local
Administration 3852/2010, Greek municipalities have taken on a range of responsibilities for social
policy, environmental protection, improving living conditions and city management, rural
development, local economic development, civil protection and facilities for culture, education and
sports. During the crisis, municipalities have played a key role in implementing social policy actions
and developing a safety network for marginalised residents, particularly in the wake of the high
number of irregular and asylum seekers who concentrated in large cities and islands since 2015
(OECD, 2018[38]). The next EU Cohesion Policy period will call for an enhanced territorial dimension
of ESIF implementation (new Objective 5: “Citizen’s Europe”). A key challenge for the future is to
strengthen the capacity of municipalities of all sizes to address integrated urban development
including better links to regional and rural development.
Clarifying the responsibilities of each level of government. Beyond the issues outlined above, there
is a need to address a lack of clarity on the division of responsibilities between municipal and
regional governments. Regional and local governments are both directly elected tiers of
government and there is no hierarchy between them. Greek regions and municipalities share
responsibilities with the central government in some areas, notably on education, health and
transport. This is an issue that the national government is well aware of and is seeking to resolve
in the coming years (see Chapter 4 for discussion).
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Box 3.8. The unlikely “smart city” of Trikala, Greece
The city of Trikala (81 355 inhabitants in 2011) set in north western Thessaly’s agricultural heartland
was Greece’s first “smart city” – named so in 2004 by Greece’s Ministry of Economy and later voted
one of the top 21 smart cities globally. EU-funded projects have spurred the city’s digitisation of services
and have helped to make it an attractive test site for local tech companies. Tikala participated in a pilot
project for driverless busses, adopted smart sensors to significantly reduce the energy consumption of
its street lights and developed an e-complaints system for local public services.
The city’s development company (e-Trikala) has been instrumental in spurring a culture of digitalisation.
Some of the city’s achievements include:
A fibre network linking 40 buildings with 8 neighbouring communities was established in 2004
through a co-operative (e-Trikala).
Free access to 12 Wi-Fi nodes was introduced in 2008 by e-Trikala. Access required onsite
registration at one of e-Trikala’s offices, where staff can explain the technology and assess the
user’s skill level. The network quickly gained 10 000 users.
To build usage, e-Trikala has launched online services including public policy fora, telehealth
and a Web portal connecting customers to Trikala businesses. The wireless network also
controls information displays for the bus network, improving service and increasing ridership.
A key component of the city’s success has been to combine investments in digitisation and e-services
with a focus on culture and use – making sure that its residents make the most of these investments.
E-Trikala pursues more than smart city initiatives. It acts as the municipalities’ development agency and
has, for example, maintained the operation of reception places for asylum seekers and refugees
referred by the United Nations Refugee Agency (UNHCR) for accommodation and provides with
comprehensive assistance (including psychosocial support, interpretation, transportation arrangements
and referrals/ accompaniment to medical/legal aid actors).
Trikala has joined a consortium to take part in the EU’s Activage programme, which tests smart houses
that monitor elderly residents’ health by detecting movement and food consumption. It also has plans
to partake in a project on agricultural modernisation that uses new technologies to grow ancient
medicinal plants for the pharmaceutical industry.
Source: ICF (2019[39]), Trikala - Intelligent Community Forum, https://www.intelligentcommunity.org/trikala (accessed on 2 June 2019);
E-Trikala (2019[40]), e-Trikala Power, http://www.e-trikala.gr/ (accessed on 2 June 2019); Rainey, V. (2019[41]), “Inside Greece’s first smart
city: ’Now you don’t need to know a politician to get something done’”, https://www.theguardian.com/cities/2018/sep/04/trikala-greece-firstsmart-city-dont-need-to-know-a-politician-to-get-something-done (accessed on 2 June 2019).
Rural economic diversification and resilience
Rural areas are of key importance to Greece’s national development
This section examines the landscape of rural policies in Greece, offering recommendations in three main
areas: i) the modernisation of the agriculture and agro-foods sector; ii) rural economic diversification; and
iii) strengthening national and regional co-ordination on rural polices. Other elements important for rural
development such as environmental management, tourism, infrastructure and digital connectivity are
discussed in other sections of this chapter. Overall, it is argued that Greece’s rural development policies
should be better connected to regional and local development.
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Rural policies in Greece – Integrated development and the sustainable competitiveness of
rural areas
The main sectors of the Greek rural economy
In the past decade, Greece experienced a dramatic loss of income in rural areas as in the whole country.
Gross value added (GVA) in Greece’s predominantly rural regions (Continental Greece, Epirus, North
Aegean, Peloponnese and Western Macedonia ) dropped by 21% between 2005 and 2015 and
employment dropped by 9% (TL3 regions) (Table 3.6). In terms of GVA, all industries saw declines over
this period in rural areas except for the real estate sector which increased by 42%. 44 The largest declines
in GVA were experienced in the construction and ICT sectors (which declined by 57% and 36%
respectively between 2005 and 2015). Meanwhile, employment in predominantly rural regions declined in
most sectors except for real estate, other industries, professional, scientific and technical activities, and
administration services saw increases. The sectors that saw the largest employment declines over this
time were construction (which declined by 38%) and financial and insurance activities (which declined by
28%).
Table 3.6. Percentage change in employment and GVA, 2005-15, predominantly rural regions,
Greece (TL3)
Employment (%)
GVA (%)
Agriculture, forestry and fishing
-10
-15
Industry
-23
-30
Construction
-38
-57
Wholesale and retail trade, transport, accommodation, food
-2
-34
ICT
-22
-36
Finance and insurance
-28
-11
Real estate
54
42
Professional, scientific, technical activities, administration
9
-35
Public administration
-4
-14
Other industries
16
-11
Total
-9
-21
Note: GVA in USD purchasing power parity [PPP] base year 2010.
Source: OECD Regional Database.
While these figures demonstrate the greatest changes over this period, they are not an indication of the
relevant importance of these sectors to rural economies.
In terms of GVA, the wholesale and retail trade, transport, accommodation and food sectors are the largest
share for both rural remote regions and rural regions close to cities in Greece (2015). 45 Public
administration is the next largest followed by the real estate, industry and finally, agriculture forestry and
fishing sectors in both types of regions. The agriculture, forestry and fishing sector is of greater importance
in rural remote regions (10% of GVA in 2015) than in those close to the cities (at 6%) meanwhile, public
administration is a larger share of GVA in rural regions close to cities (26% versus 20%) (Table 3.7).
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Table 3.7. Share of employment and GVA, 2015, predominantly rural regions, Greece (TL3)
Employment PRR
Employment PRC
GVA PRR
GVA PRC
Agriculture, forestry and fishing
26
13
10
6
Industry
9
11
17
14
Construction
6
6
3
5
Wholesale and retail trade, transport, accommodation, food
30
30
23
22
ICT
1
1
1
1
Finance and insurance
1
1
2
3
Real estate
0
0
17
16
Professional, scientific, technical activities, administration
5
7
2
2
Public administration
18
25
20
26
Other industries
5
5
4
4
Note: GVA in USD PPP base year 2010.
Source: OECD Regional Database.
While this provides an overall view, it is important to note regional differentiation. Rural island economies
are dominated by tourism but also have fisheries, food production, services, etc. Western Macedonia in is
the midst of a transition from one industrial base – lignite mining and energy production – to potentially an
entirely new one. Many central regions have strengths in agriculture and other primary industries.
In terms of employment, the wholesale and retail trade, repairs, transport, accommodation and food
services sectors remain important – at around a third of employment in both types of rural regions. In
predominantly rural remote regions, the agriculture, forestry and fishing sector is the next large share of
employment (at 26% in 2015), while for rural regions close to cities, public administration follows (at 25%).
Box 3.9. Implications of Coronavirus (COVID-19) crisis for rural development
In less than three months in the first quarter of 2020, the COVID-19 crisis developed into a global
pandemic, which is creating risks for rural regions but may also create new opportunities. Rural
businesses and dwellers are vulnerable to economic shocks, including from the ones emerging from
the pandemic crisis and associated containment measures. Demographic characteristics (a higher
share of the elderly population) and geographic features (larger distances to access healthcare centres)
coupled with reduced healthcare staff and facilities can hamper the ability of rural regions to respond to
the pandemic. The overall slowdown in demand is already affecting the agro-food sector and expected
further slowdown in trade and global demand can hit rural economies severely given their higher
reliance on tradable activities, such as mining, or those specialised in vulnerable sectors such as
tourism and transportation. In terms of rural regions specialised in manufacturing, their vulnerability will
depend on the participation in global value chains (GVCs).
Although the primary sector, especially agriculture, has typically been classed as an essential activity
and therefore maintained during the crisis, high labour-intensive sectors that are critical for rural
economies are experiencing labour shortages including from seasonal and temporary workers. In
addition, rural industries offer fewer opportunities to work from home to maintain economic activity.
Lower levels of broadband connection in rural regions might also add to the adaptability of economies
to confinement measures. Rural regions also face important challenges to deliver public services, with
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public health services being particularly an issue in small rural areas. This could be exacerbated by the
extra demand if urban dwellers temporarily swell the rural population.
Nevertheless, as a consequence of this crisis, social and policy preferences can favour improved
services of proximity, greater local consumption and recovery of strategic industries. If well planned,
this shift can benefit rural communities in many forms. There may be a shift in buying habits to favour
small local businesses. Better-equipped and accessible public services can increase rural well-being.
Similarly, in some OECD countries, the repatriation of strategic industries that were once delocalised
(i.e. raw materials) can reactivate rural economies as a host of those industries. Furthermore, this crisis
offers rural communities an opportunity to mobilise and strengthen their local networks and co-operative
structures to face the economic shock.
Countries have put in place a number of measures targeting people, businesses and places that are
relevant for rural areas. Some of these measures are economy-wide ones with differentiated effects on
rural areas and other measures directly target rural areas. In April 2020, these include:
Risk management: e.g. catastrophic insurance for the agricultural sector. Sanitary customs to
protect rural regions with low infection cases. Food prices stabilisation.
Government responses: e.g. adoption of e-government platforms. Exchange between regions
on hospital capacities, including cross-border exchanges.
Community responses: e.g. networks of local producers to deliver food, and healthcare in
remote rural areas. Implementation of a Broadband Fund to support universal access to the
Internet, enhance distance-learning and healthcare e-services. Provision of cloud services to
SMEs to support alternative types of work including telecommuting.
Economy: e.g. support rural businesses by providing them access to credit and capital. Grant
payments to inhabitants of rural areas. Deferral of financial obligations and payment of liabilities.
Strengthening digital infrastructure.
Note: The OECD has created a Digital Hub on Tackling the Coronavirus (COVID-19), which includes policy briefs and country-by-country
COVID-19 economic measures and it is intended to grow and be continuously updated. Consult www.oecd.org/coronavirus/en.
Source: OECD (2020[42]), Policy Implications of Coronavirus Crisis for Rural Development, http://www.oecd.org/coronavirus/policyresponses/policy-implications-of-coronavirus-crisis-for-rural-development-6b9d189a/#section-d1e47.
Rural policy implementation and financing
The Ministry of Rural Development and Food has the primary responsibility for rural development issues
in Greece and co-operates with other relevant ministries across sectoral priorities.46
Greece’s rural development policy is formatively shaped by the EU’s Common Agricultural Policy (CAP),
which is composed of two pillars. The first, funded through the European Agricultural Guarantee Fund
(EAGF), is targeted at: i) the common organisation of the markets in agricultural products; and ii) direct
payments to farmers. The second, financed through the European Agricultural Fund for Rural Development
(EAFRD), is targeted at sustaining the rural development policy, which is designed to support rural areas
of the union and meet the wide range of economic, environmental and societal challenges of the 21st
century. The EC has established three overarching priorities for rural development policy: i) fostering
agricultural competitiveness; ii) ensuring sustainable management of natural resources and climate action;
and iii) achieving balanced territorial development of rural economies and communities, including the
creation and maintenance of employment.47 Rural policy in Greece are also shaped by funding measures
set out in the Development Law (4399/2016) which includes specific categories of financial aid to the
mountainous, border and insular areas and in areas facing population decline, and by a range of sectoral
policies that have implications for rural development (e.g. educational, transport, health).
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Greece’s rural development policy has the main objectives to promote sustainable and multifunctional rural
areas and to create a strong, competitive and viable agro-food system. EU states can choose from a menu
of 20 measures48 to serve the priorities they have identified in their rural development programmes, which
are implemented through the EAFRD and national funds. Greece has chosen to implement all of these
measures (Table 3.8).
These objectives are mainly achieved by:
Strengthening the competitiveness and productivity of the agro-food system and increasing the
value-added of domestic agricultural products.
Upgrading human capital and strengthening the entrepreneurial culture.
Protecting and managing natural resources and biodiversity, and mitigating and adapting to climate
change.
Providing basic services to improve the quality of life in the countryside.
Diversifying the economic base and strengthening social cohesion in rural areas (Ministry of Rural
Development and Food, 2019[43]).
This last priority is also identified as LEADER (a bottom-up local development approach pursued by local
stakeholders) and community-led local development (CLLD).
Table 3.8. European Agricultural Fund for Rural Development (EAFRD), Greece, 2014-20
Measure
Description
EAFRD
contribution
(EUR)
EAFRD
contribution
(%)
1
Knowledge transfer and information actions
55 000 000
1.17
2
Advisory services, farm management and farm relief services
125 000 000
2.65
3
Quality schemes for agricultural products, and foodstuffs
40 470 000
0.86
4
4.1 Investments in agricultural holdings
378 249 076
8.02
4.2 Investments in the processing, marketing and/or development of agricultural products
208 732 511
4.42
4.3 Investments in infrastructure projects related to the development, modernisation or
adaptation of agriculture and forestry
454 856 540
9.64
Other investments in infrastructure projects
106 538 575
2.26
5
Restoring agricultural production potential damaged by natural disasters and catastrophic
events and introduction of appropriate prevention actions
40 000 000
0.85
6
Farm and business development
374 374 279
7.93
7
Basic services and village renewal in rural areas
84 401 320
1.79
8
Investments in forest area development and improvement of the viability of forests
251 265 500
5.33
0.53
9
Setting up of producer groups and organisations
25 000 000
10
Agro-environment-climate payments
372 023 776
7.88
11
Organic farming
600 875 000
12.74
12
Natura 2000 and Water Framework Directive payments
7 500 000
0.16
13
Payments to areas facing natural or other specific constraints
950 005 216
20.13
14
Animal welfare
10 000 000
0.21
16
Co-operation
70 000 000
1.48
19
CLLD/LEADER
400 000 000
8.48
20
Technical assistance
50 000 000
1.06
Source: Ministry of Rural Development and Food (2019[43]), Rural Development Programme of Greece 2014-2020, https://ead.gr/home-en/grdpen/ (accessed on 9 June 2019).
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The total budget of the Rural Development Programme (RDP) in the 2014-20 period is EUR 5 880 000 of
which the EU funds approximately 80% through EAFRD, the remainder coming from national funds.
Among these priorities, the largest share of funds (42% out of total) has been dedicated to restoring,
preserving and enhancing ecosystems related to agriculture and food while the second-highest priority is
promoting resource efficiency and supporting the shift towards a low-carbon economy (20% out of total).
Strengthening farm viability and competitiveness is the third-highest priority (at 16% out of total RDP
funds).
The current national RDP (2014-20) is delivered through the Rural Development Operational
Programme,49 which covers the whole Greek territory. The target areas are the rural regions defined by
the typology of EU urban-rural regions in 2010 based on a revised OECD methodology. Specifically, rural
regions are defined by the intermediate and predominantly agricultural regions. The metropolitan regions
Attica and Thessaloniki are excluded from the programme; however, there are rural areas with important
primary production within these regions that are eligible for some specific RDP interventions. Overall, the
defined rural areas cover 94.3% of Greek territory (82.2% rural and 12.1% intermediate) and about half of
the total population (54.5%).50
Greece’s RDP is partially linked with the overall regional development policy as it entails components that
support the growth and competitiveness of regions, and a spatially balanced regional development pattern.
It is for example associated with the regional strategic smart specialisation, which has highlighted specific
sectors (some related to agriculture), in which research and innovation could contribute to developing an
important competitive edge. Moreover, the reduction of disparities in agricultural productivity and farm size,
or of the significant inter-regional variation in the age structure of farmers, constitute policies of the RDP
that aim at reducing spatial or socio-economic disparities and at contributing to economic prosperity. There
are specific measures to support the development of local agricultural production and to allay transport
cost in smaller Aegean islands.51
Beyond the RDP, direct payments (EAGF) have been a key safety net and a driver for the modernisation
of agricultural holdings. Greek farmers’ income is based on a large degree on CAP subsidies (nearly 70%
according to data of the Payment and Control Agency for Guidance and Guarantee Community Aid).
Future reforms of the CAP are planned. Post 2020, CAP will prioritise small- and medium-sized farms (by
providing a higher level of support per hectare) and place a cap on payments for fairer redistribution (EC,
2019[44]).52 Future reforms also plan a set aside of 2% of funding for young farmers, to encourage them to
join the profession. Other reforms include more ambitious environmental and climate action (e.g. soil
preservation, crop rotation and diversification). There are however risks for the future. The gradual decline
of CAP subsidies (due to the external convergence of the Basic Payment Scheme, the establishment of a
single Common Organisation of Agricultural Markets, the abolishment of quotas and Brexit) along with the
problems that the Greek agricultural sector faces (low productivity, single-cultivation, low self-sufficiency,
high imports, small farm size, low quality of products and high state taxes) could lead to serious turbulence
in the sector and a decline of farming income in the future. Greek agriculture needs to be more competitive
to be sustainable.
While both of the CAP funds (EAGF and EAFRD) are clearly targeted at rural areas through support for
farmers and rural development, there are also other European Structural and Investment Funds (ESIF) that
are important for rural development. The Partnership Agreement (ESPA 2014-2020) stipulates that 6.7%
of non-EAFRD allocations must be rural-specific. Beyond national policies that directly target rural areas
or sectors, there are a number of policies that may not specifically target rural locales but that impact them
nevertheless. For example, policies regarding the delivery of education and healthcare can impact access
in rural areas depending on how they are configured, e.g. regulations about school size and facilities can
lead to larger schools at greater distances in rural areas. Similarly, environmental policies, such as the
protection of watersheds and forests, can disproportionality impact rural areas since they constitute the
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largest share of land in the country. Fisheries and maritime policies are also relevant for rural areas,
e.g. improving the competitiveness of aquaculture and processing sectors (Box 3.10).
The national government’s rural policies therefore in practice extend much beyond those that are labelled
as “rural” if one considers the place-based impacts of policies broadly. A territorial lens on such overarching
policies can help ensure that they are adequately tailored to place.
Box 3.10. Fisheries and aquaculture
The Greek government seeks to foster the production of high-quality and high-value-added agricultural
and fishery products in less-favoured areas or areas with permanent natural handicaps such as rural
areas and islands. The Greek Operational Programme for 2014-20 under the European Maritime and
Fisheries Fund (EMFF) has two main priorities: sustainable fisheries and sustainable aquaculture. The
priority on sustainable fisheries envisages investments in the modernisation of fishing ports, auction
halls, landing sites and in the construction of fishing shelters, innovation in fisheries, the creation and
monitoring of artificial reefs, and protection and restoration of marine biodiversity. The aquaculture
priority aims at fostering environmentally sustainable, resource-efficient and knowledge-based
aquaculture. The EMFF supports productive investments in aquaculture, actions to improve innovation
in the sector, such as developing technical, scientific or organisational knowledge and the introduction
of new aquaculture species with good market potential and new or improved products and processes.
All OECD countries are advancing reforms in their fisheries management systems to improve the
profitability and sustainability of the sector. They are also working actively to promote the development
of aquaculture, which is seen as the future of fish production. These efforts include regulatory
improvements and increased spending on research, as well as cost-sharing with the private sector to
encourage investment. Aquaculture has been one of the fastest-growing forms of food production for
many years and growth in aquaculture can provide jobs and development opportunities in territories
with few economic alternatives. The emphasis is shifting from stimulating growth to putting the sector
on a sustainable footing for the future by addressing environmental limits and focusing on new
production technologies to increase competitiveness. To do so, most countries provide now support to
general services to the sector, rather than transfers to individual fishermen. Governments invest a
significant amount of resources to this kind of support, which includes management, enforcement,
research, infrastructure, marketing, community support, education and training, research and
development, and management of resources.
Source: (OECD, forthcoming[23]) (OECD, 2017[45])
Policy challenges: Opportunities for future growth
Agriculture is important in Greece – it is one of just four countries in the EU for which employment in
agriculture is above 10% of total employment. 53 The relatively low rate of decline in the number of farm
holdings over the crisis compared to many other European countries demonstrates the importance of
agriculture as a social safety net (Giannakis and Bruggeman, 2018[46]). It is further notable that agricultural
income increased from 2014 onwards compared to wages and salaries in other sectors of the Greek
economy (EC, 2018[47]). Despite this, it is clear that Greece is not meeting its agricultural potential. Over
half of the country’s 723 010 agricultural holdings have less than 2 hectares and are characterised by small
and fragmented land parcels (EC, 2015[48]). Among EU member states, Greece has the lowest value
produced per agricultural co-operative (Iliopoulos and Valentinov, 2012[49]). The vast majority of Greek
farm managers have no formal training – most only have practical experience (EC, 2019[50]). Other barriers
to the agricultural industry include a lack of a skilled workforce, low value-added, low levels of innovation
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as well as of R&D in the agricultural sector, and limited economies of scale given the small farm sizes.
Finally, investments in fixed assets, machinery and new technologies declined post crisis, also reducing
the competitiveness of the agro-food industry (Vassakis, Lemonakis and Voulgaris, 2016[51]).
Greek food production and manufacturing is a strength – but the sector needs to enhance its
competitiveness. A quarter of Greece’s overall industrial production is in agro-food and it is estimated by
the National Bank of Greece that Greece’s agricultural and food sector could bring an additional
EUR 12.2 billion per year into the economy and create 200 000 new jobs if it was brought up to modern
standards.
Greece’s regionally unique olive oil is a globally competitive product that could gain added-value
by shifting from bulk or low-branded to high-branded sales and by adopting regionally differentiated
products.
The wine and dairy industries are ripe for restructuring and would benefit from economies of scale
including partnerships to expand the distribution network (e.g. food sales through co-operatives in
Greece are less common than in other Mediterranean states). Greek wines have been on an
upward quality trajectory in the last decade and their export potential is underexploited (Vlachos,
2017[52]).
Fruit and vegetable production needs significant investments in production technology and
expanded distribution networks in order to be competitive.
Organic agriculture is increasing in Greece; however, the sector has lacked technical support,
information on consumer demand and a strong certification system supported by marketing and
applied research.
These dynamics are different in every region. The competitiveness of these sectors can be enhanced by
better co-operation on R&D with universities and research institutes and, critically, high quality agricultural
advisory services which are only very recently being developed. Beyond this, there is a need to strengthen
the system of product certification and standardisation. Employees and managers need continuous training
and specialised technical support given the comparatively low skills in the sector.
A key factor for Greece is accelerating the digital transformation of the economy. According to the EC
Digital Economy and Society Index (DESI) for 2019, Greece ranks 26th among the 28 EU countries, as
evidenced by Greece’s weak performance in terms of fast broadband connectivity and basic digital skills.
This implies a high risk of technological lag and digital illiteracy and of a low-productivity trap (Bank of
Greece, 2019[53]). The performance of Greece in the digital infrastructure is uneven and underdeveloped,
especially in rural and remote areas. In terms of connectivity, SMEs lag in their high-speed broadband
connections compared to large firms. In 2018, Greece had the poorest penetration rates in the OECD; less
than 10% of all firms with more than 10 employees were connected to a fixed high-speed broadband
(OECD, 2019[54]). Some important action was taken by the government54 but overall digital infrastructure
need to be strengthened and digital transformation of the economy sped up.
Another issue for Greece is to boost the export capacities for goods. Greece is less export-oriented than
other economies of a similar size. For example, Greece’s share of domestic value-added embodied in
foreign final demand stood at 22% in 2014, which is below that of Italy, Portugal and Spain (at 24%-30%)
(OECD, 2018[8]). Greece’s export market is dominated by basic commodity goods such as aluminium,
marble, olive oil, olives, feta cheese and fish from aquaculture farming. SMEs in the food sector
(e.g. yoghurt, smoked fish) present significant potential for value-added in export growth. Just 11% of SME
sales are exported compared to 18% across the EU (National Bank of Greece, 2018[55]). Greek SMEs were
hard hit throughout the crisis years as domestic demand dropped and access to credit tightened.
Fortunately, more than half of all export-oriented SMEs in Greece were able to increase their exports over
this time and as such, exports are driving growth in these tradeable sectors.
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The tourism industry has proven resilient and could expand niche offerings in rural areas (World Travel
and Tourism Council, 2018[56]). The share of high-income tourists has declined in recent years and the
sector is highly seasonal compared to similar touristic destinations. More could be done to cater to different
segments of the tourism market and to develop new areas – e.g. ecotourism and agritourism. Further, the
linkages with Greece’s food sector could be strengthened. Some commonly reported barriers to the tourism
industry in these regions include poor public investments, high interest rates for borrowing, licensing delays
and inadequate tourism education training (Magoutas, Papadoudis and Sfakianakis, 2018[57]).
Beyond these sectors, it is important to recognise that Greece has a rich natural landscape and unique
ecosystems that require protection. A large share of Greek territory is mountainous or forested and as
such, not suitable for agriculture. Greece is placing an increasing emphasis on managing these resources
and on protecting biodiversity and ecosystems (Law 3937/2011).
Overall, rural areas in Greece are diverse. While agriculture is important, it is by no means a sole activity
in many parts of the country. Taken together, some main issues for rural policy in Greece to tackle include:
Strengthening agricultural productivity and the competitiveness of the agro-food sector.
Strengthening the tradeable sector in rural areas through value-added activities and linking up to
export markets.
Supporting the development of rural tourism in key locations through touristic offerings and by
linking up to local food industries.
Strengthening the environmental management of rural areas and the valorisation of rural amenities
and ecosystem services.
Anticipating and adopting strategies to manage population decline in rural areas with respect to
how services and infrastructure are delivered.
The competitiveness of agriculture and the agro-food sector should be strengthened from
the bottom up
The agricultural and agro-food sector has been identified as a key development opportunity in rural areas.
The economic crisis, while devastating, also encouraged farmers to improve the quality and marketing of
their products (i.e. design, packaging, marketing, broaden value chains or exporting markets) in order to
direct to greater market size and to achieve higher profits (Tsiapa, 2019[58]). However, serious impediments
continue to undermine agricultural productivity. Greece has largely adopted a policy of status quo in an
effort to maximise CAP payments. There has been no concerted effort to transform the agricultural
production system by, for example, favouring large farms or certain crops. There are ongoing debates
about the future of agriculture in the country and how productivity can be increased. Should Greece focus
its efforts on larger scale agriculture which produces higher volumes at lowers costs or should it focus on
strengthening smaller farms that produce high quality and niche products at a higher cost? To what extent
should Greek agriculture focus on internal versus external markets for these commodities? What is the
future of agriculture in Greece and how can the country be more strategic with its investments?
Greece would do well to adopt a middle ground between these approaches by strengthening larger
commercial farms where they are possible and focusing on increasing the potential of smaller- to mediumsized ones where they are not. Greece is not characterised by the types of large farms that exist in France
or Italy for the most part and as such is not competitive in many parts of the country on high-volume lowcost crops (there are exceptions such as Greek cotton production). Greece’s comparative advantage is
that it is small, diverse and has a large number of customers who come to the country every year for
tourism. In effect, an external market is brought to the country. In 2016, Greece received a record number
of international tourist arrivals for the fourth consecutive year, totalling 28 million visitors, an increase of
7.5% in 2015 (OECD, 2018[59]). To date Greece has not adequately taken advantage of these linkages –
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local supply chains catering to tourism are weak. While some parts of Greek agriculture can grow in
volume, other parts need to grow in value and need to be better connected to the domestic tourism market.
Key strategies to strengthen Greek agriculture and agro-food competitiveness are threefold:
New measures are needed to preserve and strengthen agricultural land.
Systematic and professional farm extension and advisory services are needed to strengthen
innovation.
Producer groups and co-operative enterprises are needed to promote value-added processing,
production and marketing and to capitalise on Greece’s rich agricultural diversity.
These initiatives will not be successful if they are applied in a top-down manner. In order for the Greek
agricultural and agro-food system to innovate and build economies of scale so that smaller producers can
deliver high-value goods to local and international markets, local actors need to be galvanised in this
collective work and place-based initiatives are needed, focusing on locally and regionally specific assets.
Agricultural and farmer’s organisations need to be rebuilt to be effective partners in the sector’s
development. Inter-branch organisations (IBOs) need to be strengthened. These are organisations of
farmers and processors or traders in the supply chain supported by the EU. IBOs carry out many activities
for their members and provide a means of allowing dialogue between actors in the supply chain, and in
promoting best practices and market transparency. As of 2017, Greece has seven recognised IBOs for a
variety of food products (e.g. wine, olive oil, tobacco). Recognition of IBOs is optional in most sectors but
is mandatory in the olive oil, table olives and tobacco sectors. Beyond these actors, LEADER’s local action
groups (LAGs) could play a stronger role in supporting the agro-food sector and connecting this to local
tourism strategies.
Preserving and consolidating agricultural land
Around 55% of Greece’s total land area is agricultural land and most of the country’s agricultural land is
located in the plains of Macedonia, Thessaly and Thrace (FAO, 2015[60]). Greek agricultural holdings are
characterised by small and fragmented plots such that even small farms of a few hectares can be split up
into multiple plots. This makes them inefficient to manage and means that equipment needs to be moved
greater distances. Economies of scale offered by modern farming practices have limited impact on the
small plots of land typically used in Greece and other investments in productivity enhancements will have
little impact if farm sizes remain very small and it will be harder to attract a new generation of farmers. It
bears noting that Greek data on land fragmentation needs to be interpreted with caution due to the common
practice of renting land to others and of farming under different registered names and tax numbers across
multiple plots. What may look like a fragmented land tenure system may in fact be managed by one farmer.
This does not make the issue of farmland consolidation less important; rather, it has arisen as a strategy
to make agricultural production feasible.
Land consolidation is difficult and entails decreasing the number of separate and non-adjacent plots and
improving the spatial configuration and location of these plots relative to dwellings and service structures.
The consolidation and management of land in this way can help to establish larger plots, thus reducing the
number of small-scale and inefficient farms. Land consolidation and exchange can also be used to counteract
the ongoing fragmentation of the agrarian structure – thus 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 dating back to the 1950s (EC, 2013[61]). The main measures to date are:
The subdivision of agricultural land below the minimum parcel size of 0.4 hectares is not permitted
(since 1979).
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There are tax exemptions on the transfer and purchase of farmland for farmers under 40 years of
age and those purchasing land adjoining agricultural land already owned by the buyer.
Despite this, progress in land consolidation has been slow. Regional authorities in Greece are responsible
for land re-parcellation – but this is not a well-resourced function and, as such, has not produced results
in most places. Regions need to be better resourced to fulfil these roles. Creating markets for the exchange
of fields among farmers in a community is a complex process. Options to address this include establishing
co-operatives to amass this land and cultivate it jointly or to facilitate long-term leases between parties that
have land with adjoining borders as a first step to assemble large contiguous parcels of land. There should
be targeted strategies to consolidate fragmented land in areas that show the most potential and which are
well connected to markets and infrastructure.
Even where land re-parcellation occurs, these changes will be undermined by the tax exemptions offered
by the inheritance or inter-generational transfer of agricultural land and by rules that allow the land to be
inherited in different pieces. Agricultural landowners pass on their plots of land to their children, reducing
the size of the plots and this is encouraged by the tax system. Other countries have rules about breaking
agriculture plots of land into pieces and instead stipulate that the land must be transferred to someone who
will farm it. It is estimated that around half of the agricultural land in Greece is rented to others, though
there is no official data on this matter.
Beyond farm size, the preservation of agricultural land in good condition is also an issue in Greece. Greece
has the third-highest loss of agricultural productivity in the EU due to soil erosion (after Slovenia and Italy)
(Bilas et al., 2016[62]). More effective spatial management in rural areas should be implemented to protect
prime agricultural lands and prevent soil erosion. Greece’s Ministry of Agricultural Development and Food
has recently developed a national geodatabase of soil data for all agricultural areas of the country in
support of a multi-purpose master plan for agricultural land management (Bilas et al., 2016[62]). The
integrated system is expected to provide important electronic services and benefits to farmers, private
sector and governmental organisations. The Master Plan for Agricultural Land Management includes soil
quality maps for 30 agricultural crops, together with maps showing soil degradation risks. This new
database shall provide the tools for soil conservation and sustainable land management; however, the
system of managing agricultural land needs to be strengthened in order for these tools to be put to good
use. Countries across the OECD have adopted a range of approaches to address these issues. For
Greece, France’s national Society for Land Development and Rural Settlement (SAFER) may be of
interest. SAFER has adopted a broad mandate which is connected to local economic development
(Box 3.11).
Box 3.11. National institutions to manage agricultural land: France
France’s national Society for Land Development and Rural Settlement
The French national programme – the Society for Land Development and Rural Settlement (Société
d’aménagement foncier et d’établissement rural, SAFER) – was established in 1960 to purchase
farmland when it comes up for sale to help existing farmers increase the size of their farm to boost
efficiency and facilitate new entrants into farming. SAFER is a non-profit agency with a mandate to
assist in farm reorganisation, make farmland more productive and encourage young people into the
profession. Today its mandate is a bit broader, with a focus on protecting farmland and the natural
environment and supporting the development of the local economy. The organisation purchases
agricultural land for resale to farmers or public authorities in order to maintain a specific pattern of land
use in an area. It can also rent land for agricultural purposes, take on projects to maintain local
landscapes and conduct studies on agricultural land prices. By law, SAFER is offered the right of first
refusal to purchase agricultural land in order to maintain farms of a specific desired size
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(Articles L. 143-1 and L. 143-2 of the Rural Code). SAFER has regional offices throughout France.
Agricultural land management is regulated by the state through regional departments of agriculture
together with SAFER.
Source: OECD (2017[21]), The Governance of Land Use in France: The Cases of Clermont-Ferrand and Nantes Saint-Nazaire,
http://dx.doi.org/10.1787/9789264268791-en.
Strengthening 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 because of the low innovation of Greek agriculture. Innovation is the main
means by which farms increase their productivity over time through new crop varieties, new inputs and
new production technologies. The current EU financial perspective (2014-20) places a special emphasis on
programmes to support agricultural innovation.
Farm advisory and extension services are a key part of agricultural innovation. These services are
underdeveloped in Greece (Michalopoulos, 2017[63]), highly fragmented and scarcely effective with national
organisations largely focused on bureaucratic administration related to CAP and a lack of specialised local
services that meet the demands of modern agriculture (Konstantidelli et al., 2018[64]). Informal agricultural
education and training are provided by the Organisation of Agricultural Vocational Education, Training and
Employment (DEMETRA) which is supervised by the Ministry of Rural Development and Food. There are
71 branches across Greece which offer educational programmes which mainly offer one-month
educational programmes intended for farmers eligible for participation in various EU programmes
(e.g. modernisation schemes and the establishment of young farmers).55 These are sometimes viewed as
a rubber stamp for EU funding eligibility (Karantininis, 2017[65]). Training programmes are also provided by
local co-operatives and private agencies, such as farm equipment/supply companies and certification
bodies which certify quality systems in agricultural production or private agronomists. In some countries,
local action groups (LAGs) have played some role in these types of services but, in Greece, LAGs have
been very infective in this regard (Koutsouris, 2014[66]).
Overall, Greece’s current system of advisory and extension services is not adequately connected with
modern agricultural developments. There are a number of options to strengthen agricultural advisory and
extension services in Greece across public, private and hybrid models. The Ministry of Rural Development
and Food has announced at the beginning of the programming period the putting out of tenders for
agricultural advisory services to deliver formal training and accreditation through a national system of
farming councillors who will support producers irrespective of co-financed programmes. This system aims
to be more flexible and responsive to farmers’ needs but it does not address connections to R&D and
remains an advisory, not an extension service. Advisory registers are foreseen in existing legislation (see
Law 4214/2014, article 28 paragraph 8) but the majority are inactive.
In terms of the potential of private agricultural advisory services, the current Greek situation with a large
share of very small low-income farms makes paying for advisory services challenging. Private services at
present mostly cater to larger farms and often focus on developing grant applications for EU subsidies
since they can be paid from the proceeds. While EU financial support can be a source of improved farm
productivity, it is more likely to occur if a farm is provided with comprehensive advice, including innovative
solutions. Private services are also provided by large agrochemical corporations that have a clear conflict
of interest in the services that they provide. An independent system would be more effective.
Further, Greece 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 (e.g. the Institute of Agro-biotechnology, the University of Thessaly, the Food Industrial Research
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and Technological Development Company (ETAT). Digital technologies could help better link up the value
chain. Public policies should promote collaborative schemes involving digital technologies. A particular
challenge in many OECD countries is linking advice in agronomic practices to farm financial management.
Promoting local producers’ groups and co-operatives
Smaller-scale Greek agriculture needs some kind of co-operative organisation to build scale in order to be
competitive and to market on the basis of quality and regional identity. Small-scale producers have difficulty
developing a marketing channel for their products. An individual small farm has a relatively small amount
of surplus production that can be sold after household consumption is met and it is usually hard to develop
a relationship with a broker, distributor or processor that allows the residual production to be sold. The
typical fall-back option is to rely on direct marketing either through a farm stand or through a farmers’
market. Commercial food distribution channels cannot easily deal with individual small farms due to: high
fixed costs of contracting for a small volume of product, potential problems with the farmer meting required
quality standards and intermittent supply from a single farm. While a large-scale farm may be able to contract
directly with a processor or distributor, small-scale farms require an intermediary which can aggregate small
amounts from multiple producers to obtain a large enough amount of uniform quality to be attractive to the
processor or distributor. However, introducing an aggregator adds significant cost that is reflected in lower
prices to the farmers. The aggregator has costs, associated with identifying farmers, assembling products
from diverse sources and verifying quality, that can be significant. Further, unless there is a large enough
quantity of output that is produced over multiple months, the marketing interval may not be long enough to
justify setting up as an aggregator. As the number of farms increases and the amount of production of
individual farms declines, the viability of an aggregation business also declines.
Market imbalances in bargaining power between small farmers relative to large food processing companies
is a sensitive policy issue. One possible solution is for farmers to form a production and marketing
co-operative that provides advice to farmers on production methods to ensure uniform and high-quality
products, and pools production to facilitate sales to distributors and processors. Because the farmers own
the co-operative, it has no incentive to extract a profit margin, which should maximise benefits to the individual
farmer. However, while co-operatives are in principle attractive solutions to the marketing challenge of smallscale farms, they have been found to be difficult to operate due to low volume, large numbers of producers
and challenges in maintaining consistent quality. All of these add costs that have to be spread across all
producers, which can reduce a farmer’s interest in participation. In Greece, an additional residual issue is
the distrust many farmers have of external agencies that impose management conditions, even if they are
collectively owned and not part of the state.
The public sector can play an important role in both strengthening collective initiatives and encouraging
them where they are less prevalent by creating platforms to share knowledge between groups and
determining best practices in order to better understand the risks involved in setting up and participating
in such groups and the benefits they can bring to members. A strong national agricultural product marketing
initiative, complemented by region-specific initiatives, can help export more of its output. A modern and
efficient network of producers’ groups strengthens market access for Greek agricultural products. Beyond
this, public policy has a role to play in strengthening the attractiveness of co-operatives. Greece has huge
untapped potential in the area of co-operatives when compared to other EU countries: 39% of food sales
are done by co-operatives in the EU as a whole and 42% in the Mediterranean bloc but this figure is only
17% in Greece (Georgiopoulou, 2018[67]). It is reported that changes in agricultural and tax policies in
Greece have acted as a disincentive for farmers to organise in co-operatives as it becomes impossible to
forecast the expected profit (Michalopoulos, 2017[63]). Furthermore, the national law on co-operatives has
been revised multiple times over the past six years. Co-operatives need a consistent legislative
environment in order to be effective.
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Box 3.12. The co-operative model in Trentino, Italy
The farming structure in the Autonomous Province of Trento (Italy) has always been characterised by
the presence of a large number of small enterprises, family-based and endowed with relatively small
portions of land. Each farm has on average an extension of 1.5 hectares and this condition had a
negative influence on the productive structure. Economies of scale were precluded with adverse effects
in efficiency and performance. The solution was found in the co-operative system.
Co-operatives account for 80% of the provincial agricultural production and manage almost all the
marketing and distribution activities of local producers. The evident positive performance of the
agricultural co-operatives in Trentino is due to the idea of vertical integration and concentration
(economies of scale), implemented over time by the Federation of Trentino Cooperatives and the
Autonomous Province of Trento.
This means that the first level co-operatives, spread over the territory, have a direct link between
members and the co-operative structure, offering advice and resources to the small producers.
The second level co-operatives, namely the consortia, are governed by a pact among co-operatives to
develop all marketing functions and relations with the value chain. Mastering on the accumulated
experience, the second level consortia organised their strategic goals to increase market shares in final
product markets through aggressive sales efforts. They were supported by aggregation, facilities
operating at optimal scale and efficient managerial functions, enabling co-operatives to reach
economies of scale. Consortia focus their marketing strategy on quality factors, in particular those
involved in production and reflecting the consumer’s preferences, instead of using discounts or
promotions to underbid competitors. They avoid to pressure on product prices and address their
strategic design and incentives on members to innovate in quality and sustainable production
techniques. Being able to capture part of the increased marketing margins, the gains return to the active
owners preserving their entrepreneurial responsibility.
The third level, the Federation of Trentino Cooperatives, is at the centre of the system composed of
first- and second-level co-operatives. It unites, represents, protects and promotes the interests of the
associates. The federation is a legally recognised organisation that brings together over 500 companies,
active in all productive sectors, and a social base consisting of about 280 000 people. This is an element
that distinguishes the co-operative movement in Trentino from others. All sectors of entrepreneurship
and all the merchandise areas in which the Trentino co-operation operates find in the federation a
unitary centre of representation and assistance. An integrated group of rural and co-operative banks
support the system.
Source: OECD (2014[68]), The Co-operative Model in Trentino - Italy,
https://www.oecd.org/cfe/leed/150202%20The%20cooperative%20model%20in%20Trentino_FINAL%20with%20covers.pdf.
Rural economic diversification should be fostered
Greece’s Rural Development Programme (RDP) focuses on enhancing farm viability and competitiveness,
preserving and enhancing ecosystems and promoting local development in rural areas across a wide range
of measures such as water and soil management, modernising agricultural holding, marketing and
investment support for developing short supply chains and agro-food businesses and training for farmers
and other rural businesses (EC, 2015[48]). While Greece’s rural development goals are not entirely confined
to agriculture or natural resources, they remain largely focused on these sectors and the vast majority of
funds under the RDP are allocated to these activities. Greece’s rural economies are diverse and efforts
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are needed to strengthen entrepreneurship, innovation and extroversion for sustainable job creation. This
is also a goal of RDP funds that can be more adequately targeted towards these ends.
A case in point is LAGs which are part of the EU LEADER programme. The LEADER programme, which
was first adopted in the 1990s, has played a critical role in reorienting rural development beyond agricultural
policies only across Europe. The approach has been so successful in rural areas that it was subsequently
expanded to three additional EU funds under CLLD (ESF, EMFF and ERDF).56 In rural areas, LAGs are
established at the initiative of local governments, entrepreneurs and civil associations within a certain
territory or community in order to implement objectives related to the LEADER programme. LAGs are a
form of “special association” where, at the decision-making level, private partners and associations must
make up at least 50% of the local partnership. LAGs decide the direction and the content of the rural
development strategy and take decisions about the different projects that are financed under the LEADER
programme – there are 70 such groups in Greece which are referred to as development authorities
associated with a particular area. In many EU countries, these are used to galvanise holistic local
development strategies around key assets and local competitive advantages. For example, in Poland,
LAGs are named according to the focus of their development strategy, often valorising local assets, culture
and cuisine.
In Greece, LAGs have focused more on delivering basic services. These are important functions but do
not form a multi-sectoral local development strategy. In the current programming period, integrated spatial
development is one of the implementation tools meant to strengthen rural-urban partnerships. LAGs are
responsible for the main strategy design, the proposal submission, and the management and
implementation of the project but interviewees have expressed several times that these initiatives have
been quite slow to get off the ground. Greece’s LEADER/CLLD network reports that the administrative
burdens and financial requirements associated with the programme are very high and that this has
hampered the efforts of these actors to focus on implementation and local innovation (Lampropoulos, N.;
Elanidou, 2018[69]). It has also led to delays in the implementation of the programme. For example, just
two years before the official end of the programme programming period, no LAG had managed to publish
a call for proposals in Greece (Lampropoulos, N.; Elanidou, 2018[69]).
LAGs are meant to have public, private and third sector involvement. In Greece, as in some other countries
across the EU, initiatives have been disproportionately driven by local governments. In the forthcoming
period, there should be a concerted effort to build economies of scale among LAGs and to more greatly
involve private sector partners in determining local development priorities and shaping initiatives that can
have a longer-term impact. The LAG “Finest Greek Tastes” is a positive example of how to create such
inertia; it was established in the 2007-13 programming period and has continued to operate as an NGO
(Box 3.13). The LAG has focused on marketing and promotion, but efforts are also needed to support
product development through, for example, food incubators that provide commercial-grade kitchens and
that help individuals meet health and safety requirements and food regulations. LAGs could be more
effectively used in Greece to support business development in key sectors and help smaller firms grow
and diversify their products and services. They need private sector partners to deliver on these objectives.
Box 3.13. Building scale through LEADER – A collaborative network to promote quality Greek
products
As LAG groups are small, one of the key strategies to strengthen the impact of their initiatives is to develop
multi-stakeholder co-operation projects. The LAG “Finest Greek Tastes” is an example of this. The
LEADER co-operation project which took place over the 2007-13 period involved 21 LAGs and more than
50 municipalities, working together to promote quality Greek products based on local culinary traditions
and culture. The partnership was used to showcase quality Greek products but also the full range of skills,
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knowledge, rituals, symbols and traditions for producing, preparing and even consuming food in Greece.
Around 5% of the project funding was private. This initiative led to the establishment of the Finest Greek
Tastes Network made up of LAGs, municipalities and institutions from across Greece which focus on
research and scientific presentation of the values of Greek cuisine; and promotion and marketing of quality
Greek products to international markets, including through a marketing plan, videos, website, events and
publicity material. Finest Greek Tastes is now an autonomous non-profit entity, giving it a firmer basis to
continue its work beyond the project funding.
The groups focus on marketing and promotion benefits existing companies. LAGs can also play an
important role in helping new business develop as well. In the food sector, food incubators are particularly
important as they help individuals access commercial-grade kitchens and meet food regulations.
Source: ENRD (2019[70]), Finest Greek Tastes, https://enrd.ec.europa.eu/projects-practice/%E2%80%98finest-greek-tastes%E2%80%99_en.
Rural innovation should be pursued
The underlying logic of smart specialisation is to support activities that result in tradable goods or services
and while each region focuses on its opportunity to export, it must also assess the possibility that other
regions may be better positioned and are more likely to capture market opportunities. This discussion is
particularly relevant for Greece’s rural regions where the usual approach of expanding formal research in
high-technology industries to increase the role of these fast-growth sectors in the local economy is much
less relevant. Very little of the economic base of most rural regions can be characterised as high-tech,
advanced manufacturing or ICT-related. A relatively small share of the local workforce has an advanced
degree or even a tertiary education. Low population density, small and dispersed settlement over a large
geographic area limit interaction among people and firms. Similarly, small local markets and a small labour
force make diversification and the opportunity for “related variety” innovations limited.
However, in a rural context, smart specialisation can become a way to facilitate a stronger exogenous
growth process. If the scope of the opportunities for support is expanded beyond the usual format of exportoriented high-technology products and formal research then the concept becomes more generally
applicable. As noted by Charles, Gross and Bachtler (2012[71]), “smart specialisation should not be seen
as being about technologies as such but about knowledge and its application, and this applies to all sectors,
even agriculture and craft-based industries”. A large share of the firms in rural regional economies are
SMEs with no formal R&D activity but, in some cases, they have considerable ability to innovate, although
in ways that are not easily detected since, for example, no patent is filed. Process innovations, innovations
protected by trade secrets or innovations that remain hidden because the firm is far from competitors can
be locally significant but do not neatly fit into a smart specialisation strategy. Innovations in the delivery of
services or in goods that are not export-oriented are also not captured but can lead to increased
productivity and improved quality of life (Box 3.14).
Box 3.14. Entrepreneurship and innovation in rural areas
Innovation in rural areas relies to a great extent on the action of local entrepreneurs. While some
innovations are imported from urban places either by the local branch plants of large multinational
companies or by the transfer of ideas developed for initial use elsewhere, these innovations tend not to
be fully embedded in the local economy. By contrast, innovations that come from local people are more
likely to be based on better uses of local resources or on new ways to solve problems for which an
existing solution is not available.
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The key issue for public policy is identifying ways to stimulate latent entrepreneurs to act on their ideas
and to develop better support mechanisms for them when they do choose to act. There are two distinct
motives for rural entrepreneurs that must be recognised. The first is a simple profit motive where the
entrepreneur perceives that there is a current gap in the market that can be filled by his or her actions.
The second is known as “user innovation”, where an individual has a problem in their life or business
for which no adequate solution is available, so they invent one. It is only after the invention that the idea
of becoming an entrepreneur occurs.
Essentially, support for innovative rural entrepreneurs takes two forms. The first entails ensuring that
existing support for innovation does not discriminate against rural entrepreneurs. Forms of
discrimination include: a focus only on formal innovation systems where science-based research and
development activity is a prerequisite for support, focusing support only on innovations that have the
potential for rapid growth (gazelles), requiring that innovation be novel in a national or international
context before it can be supported, establishing high minimum funding levels and complex application
procedures that can be difficult for individuals or small firms to deal with, and concentrating efforts to
promote innovation in urban areas. The second is broader-based support for small rural business,
including assistance in moving from identifying an idea – the latent entrepreneur – to then acting on
that idea and developing a business plan and to actually starting a business. In rural areas, the first of
the three steps can be the most difficult. In many rural areas, there is not a strong tradition of
entrepreneurship, and in almost all rural areas, there are few peers who can be looked to by someone
interested in starting an innovative business.
Financing a start-up can be a particular challenge in rural areas because the financial intermediation
system is weak. Incomes are lower in rural areas, leading to less ability for the entrepreneur to raise
equity funds from own sources or family and friends. Banks tend to be less capable of assessing
business plans and are more risk-averse. Start-up costs can be higher in rural areas because facilities
may have to be constructed rather than rented and equipment must be imported. Mainstream venture
capital is designed to bridge this gap but is primarily designed for high-growth/high-return ventures
which are also not normally evident in rural areas. Many rural areas have bridged this gap through the
creation of community development finance institutions (CDFI) which provide revolving loan funds to
local SMEs and start-ups. The initial capital for the institution may be raised from the local community,
other financial institutions and government. CDFIs can be banks, credit unions, loan funds, microloan
funds or venture capital providers. CDFIs are normally accountable to their local community and operate
on a not-for-profit basis with legislative and funding support from governments.
Source: Elaboration based on US Treasury (2016[72]), “Community Development Financial Institutions Fund”,
www.cdfifund.gov/Pages/default.aspx (accessed 9 January 2016).
Co-ordination of rural, regional and agricultural policies should be strengthened
The Ministry for Rural Development and Food has largely focused its efforts on the agricultural sector and
the maximisation of the CAP financial resources and their distribution to farmers (Koutsouris, 2014[66]).
This is a common critique of CAP policies, particularly when they are driven by a national agriculturefocused ministry as in the case of Greece. 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. At present, the Greek national
government has a number of policies that address the rurality and peripherality of small islands. There are
compensating measures to help deliver services and reduce transport costs for these areas. But there is
no overarching rural development strategy apart from the EU Cohesion Policy/ESIF intervention. The
question is how to adapt current rural strategies, which are often sector-based, to take into account the
different development needs of rural regions, many of which are based on exploiting specific local
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resources. Designing rural development policy for different communities or territories involves pooling the
knowledge held by a wide variety of public and private actors. Adjustments are thus needed both at the
central and local government levels and between the different levels of government.
This process requires political commitment to overcome sectoral tendencies and an overall clarification of
roles and responsibilities of different ministries or agencies in the field of rural development. Consistency
is required to ensure that individual policies are not contradictory and that they converge in a coherent
strategy. Co-ordination is needed between the central government, between the central and subnational
governments and at the local level to integrate sectoral approaches, to involve private partners and to
achieve the appropriate geographic scale.
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.
At present, Greece’s representatives of regional authorities or of other public bodies, which are responsible
for issues of state aid, employment, environment, tourism, culture, health, research and innovation, public
administration, etc. can participate in the Monitoring Committee which is set up to monitor the
implementation of the program in agreement with the Managing Authority for the Rural Development OP.
Furthermore, regional and local bodies compose the National Rural Network together with the members
of the Rural Development Programme Monitoring Subcommittee, composed by social-economic partners
and civil society. However, this network’s vast number of members (almost 200) means the level of
engagement between actors is mostly focused on communications rather than shaping policy actions.
Some countries have established a specific Council of Ministers with a rural mandate in order to address
this issue but in meetings of equals, there can be no leading authority. Finland has adopted a unique
approach to co-ordinating rural policy across sectors – one that combines elements of the broad rural
policy along with forms of vertical and networked governance. Finland’s Rural Policy Committee is a
35-member co-operation body appointed by the Finnish government which draws its membership from
national ministries, regional co-operation bodies, trade unions, the federation of higher education and
training institutions, the association of local authorities, the ombudsman for the LEADER programme,
associations of producers of agriculture and forestry products, and the Village Action Association of
Finland. The committee is presently led by a representative of the Ministry of Agriculture and Forestry.
Seven thematic networks also support the work of the Rural Policy Committee and the realisation of
Finland’s National Rural Policy Programme 2014-20.
An alternative approach to the co-ordination of national policies that impact rural areas is “rural proofing”,
which was first adopted in the English context. Rural proofing entails considering the likely impact of policy
decisions on rural areas, and, where necessary, adjusting the policy to take into account the particular
needs of those who live in, work in or enjoy the countryside. This approach encourages the early
assessments of expected or likely impacts in rural areas. Canada adopted a similar approach at the end
of 1990s with a “rural lens” – a checklist of considerations to determine if a policy or programme addresses
priorities for rural Canada. The effectiveness of such approaches is a matter of debate, with some arguing
that it can act as a form of tokenism that does not in fact adequately inform policy development at an early
stage (Shortall and Alston, 2016[73]). Rural proofing is only as effective as underlying commitments to rural
development.
There is no one best solution to overcoming inherent divisions between regional, rural and agricultural
policies. The type of network approach that Finland has adopted is enmeshed in its culture of
decentralisation and multilevel governance. Similarly, rural proofing does not offer a one-size-fits-all model.
However, beyond governance structures, the inherent silos between these policy domains can be
addressed at an organisational level as well. 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.
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Fostering productivity, competitiveness and job creation
Greece faces two competitive pressures and a strategic choice. On the one hand, Greece – at the
European Union’s periphery – faces competition in goods and services from countries with low labour costs
such as Turkey. On the other hand, Greece also faces competition within Europe from countries with higher
labour costs but considerably stronger technological and productive capacities. A general challenge for
Greece is to strengthen value-added services and activities in enterprises and to scale up and cluster
activities in order to boost productivity and generate employment. Raising labour productivity is not only
essential for long-term economic prosperity but also the only way to ensure sustainable wage growth.
Beyond economic output and income levels, productivity matters for many other dimensions of well-being
(OECD, 2018[2]).
Regional development strategies should, therefore, address not only a substantial increase in economic
activity and employment but also the reallocation of resources to more productive uses, for example
fostering sectors and areas of competitive advantage in order to shift towards more dynamic and innovative
ones that have higher added-value and that can compete in the EU and international markets.
Business development and innovation
Strengthen SMEs and value-added activities in enterprises is a priority to increase
productivity and generate employment
The vast majority (99.9%) of enterprises in Greece are small- to medium-sized – i.e. firms with less than
250 employees. SMEs constituted approximately 86.5% of employment out of the total business economy
in enterprises but just 54% of value-added in 2018 (OECD, 2019[54]). Greece’s business landscape is
particularly dominated by microenterprises. Among all SMEs, microenterprises with between
1-9 employees are the largest share of all business types in Greece at 56%, which is significantly above
the OECD average of 30% (Figure 3.5). These small firms have limited banking access, limited access to
capital markets, no venture capital and weak business planning. Meanwhile, Greece also has a much lower
share of employment in medium- (10-49 employees) and large-sized enterprises (50-249) compared to
the OECD average. Social entrepreneurship in Greece is low (only 1% compared to 6% in the EU) (OECD,
2019[54]). Between 2010 and 2016, labour productivity among Greek SMEs declined in all sectors and size
classes, with the exception of medium-sized wholesale and retail trade firms. The drop was especially
pronounced in professional, scientific and technical activities, and in micro-firms in the manufacturing, and
wholesale and retail trade sectors (OECD, 2019[54]).
There are low levels of innovation and R&D except for Attica and Thessaloniki. Concerning the spatial
allocation of research, technology and innovation (RTI) activities, the national system has been highly
centralised, as it is clear that the capital region of Attica represents the vast majority of RTI performance.
Nevertheless, when regional GDP is taken into account, the region of Crete, which hosts the University of
Crete, the Technical University of Crete and the Foundation for Research and Technology, shows the
highest research and technology intensity in Greece (Chrysomallidis and Tsakanikas, 2017[74]). Greece
lags behind the OECD average both in business and government spending on R&D activities, which
amount to 0.28% and 0.54% of GDP respectively (in 2015) (OECD, 2018[8]). While the number of
researchers in Greece is above the OECD average, research productivity in terms of the number of patents
per researcher and R&D spending is low. Because Greek businesses are small, they tend to buy
technology (mainly imported from abroad). There tends to be poor co-operation among private companies
and insufficient research potential in firms. While the innovation performance of Greek SMEs is in line with
the OECD median, medium-sized firms exhibit a sub-par performance in R&D and SME participation in
R&D has declined since 2010 (OECD, 2019[54]). Greek SMEs lag in knowledge-based capital investment
and firms were negatively impacted by the brain drain that occurred during the crisis. There are important
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skills deficiencies. These are related to both level of education but also very low workplace training (OECD,
2019[54]).
Credit conditions in Greece have not recovered to the pre-crisis levels. In 2017, 23% of Greek SMEs
reported finance as their most pressing problem against the EU28 average of 7% and the number of SMEs
applying for bank financing more than halved between 2010-17. The internationalisation performance of
Greek SMEs remains one of the weakest in the EU with less than 10% of Greek SMEs currently exporting
(OECD, 2019[54]). FDI tends to concentrate on a limited number of locations, self-selecting into regions and
sectors of high productivity and thus acting to heighten existing spatial imbalances.
Figure 3.5. SME employment and value-added
Percentage of total employment (value-added), 2016
Employment
Value added
OECD
%
60
50
40
30
20
10
0
SMEs
Large
Source: OECD (2018[75]), OECD Structural and Demographic Business Statistics Database, http://dx.doi.org/10.1787/sdbs-data-en.
Box 3.15. The impact of COVID-19 on SMEs
In less than three months in the first quarter of 2020, the COVID-19 crisis developed into a global
pandemic. Preliminary OECD analysis (April 2020) shows that there are several ways the coronavirus
pandemic is affecting the economy, especially SMEs. On the supply side, companies experience a
reduction in the supply of labour. Measures to contain the disease by lockdowns and quarantines lead
to severe drops in capacity utilisation. Furthermore, supply chains are interrupted leading to shortages
of parts and intermediate goods. On the demand side, a dramatic and sudden loss of demand and
revenue for SMEs severely affects their ability to function, and/or causes severe liquidity shortages.
Furthermore, consumers experience loss of income and heightened uncertainty, which in turn reduces
spending and consumption. These effects are compounded because workers are laid off and firms are
not able to pay salaries. The impact of the virus could have potential spill-overs into financial markets,
with further reduced confidence and a reduction of credit. These various impacts are affecting both
larger and smaller firms. However, the effect on SMEs is especially severe, particularly because of
higher levels of vulnerability and lower resilience related to their size.
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Businesses, including SMEs, will bear the brunt of a reduction in global demand for their products and
services. This impact may particularly be felt in specific sectors such as tourism and transports, but also
amongst those SMEs catering for local markets where containment measures have been introduced.
SMEs are particularly vulnerable to the disruption of business networks and supply chains, with
connections with larger operators and the outsourcing of many business services critical to their
performance. Costs for prevention as well as requested changes in work processes, such as the shift
to teleworking, may be relatively higher for SMEs given their smaller size but also, in many instances,
the low level of digitalisation and difficulties in accessing and adopting technologies. If production is
reduced in response to the developments, the costs of underutilised labour and capital weigh greater
on SMEs than larger firms. Given the limited resources of SMEs, and existing obstacles in accessing
capital, the period over which SMEs can survive the shock is more restricted than for larger firms.
Many countries are urgently deploying measures to support SMEs and the self-employed during this
severely challenging time, with a strong focus on initiatives to sustain short-term liquidity. Such policies
take various shapes. Some countries have focused on more general policies that have the potential to
cushion the blow for the economy and all businesses. For instance, in many countries, central banks
have stepped in to support lending by alleviating monetary conditions and enabling commercial banks
to provide more loans to SMEs. In April 2020, many countries have introduced SME specific policy
measures:
Several countries have introduced measures related to the shortening of working time,
temporary lay-offs and sick leave, some targeted directly at SMEs. Similarly, governments
provide wage and income support for employees temporarily laid off or for companies to
safeguard employment. In many cases, countries have introduced measures specifically
focused on the self-employed.
In order to ease liquidity constraints, many countries have introduced measures towards the
deferral of tax, social security payments, debt payments and rent and utility payments. In some
cases, tax relief or a moratorium on debt repayments have been implemented. Also, some
countries are taking measures regarding procedures for public procurement and late payments.
Several countries have introduced, extended or simplified the provision of loan guarantees to
enable commercial banks to expand lending to SMEs. In some cases, countries have stepped
up direct lending to SMEs through public institutions. Several countries are providing grants and
subsidies to SMEs and other companies to bridge the drop in revenues.
Increasingly, countries are putting in place structural policies to help SMEs adopt new working
methods and (digital) technologies and to find new markets and sales channels to continue
operations under the prevailing containment measures.
Note: The OECD has created a Digital Hub on Tackling the Coronavirus (COVID-19), which includes policy briefs and country-by-country
COVID-19 economic measures and it is intended to grow and be continuously updated. Consult www.oecd.org/coronavirus/en.
Source: OECD (2020[76]), SME Policy Responses, http://www.oecd.org/coronavirus/policy-responses/coronavirus-covid-19-sme-policyresponses-04440101/.
Policies for business development and innovation
Strengthening entrepreneurship, supporting business development and enhancing the innovativeness of
businesses have been top priorities for Greece’s national and regional governments for some time. For
example, enhancing business competitiveness and extroversion, shifting to qualitative entrepreneurship
spearheaded by innovation and higher domestic added-value is a priority both in the National Growth
Strategy and for the Partnership Agreement (ESPA) 2014-2020. As such, two main national policies
address this issue:
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Greece’s Development and Investment Laws, which are financed by the Public Investment
Programme and framed by the National Development Programme, currently: i) Law 4399/2016
“Regulatory framework for the establishment of state aid schemes for private investments for the
regional and economic growth of the country”; and ii) Law 4635/2019 “Invest in Greece and other
provisions”, which will be fully implemented from the end of 2020 and introduces reforms covering
a wide range of fields with the scope to improve the business environment and facilitate productive
investments.
The national sectoral Operational Programme for Entrepreneurship, Competitiveness and
Innovation (EPAnEK) within the European Structural Funds financing.
Beyond this, there are also Regional Operational Programmes (ROPs) for each region which address
these priorities mainly within the respective Regional Smart Specialisation Strategies. EPAnEK and the
ROPs are expected to contribute to the proposed shift in the growth model of the Greek economy from
non-tradable into tradable sectors, and cluster development of innovative and out-turned sectors with a
sustainable competitive advantage.
EPAnEK is managed by the Ministry of Development and Investments and covers the whole of Greece.
Just over half of the funds (EUR 4.72 billion public – EUR 3.69 billion EU contribution) are directed towards
research and innovation activities in sectors with competitive potentialities/advantage (agro-food, energy,
supply chain, cultural and creative industries, environment, tourism/culture, ICT, health,
material/constructions). Around a third of the funding is expected to contribute to upgrading the country’s
infrastructure related to business development and innovation through investments in research centres,
broadband and NGA infrastructures and energy efficiency interventions. Around 18% of the funding is
allocated to skills development and labour market matching and the remainder is for technical assistance.
Taken together, the national sectoral OP for Entrepreneurship, Competitiveness and Innovation delivers a
mix of hard and soft investments and are funded by a mix of ERDF and ESF.
The national Development Law 4399/2016 and EPAnEK are generally complementary – e.g. both focus
on enhancing the competitiveness of SMEs and improving the technological development and
competitiveness of firms (Table 3.9). However, there may be some potential issues. For example, the
national Development Law advocates for the re-industrialisation of the country while EPAnEK includes
supporting a shift to a low-carbon economy. The two may need to be aligned, depending on what kind of
re-industrialisation is supported.
In previous EU Cohesion Policy programming periods, investments in SMEs and industry were often
focused on physical infrastructure over priorities for long-term growth-generating R&D and human capital
projects (Medve-Bálint, 2018[77]). The current 2014-20 programming period places a concerted effort on
increasing the knowledge and building networks to support more innovative and productive businesses. In
effect, EPAnEK has ushered Greece in a new development paradigm that showcases the key role of
productive, competitive and export-oriented sectors, such as tourism, agro-food, as well as processing and
high added-value services. It has focused attention on the need to increase the scale/size of production
units, accelerate the introduction of new products/services that create a competitive edge to Greece and
the individual regions and incorporate new knowledge, producing high-quality products that are competitive
on a global scale. Smart specialisation strategies at the national and regional levels have arisen as a key
feature of this approach. The following section describes these strategies and how they could be
strengthened in the future.
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Table 3.9. Policy priorities for entrepreneurship, business development and innovation, Greece
Law 4399/2016, 2016
Openness and innovativeness
Job creation
Developing the country’s human resources with an emphasis on
the employment of trained human resources to reverse the
current exodus of young scientists
Attracting foreign direct investments
High added-value
Improving the technological level and the competitiveness of
enterprises
Smart specialisation
Developing networks, synergies, co-operative initiatives and
generally supporting the social and solidarity economy
Encouraging mergers
Developing sections and interventions to enhance healthy and
targeted entrepreneurship with a special emphasis on small and
medium entrepreneurship
Re-industrialisation of the country
Supporting areas with reduced growth potential and reducing
regional disparities
National Sectoral OP for Entrepreneurship, Competitiveness and
Innovation, EPAnEK, 2014-20
Strengthening research, technological development and
innovation
Enhancing access to, and use and quality of, ICT
Enhancing the competitiveness of SMEs
Supporting the shift towards a low-carbon economy
Preserving and protecting the environment and promoting
resource efficiency
Promoting sustainable transport and improving network
infrastructures
Promoting sustainable and quality employment and supporting
labour mobility
Investing in education, training and lifelong learning
Improving the efficiency of public administration
Source: National Development Law, 2016; National Sectoral OP Entrepreneurship, Competitiveness and Innovation, EPAnEK, 2014-2020.
Policy challenges
Strengthening and mobilising networks of entrepreneurs and researchers
The Entrepreneurial Discovery Process (EDP) entails collecting and analysing diverse information held by
entrepreneurs or embedded in firms and public institutions. Incentives and instruments for disclosing this
information (e.g. through stakeholder consultations, public-private partnerships) are key to the success of
this approach. This entails working with entrepreneurs to identify their knowledge-based strengths at the
regional level and in a more exploratory approach in which public decision-makers listen to market signals
using a range of assessment tools (e.g. Strengths, Weaknesses, Opportunities, Threats [SWOT] analysis,
surveys) and mechanisms such as public-private partnerships, technology foresight and road-mapping to
name a few.
National and Regional Research Councils of Innovation were created in Greece to support the EDP. While
at the national level many interviewees have reported that Greece’s National Council for Research and
Innovation has functioned well, at a regional level they have not always been fully resourced and
operationalised. These councils are formed by members from the research, academic and business
sectors (the national ones also include two members from the regional councils). These entities could, if
well-resourced, determine areas of focus, co-operate with other regions, including those with other
countries and better connect academia and businesses to encourage investments in innovation rather than
purchasing it.
Targeted policy intervention should support actions for Greek regions in:
Strengthening their Entrepreneurial Discovery Process (EDP) and mobilising regional networks in
a meaningful way in order for their smart specialisation strategies to be successful. These networks
will look different in every region. Some regions have more developed formalised research
institutions in the public sector while in others, this is more business-led. The RIS3 strategies need
to be outward-facing and based on local intelligence.
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Ensuring that Regional Councils for Research and Innovation do not form a new layer of
bureaucracy. They should be a flexible network that galvanises action to implement the RIS3. They
should work to build trust among key actors and break down some of the well-recognised silos that
currently exist between different research institutes and between the public and private sectors.
Developing additional network structures. While Regional Research Councils are one important
mechanism to strengthen the connections between research centres, universities, large
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.
Enhancing capacity in regions to formulate their own studies. For example, Greek regions lack
systematic data on scientific research and institutional mapping of their entrepreneurship
ecosystem.
Some regions are already taking positive steps. For example, Central Macedonia and Crete are making a
priority focusing on facilitating ties between industry and research bodies as well as developing regional
databases of entrepreneurship and stakeholders.
Better linking research to the needs of businesses
Greece has extensively used EU Structural Funds to finance research (ERDF) as national public funding
is not sufficient. This has all its restrictions and length imposed by the regulations on the structural funds
(e.g. categories of regions, predefined targets etc.). Moreover, the scarcity of public funding for research
has contributed to an opportunistic supply‑driven research system.
At present in Greece, research and innovation are distanced from enterprises. Universities and research
centres do not tend to pay enough attention to business needs and the national innovation system has
been dominated by established institutions that used to operate in isolation (mostly financed by the Horizon
2020 programmes). For example, Greece is a number one country in shipping but there is no specialised
support for the shipping sector. At the same time, co-operation and financing of, mostly, public research
centres and universities by the private sector face stiff resistance (OECD, 2018[8]). In sum, there are limited
connections between businesses and the private sectors.
Target policy intervention should support actions for:
Developing a comprehensive programme (e.g. Industry 4.0) with specific measures to support
SME research and development needs. Greece has recently established the Hellenic Foundation
for Research and Innovation with an initial budget of EUR 240 million over the next 3 years from
public funds and the European Investment Bank (EIB). The foundation has been created to
promote scientific quality and excellence financing research projects and researchers. The
foundation could be used to put out special calls that are aligned with the Smart Specialisation
Strategies and that include specific incentives for partnerships (Box 3.16). The 2016 and 2019
Development Laws establishing state aid schemes for private investments also provide financial
incentives to boost R&D and foster collaboration between industry and R&D centres. All these
measures may be uniformed and united in a single strategy.
Strengthening the “knowledge triangle” (education, research and innovation) through dedicated
policies and aligned incentives (e.g. tax exemptions or tax incentives)57 that promote research,
technology diffusion, entrepreneurship and foster closer ties between businesses, research
centres and universities. This would further contribute to increasing R&D spending and the ICT
sector’s share in GDP. Overall, a strengthening of the knowledge triangle would lead to the digital
transformation of the economy, an increase in the stock of knowledge and productive capital, the
development of outward-oriented sectors and, more generally, to a knowledge economy and
society (Bank of Greece, 2019[53]).
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Simplifying procedures and speeding up time for financing from EU Structural Funds. Major
shortcomings for the utilisation of Structural Funds from SMEs are the issues of complexity of
procedures and timing. Very few private firms have the internal capacity to instruct dossiers for
funding and no firm would wait for a year or so before they know if they have obtained the financing
to develop something related to their strategic growth. While attempts to simplify procedures are
ongoing, late payments could be addressed by adopting an open season with revolving calls.
Box 3.16. Interfaces and platforms for technology transfer
Germany - Joint Initiative for Research and Innovation (renewed in 2016) and High-Tech Strategy (since
2014)
It puts emphasis on research commercialisation and academia-industry partnerships. This is on line
with the recent emphasis given to the creation of user-oriented environments and tighter public-private
co-operation.
Portugal - Interface Programme (2017)
It aims to enhance Portuguese products through innovation, increased productivity, value creation and
technology incorporation by supporting Technological Interface Centres and SMEs, enhancing their
linkages to the innovation system and providing incentives for hiring researchers and qualified staff. It
also includes the creation of Collaborative Labs across the country and Suppliers’ Clubs to facilitate the
integration of Portuguese SMEs into GVCs. The Interface Programme provides EUR 1.4 billion to
technology transfer and cluster certification.
Source: OECD (2019[54]), OECD SME and Entrepreneurship Outlook 2019, https://doi.org/10.1787/34907e9c-en.
Strengthening and expanding business services for SMEs
While Smart Specialisation Strategies are a key part of regions’ entrepreneurship and innovation
strategies, equally important are core services for businesses. This is particularly the case given the
structure of Greek businesses and the preponderance of microenterprises. Greece does not have a welldeveloped system of business advisory services. There is a strong need for active face-to-face support in
terms of mentoring, training, advisory and counselling services that can help business navigate regulations,
access finance and connect to the relevant networks and expertise. Such services can support valueadded in business activities, encourage firms to grow and access new markets and help smaller firms
access local value chains.
These services need to be staffed by very knowledgeable people who can help businesses access a range
of supports in a fluid way. One emerging best practice is to have business clients of one-stop-shops
providing integrated services greeted by a business navigator who is able to discern the types of services
that the client needs to access as opposed to requiring the client to navigate this themselves.
Other complementary strategies to business services include:
Expanding e-services. Greece has strengthened its e-services for firms in recent years (e.g. value
added tax [VAT] can be filed electronically) and there are new Citizen Engagement Programme
(CEP) citizen service centres. E-CEP services could further strengthen the ease of doing business
and reduce operating costs.
Increasing the availability of incubators for small firms. Microenterprises are smaller than the EU
average and have higher interest rates and higher operating cost. These small firms have limited
banking access, limited access to capital markets, no venture capital and no corporate governance
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in mind. They need incubators for providing what microenterprises cannot afford by themselves,
including training for corporate governance.
Adopting specific measures to boost export capacities. This is a real priority which needs dedicated
measures. For example, Italy has adopted a unique approach to helping SMEs overcome barriers
to accessing foreign markets through a programme that supports the costs of hiring a temporary
export manager (as part of the 2015-17 Special Plan for the Made in Italy Promotion). The
programme helps SMEs to hire a full-time or part-time temporary employee to work in the small
business in order to help them establish marketing, sales, accounting, information technology and
other processes needed to export to a new market. There is an element of training involved in the
programme as well. Once the individual has developed systems to support or enhance a firm’s
export capacities, this knowledge is passed on to existing staff in the business and the temporary
export manager goes on to support other small businesses. The programme entails
two components: a training programme for temporary export managers and a voucher for SMEs to
partially cover the cost of employing a temporary export manager. This programme serves to both
help firms access new markets and build their internal capacity to continue to do so through
employee training.
Developing dedicated support for social enterprises. A social enterprise is any private activity
conducted in the public interest, organised with an entrepreneurial strategy, but whose main
purpose is not the maximisation of profit but the attainment of certain economic and social goals
and which has the capacity for bringing innovative solutions to the problems (OECD, 2017[78]).
Social enterprises require business support. However, a one-size-fits-all approach to business
support that expects social enterprises to require the same services as entirely commercial
enterprises is likely to be suboptimal if the offer of information, advice and consultancy and so on
fails to acknowledge the social dimensions which are central to the creation of social enterprises.
“Braided support”, which incorporates both general business support and support specifically
tailored to meet the needs of social enterprise, can be more effective for the start-up and
development of social enterprises.
Developing a broader view of innovation – Beyond the traditional science and technologybased model
While the national government is focused on technology and science-driven innovation as the core of smart
specialisation strategies, demand-driven innovation in the form of applications, entrepreneurship, userdriven innovation, and innovation in services and organisations is equally important for Greece. While the
production of inventions may continue to be concentrated in a small number of metropolitan regions, all
regions can benefit from adopting these inventions in the form of regional innovations. It is the ability to
adopt and adapt new and existing knowledge that separates higher growth regions from slower growth
ones.
Thus, some key lessons for Greece in formulating regional smart specialisation strategies in regions that
do not have a strong science and technology-based innovation system include the following:
It is important not to focus on the level of technology when identifying target sectors but on sectors
that have future growth potential in the region. This could be in: primary industries, such as forestry,
fishing, mining or agriculture; manufacturing, whether it is traditional heavy industry, boat building
or specialised components; or services including tourism, healthcare delivery or job training.
The selection has to reflect an existing competency, not simply an aspiration. It is also important
that the projected demand for a particular good or service be large enough that providing it will
have a noticeable impact on regional output and employment. There need not be an immediate
increase but there should be clear potential for significant growth over time.
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Regions should build on existing capabilities. By extending the local demand for input or by using
a by-product from the production of current output, the local economy can grow organically without
having to establish a completely new production process.
There is considerable opportunity in traditional industries for future economic growth, and regions with a
strong comparative advantage in these industries should carefully assess how they can invest in increasing
the competitiveness of local firms as a central element of their smart specialisation strategy (Wintjes and
Hollanders, 2011[79]). While these sectors may not benefit from the push effect of formal R&D investments,
they can benefit from the demand for product or process improvement, and there are opportunities for
small-scale innovations by entrepreneurs and existing SMEs based on local knowledge. Finally, the
importance of regions importing inventions and knowledge developed elsewhere and using it for local
innovations cannot be overemphasised as a way to increase the competitiveness of local firms.
Overall, innovation strategies that are grounded in “mixed modes” of innovation (i.e. R&D and non-R&D
driven) can better capture the value that innovation offers. Such strategies support the R&D dimension
and promote associated product and process innovations, without ignoring the value of new marketing or
organisation methods. It should be noted that the relationship is somewhat circular as new organisational
methods can facilitate the introduction of new production processes or new products, which can eventually
lead to additional developments in organisational methods, etc. (OECD, 2018[80]).
A broader definition of innovation can generate a series of “how to” questions that should be considered
when designing an innovation policy. These include: how to localise R&D and science to push forward
change and create value; how to encourage innovation; how to shift demand and reduce cost; how to use
existing knowledge in new ways and generate new knowledge; and how to manage the uncertainty
associated with promoting innovation, as outcomes are never guaranteed – a factor that affects investment
and investment potential (OECD, 2018[81]).
OECD countries are increasingly shifting away from innovation-based predominately on R&D activity
towards a more diverse definition and broader innovation approach (OECD, 2018[81]). Industrial policy is
also evolving across the OECD through greater regional-level involvement, for example through regional
development agencies, subnational government collaboration with local universities and companies, and
more actively engaged citizens. Finally, the instruments used to support innovation are also adapting. For
example, start-up laws are being introduced, there is increased support for targeted groups (e.g. lagging
companies), financing mechanisms are expanding to include grants as well as tax incentives, policy
supportive procurement is taking hold and more private sector funding is underway. Reliance on
competitive and co-operative mechanisms, such as science funding, networks, clusters, platforms and
public-private partnerships (PPPs), is also on the rise, as is the digitalisation of innovation policies. All of
these shifts underscore the multifaceted nature of innovation and innovation policy and highlight the need
for an attractive innovation ecosystem (Box 3.17).
Box 3.17. OECD principles and characteristics of an enabling environment for innovation
The OECD identifies five policy principles and four characteristics of an enabling environment for
innovation that can help guide policymakers as they think through innovation policies and programming.
Innovation policy principles
1. Empowering people to innovate.
2. Unleashing innovation in firms.
3. Creating and applying knowledge.
4. Applying innovation to address global and social challenges.
5. Improving the governance and measurement of innovation policies.
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Characteristics of an enabling environment for innovation
A skilled workforce – one that has the knowledge and skills to generate new ideas and
technologies, to bring them to the market and to adapt to technological changes across society.
A sound business environment – one that encourages investment in technology and knowledgebased capital, and that also enables innovative firms to experiment with new ideas, technologies
and business models, helping them to grow, increase their market share and reach scale.
A strong and efficient system for knowledge creation and diffusion – one that engages in the
systematic pursuit of fundamental knowledge, and that diffuses this knowledge throughout
society through a range of mechanisms, including human resources, technology transfer and
the establishment of knowledge markets.
Policies that encourage firms and consumers to engage in innovation and entrepreneurial
activity – more targeted innovation policies that can help strengthen markets for innovation and
focus policy on specific challenges and opportunities, e.g. green growth, including at the
regional or local level. Moreover, well-informed, dynamic, engaged and skilled consumers are
important for innovation and their role can be facilitated by specific consumer policies.
Source: OECD (2010[82]), The OECD Innovation Strategy: Getting a Head Start on Tomorrow, http://dx.doi.org/10.1787/9789264083479-en.
Maritime and blue growth
Maritime and blue growth play a very important economic and strategic role for Greece. Blue growth is the
EU long-term strategy to support sustainable growth in the marine and maritime sectors as a whole. Seas
and oceans are drivers for the European and Greece economy and have great potential for innovation and
growth. It is the maritime contribution to achieving the goals of the Europe 2020 strategy for smart,
sustainable and inclusive growth. The strategy consists of three components: 58
Develop sectors that have a high potential for sustainable jobs and growth, notably: aquaculture,
coastal tourism, marine biotechnology, ocean energy.
Essential components to provide knowledge, legal certainty and security in the blue economy:
i) marine knowledge to improve access to information about the sea; ii) maritime spatial planning
to ensure efficient and sustainable management of activities at sea; iii) maritime surveillance to
give authorities a better picture of what is happening at sea.
Sea basin strategies to ensure tailor-made measures and foster co-operation between countries
(Adriatic and Ionian Seas, Arctic Ocean, Atlantic Ocean, Baltic Sea, Black Sea, Mediterranean
Sea, North Sea).
The Blue Economy includes all those activities that are marine-based or marine-related sectors (EC,
2020[83]):
“Established” sectors include: marine living resources, marine non-living resources, marine
renewable energy, port activities, shipbuilding and repair, maritime transport and coastal tourism.
“Emerging and innovative” sectors include some marine renewable energy (i.e. ocean energy,
floating solar energy and offshore hydrogen generation), blue bio-economy and biotechnology,
marine minerals, desalination, maritime defence and submarine cables.
“Emerging” sectors offer significant potential, especially as regards renewable energies where the EU is in
the lead, hosting 70% of global ocean energy (wave and tidal) installed capacity in its waters. The maritime
defence sector accounts for over 177 000 jobs in the EU and within blue bioeconomy sectors, the algae
sector generated an estimated turnover of over EUR 350 million. Desalination continues to be a key sector
for those countries that are more likely to suffer water shortages (e.g. Greece, Spain), not least as a result
of climate change, even if with important side effects (brine, energy consumption, etc.) (EC, 2020[83]).
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The blue economy is linked to many other economic activities and its impact goes beyond the abovementioned sectors and encompasses all sectoral and cross-sectoral economic activities based on or
related to the oceans, seas and coasts:
Marine-based activities: include the activities undertaken in the ocean, sea and coastal areas, such
as marine living resources (capture fisheries and aquaculture), marine minerals, marine renewable
energy, desalination, maritime transport and coastal tourism.
Marine-related activities: activities which use products and/or produce products and services from
the ocean or marine-based activities like seafood processing, biotechnology, shipbuilding and
repair, port activities, technology and equipment, digital services, etc.
In 2018, the contribution of established blue economy sectors to the overall EU economy was 2.2% in
terms of employment (down slightly from 2.3% in 2009) and 1.5% in terms of GVA (down from 1.7% in
2009). Established blue economy sectors in Greece employ around 533 5470 people and generate over
EUR 8.4 billion in GVA. Overall, blue economy jobs decreased by 7.4% and GVA by 36.1% compared to
2009. Nonetheless, the share of the blue economy in the Greek national economy continues to be
substantial: in terms of jobs, in Greece, it contributes 14.2% of all national jobs, the highest share in the
EU. In terms of GVA, Greece ranks fourth with the blue economy contributing to 5.2%. Greece’s blue
economy is dominated by coastal tourism, which contributed 85% to blue jobs and 69% to blue GVA in
2018. Maritime transport is also a large contributor, with 13% of the GVA and 3.8% of the employment,
while marine living resources generates around 7% of jobs and GVA (EC, 2020[83]).
According to the Union of Greek Shipowners,59 2016-17 saw the first signs of improved market conditions
for global shipping after a long and deep recession. Greek shipping continues to hold the first position
internationally. Greek shipowners control 36% of the world’s oil tanker fleet, 48.6% of the world’s ore and
bulk carrier fleet and 6.5% of the world’s chemical and products tanker fleet.60 As such, Greek shipping
plays an indispensable role in world seaborne trade including the EU’s export-import trade and in particular
in securing the EU’s energy needs through the provision of sea transportation. The contribution of Greek
shipping to the country is multifaceted and not limited to the receipts in the balance of payments (BOP)
from maritime transport services. It ranges from indirect economic investments to employment
opportunities and raising the profile of the country internationally by being a strategic trade (EC, 2020[83]).
Box 3.18. The EU Integrated Maritime Policy
The EU Integrated Maritime Policy seeks to take account of the inter-connectedness of industries and
human activities centred on the sea and to provide a more coherent approach to maritime issues, with
increased co-ordination between different policy areas.
It focuses on:
Issues that do not fall under a single sector-based policy, e.g. "blue growth" (economic growth
based on different maritime sectors).
Issues that require the co-ordination of different sectors and actors, e.g. “marine knowledge”.
It specifically covers these cross-cutting policies:
Blue growth.
Marine data and knowledge.
Maritime spatial planning.
Integrated maritime surveillance.
Sea basin strategies.
Source: EC (n.d.[84]), Integrated Maritime Policy, https://ec.europa.eu/maritimeaffairs/policy_en.
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Policy implementation and financing
Helping finance the Blue Economy
The EU is making increasing use of mechanisms to leverage the financial support that it provides from its
own funds with investment from other public or private sources. In 2014, former EC President Juncker
announced the Investment Plan for Europe. EUR 21 billion in guarantees coming from the European
Institutions (EU budget and EIB own funds) leveraged a European Fund for Strategic Investment (EFSI)
of EUR 315 billion (later extended to EUR 500 billion based on EUR 33.5 billion guarantees). Up to the
end of 2019, EFSI has contributed with over EUR 1.4 billion in funding to EUR 8 billion worth of offshore
wind projects as well as substantial support to other parts of the blue economy including port development
and clean shipping (EC, 2020[83]).
Besides large projects like the wind farms, the EFSI also focuses on stimulating access to finance for
SMEs, which make up a substantial part of the blue economy – up to 70% of the added-value in
shipbuilding for instance. It is these companies that are capable of delivering the innovations needed to
compete on the global market and meet the growing demand for low-emission, environmentally friendly
products and services. The largest sectors were the blue bioeconomy and renewable energy, a broad
category covering ideas to make aquaculture more efficient or more respectful of ecosystems or to produce
new products such as nutraceuticals. In this context, the EC and the European Investment Fund (EIF)
decided to set up a BlueInvest Platform for SMEs in 2019. This encompassed a package of measures
including coaching for investment readiness and grants up to EUR 22 million in 2019 and EUR 20 million
in 2020, for the final steps of the new business plans (e.g. demonstration, certification, marketing, etc.). In
line with the EU’s move towards leveraging its support, the grants were made conditional on letters of
intent from investors – either from the public or the private sector. In addition, EUR 75 million worth of
liquidity from the EIF (with a 95% guarantee from EFSI) was made available in 2020 for investing equity in
funds specialising entirely or mostly in the blue economy or co-investing in particular companies (EC,
2020[83]).
The OP for support from the European Maritime and Fisheries Fund in Greece
The Operational Programme "Fisheries and Maritime 2014-2020" for support from the European Maritime
and Fisheries Fund in Greece (EMFF OP) aims to achieve key national development priorities alongside
Europe 2020 objectives. The OP addresses the general reform of the Common Fisheries Policy (CFP) and
fully supports the priorities defined in the EMFF regulation. The main objectives of the OP aim at enhancing
the viability of the sea fisheries sector, the competitiveness of aquaculture and processing sectors and the
sustainable development of traditionally fishery-dependent areas. The programme also addresses the
need for protection and rehabilitation of the marine environment and its living resources, the control of
fishery activities, the collection of fishery data and aims at fostering the implementation of the Integrated
Maritime Policy (IMP).
The OP has a total budget of approximately EUR 522 888 660 (EUR 134 110 746 the national co-financing)
and it is managed by the Ministry of Rural Development and Food. Funding priorities include:
Fostering the viability and the sustainable development of the Greek fisheries sector as well as the
protection of the fishing/marine resources (33.6% of total OP allocation).
Fostering environmentally sustainable, resource-efficient, innovative, competitive and knowledgebased aquaculture (15.9% of total OP allocation).
Fostering the implementation of the Common Fisheries Policy (CFP) by improving the collection
and management of data as well as with provisions of support to monitoring, control and
enforcement (17.6% of OP resources).
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Promoting the maintenance of the economic and social sustainability of the Greek fisheries and
aquaculture areas, the creation of jobs and the diversification within and/or outside the fisheries
and aquaculture sectors and the implementation of community-led local development (CLLD)
strategies (13.5% of OP resources).
Fostering marketing and processing of fishery and aquaculture products (15.0% of OP allocation).
Fostering the implementation of Integrated Maritime Surveillance, with particular focus on the
development of part of CISE (Common Information Sharing Environment) (1.1% of OP allocation).
Technical assistance (3.3% of OP resources).
Policy challenges: Building on Greece’s maritime tradition and strategic advantages
Benefitting from a large merchant fleet, a long maritime tradition, a strategic location for sea trade and
hosting top sea tourism destinations, Greece is well placed to chart ambitious maritime policies that boost
growth and employment. The country’s growth strategy aims at capitalising on the shipping industry’s
strength to expand its economic benefits, developing the port and shipbuilding sectors through
privatisations and fully exploiting its competitive advantage in sea and coastal tourism. Already a significant
European gateway for Asian seaborne trade, Greece has the potential to develop into a major intermodal
transport hub with sizeable port cluster and logistics sectors. The National Action Plan for Logistics
supports the country’s goal to become a leading logistics hub by increasing transit and developing valueadded services. Concerning sea transport, initiatives are taken to enhance shipping efficiency and maritime
operations. The revision of the National Ports Strategy also seeks to enhance competitiveness, through
the upgrade of port technologies and the promotion of cruises, sea tourism and the greening and
digitisation of ports. Maritime transport is vital for Greece’s territorial cohesion and therefore upgrading
commuting and communication between the islands and the mainland is a further priority (Government of
Greece, 2019[85]).
To ensure continued and sustainable growth and well-being in Greece’s regions and islands, a number of
challenges regarding blue growth and maritime policies need to be addressed. They include:
Shipping. Shipping’s contribution to the national economy is estimated at around 7% of GDP in
2017. The Greek-owned fleet is placed 1st on a global scale (about 4 536 vessels) and 8th
considering only the 670 vessels under the Greek flag. While Greece represents only 0.15% of the
world population, Greek-owned ships represent almost 21% of the global tonnage, 53% of the EU
deadweight tonnage (DWT). The Greek shipping cluster is a successful bright spot in the Greek
economy. More than 1 430 shipping companies – active in ocean-going shipping – and an
additional 3 674 maritime companies – mainly active in cabotage, fishing, maritime support
services and short-sea shipping – operate in Greece. This highlights Piraeus as a worldwide
maritime centre and a base of expertise in the technical and commercial management of vessels.
These companies offer direct employment to over 16 000 employees and constitute the driving
force for the entire maritime cluster, employing, directly and indirectly, 190 000 people. The receipts
in the services’ BOP from maritime transport are estimated at 9% of the national GDP for 2018.61
The inflow of service payments from maritime transport is estimated at around EUR 17.3 billion for
2019, an increase of 2.3% compared to 2018 when the corresponding inflows reached
EUR 16.6 billion. The shipping contribution includes, among other things, indirect financial
investments, employment opportunities and the promotion of the country’s image at the
international level, as an important commercial and strategic partner. One of the top priorities of
the Ministry of Maritime Affairs and Insular Policy is to attract more vessels to the Greek flag,
increase the number of shipping companies and promote Piraeus as a ship-management centre
of global scale. This is achieved by a range of measures to reduce red tape, increase digitisation
and simplify procedures for registering vessels. A relevant key requirement, which is intended to
result in a significant reduction in the national unemployment rate, is to attract more Greeks to
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maritime professions by upgrading maritime education as well as improving the image of the
maritime profession among young Greeks (Government of Greece, 2019[85]).
Shipbuilding and repair. The once-thriving shipbuilding industry of Greece, currently plagued by
complex legal, market and technical issues on account of past mismanagement, is potentially a
source of sizeable growth and a target for significant investment. Efforts are continuing to unlock
the productive potential of main shipyards such as Elefsina, Neorion, Perama-Piraeus, Salamina
and Skaramangas. The necessary legal framework was set up to allow for the development of
small shipyards for wooden tourist vessels (Government of Greece, 2019[85]).
Port policy. The port industry, which is closely tied to the logistics sector and the wider field of
intermodal transport, is of vital importance to the national economy. The upgrade of rail and road
links in Northern Greece and the Balkans, which is already underway, will expand the hinterland of
Greek ports to Central Europe. The privatisation of the port of Thessaloniki was concluded in 2018,
following that of Piraeus. In 2017, the port of Piraeus jumped from 44th to 38th place in the Lloyd’s
List Global Ports Top 100. Meanwhile, Piraeus holds the top position in Europe in terms of
passenger traffic. Legislative measures (Law 4504/2017) have resulted in limiting bureaucracy and
the provision of mechanisms/tools to port authorities in order to finally legalise certain port
installations. The ministry is working towards enacting a new sustainable national port
management system. Apart from the latter and in line with the ongoing revision of the national
ports’ strategy, during the next decade, priority is expected to be given to the implementation of
planned and remaining projects for the ports belonging to the Greek part of Orient East Med
Corridor. Key priorities are also the enhancement of ports’ connectivity and the promotion of port
logistics’ hubs, the marine tourism sector’s upgrade, the sustainable reorientation of the cruise
sector towards addressing local needs and the insular character of the country, the revitalisation
of port-city relationships, the integration of the port dimension in the national marine spatial
planning and the boosting of green and ICT investment technologies in ports (Government of
Greece, 2019[85]).
Maritime education. Greece is investing in maritime education in order to meet a large part of the
excess demand for officers and crew projected for the coming decade. An extensive programme
of upscaling Greek Maritime Academies is underway, which focuses on combatting understaffing
and upgrading buildings and equipment. Furthermore, virtually all maritime academies have signed
memoranda of understanding (MoUs) for co-operation with local universities offering maritime
education courses. Recent legislation (Law 4205/2017) provides for the establishment of another
two Vocational Training Centres for Captains and Ship Engineers as well as a School for Rescue
and Firefighting Means. Lastly, a study assigned by the ministry to develop a framework law for
national maritime education is currently underway (Government of Greece, 2019[85]).
Sea tourism. The development of homeporting in Greece remains the top priority of the National
Coordinating Committee for the Cruise Sector, established in 2016. In 2017, the Ministry of
Maritime Affairs undertook an initiative to combat the illegal chartering of tourist vessels, which had
grown over the past years. A recent lifting of restrictions, inter alia in crew composition, has resulted
in the liberalisation of the market for mega-yacht chartering, which is expected to attract both
domestic and EU charterers and to elevate island tourism further (Government of Greece, 2019[85]).
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Box 3.19. The Greek new government’s plan to boost domestic shipping
Greece’s newly elected government (2019) is developing a threefold plan to boost the domestic
maritime industry.
The first part of the initiative will comprise measures to make the Greek flag more attractive to Greek
shipowners, who control the world’s largest merchant fleet (20% of the global fleet in DWT).
The second part concerns bringing investment into the country’s ports and particularly to Piraeus.
The third part of the plan is to promote marine tourism, such as yachting and other activities that have
the potential of bringing in significant revenues.
The plan integrates actions to promote maritime and shipping professions to the younger generations.
Moreover, under a new bill which will be enacted shortly, Greece will for the first time develop a National
Strategy for the Integrated Maritime Policy (IMP) in the islands, introducing innovative financial tools to
support inter alia innovative entrepreneurship in the fields of blue growth and blue economy.
Source: Safety4Sea (n.d.[86]), Homepage, https://safety4sea.com; Ministry of Maritime Affairs and Insular Policy (2020).
Attractiveness and sustainable tourism
Tourism is a central pillar of Greece’s economy
In 2018, Greece received a record number of international tourist arrivals for the sixth consecutive year,
totalling 33.1 million visitors, an increase of 9.7% on 2017. Overnight stays in Greece totalled over
230.7 million, compared to 213.5 million in 2017. Visits from EU countries accounted for almost two-thirds
of all arrivals and saw an overall growth of 15.1% over 2017 (OECD, 2019[87]). As far as the cruise sector
is concerned, 4 093 cruise ship arrivals were recorded in 2016 (4 375 in 2015), while the number of cruise
passenger visits was stable at 5.1 million (OECD, 2019[87]). Domestic tourists in Greece in 2018 were
5.7 million, 3.6% up over 2017. The vast majority of these trips (over 95%) were for leisure purposes,
however about two-thirds (65.8%) of total nights were spent in non-commercial accommodation (OECD,
2019[87]).
In 2017, direct tourism GVA was estimated to be EUR 10.7 billion, which represented 6.8% of national
GVA (OECD, 2019[87]). INSETE62 has estimated the contribution of tourism in Greece to be 11.7% of
national GDP in 2018. According to an IOBE63 study in 2012, tourism had a multiplier effect on the Greek
economy of 2.264, while KEPE65, in a similar study in 2014, considered that the multiplier of tourism activity
amounted to 2.65 (INSETE, 2019[88]).66
There is also a strong regional element in Greece’s tourism activities as the economy of 3 island regions
(Crete, the Ionian Islands and South Aegean) is heavily dependent on tourism while, at the same time, 8 of
the 13 NUTS II Regions have a much smaller share of the “tourism pie” in Greece. Despite a lack of data
on the regional distribution of total tourism expenditure, INSETE has estimated67 a 47.2% contribution of
tourism to the GDP of Crete, 71.2% for the Ionian Islands and 97.1% for South Aegean region. Excluding
Attica, South Aegean has the highest per capita GDP in Greece, while Crete and the Ionian Islands are
among the highest (INSETE, 2019[88]).
Aside from its major contribution to Greece’s GDP, tourism is also an important contributor to employment.
In 2018, tourism directly employs 381 819 people, accounting for 10% of total employment in Greece
(OECD, 2019[87]). INSETE has estimated that the total employment generated by tourism at peak season
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(third quarters) of 2018 was 650 000 workers or 16.7% of employment and overall (directly and indirectly)
between 36.7% and 44.2%, while it had a key contribution in reducing unemployment (INSETE, 2019[88]).
The positive impacts of tourism are widely recognised, however, the increasing number of tourists at the
most popular regions and attractions, often exacerbated by the peaks and troughs of seasonality, has also
led to increased pressure on local communities. These impacts can be direct or indirect and can take the
form of increased traffic congestion and pollution, and higher pressure on public services and infrastructure
(e.g. water, waste management, and public transport); all of which, individually or combined, can negatively
impact resident perceptions of tourism. For instance, the island of Santorini, a major tourism destination,
has been suffering from over-tourism during recent years, with significant pressure on transport
infrastructure and on the everyday life of the local community. Furthermore, in certain urban centres, the
expansion of tourism’s sharing economy has become a major problem for residents. According to the
region of Attica, in the district around the Acropolis in Athens for example, the proliferation of Airbnb holiday
rentals resulted in a significant rise of household rentals.
Regions with a stronger reliance on tourism were more resilient to the crisis
Even during the crisis, the tourism industry in Greece has been one of the mainstays of economic growth
and employment, with continued growth in tourist arrivals and revenues. The productive structure of
Greece has changed as a response to the shock of the crisis. In the post-crisis period, resources shifted
towards tourism-related sectors, allowing island and more touristic regions to buffer the effects of the crisis
in terms of employment and incomes (Chapter 2). Regions that saw smaller reductions in their
employment, notably Attica, Crete, the Ionian Islands, North Aegean and South Aegean, had a larger share
of GVA in tourism-related activities, including distribution, trade, accommodation and food service
activities. They also had the highest number of nights spent at a tourist accommodation per inhabitant
(59.6 nights per inhabitant in South Aegean, 53.4 in the Ionian Islands, 38 in Crete, 8 in North Aegean and
7.4 Western Macedonia) (Chapter 2). The regions with dominant tourism also experienced a smaller fall in
income and had higher employment rates in 2015. South Aegean is the only region where disposable
household income grew between 2007 and 2015 by 7%. The remaining regions had seen a drop in
disposable income varying from 10% in the Ionian Islands to 43% in Attica. Unlike the mining region of
Western Macedonia, the relatively lower fall in incomes in 2007-15 in the Ionian Islands and South Aegean
translated into higher employment rates in 2015 (Chapter 2).
During the 10 years of economic crisis in Greece (2009-18), incoming tourism contributed in excess of
EUR 125 billion to the Greek economy. In addition, incoming tourism revenues increased from
EUR 10.5 billion in 2012 to EUR 16.1 billion in 2018. This performance significantly contained the crisis
and its effects. Over the same time and at a period when Greece’s image in the international media was
often very negative, approximately 230 million people visited Greece and the majority by far left with a very
positive opinion.68
Box 3.20. The impact of COVID-19 on the tourism economy
The COVID-19 pandemic is an unprecedented crisis for the tourism economy. In April 2020, preliminary
OECD estimates on the COVID-19 impact point to a 45% decline in international tourism in 2020. This
could rise to 70% if recovery is delayed until September. Domestic tourism is also heavily affected by
containment measures; however, a quicker recovery is expected with an important role to play during
the recovery phase.
Tourism is a significant part of many national economies – directly contributing, on average, 4.4% of
GDP and 6.9% of employment in OECD countries. The immediate and immense shock to the tourism
sector resulting from the coronavirus pandemic is affecting the wider economy. This will translate into
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significant macroeconomic effects, particularly in countries, cities and regions where the sector supports
many jobs and businesses. Tourism businesses in all branches of the sector are at the forefront of the
crisis and governments are introducing policy measures to mitigate the economic impact and support
recovery of the tourism economy. In particular, governments are taking action to ensure that tourism
businesses and workers can benefit from economy-wide stimulus packages (e.g. liquidity injections and
fiscal relief). Many governments are also introducing tourism specific measures to address the
immediate impacts on the sector and facilitate recovery, but more needs to be done at the sectoral
level, and in a more co-ordinated way, to support tourism businesses and workers, restore traveller
confidence and be ready to restart business operations and stimulate demand once containment
measures are lifted.
In April 2020, a preliminary overview of country policy responses to the COVID-19 pandemic highlights
three major response categories and types of responses:
People: Protecting visitors and tourism workers.
o
Tourists outside their normal environment often suffer from an information deficit and
countries are taking steps to provide assistance and information in multiple languages and
formats.
o
The tourism sector benefits also from cross-sectoral measures introduced by governments
to provide flexibility and relief for companies and workers in the reduction of working hours,
temporary lay-offs and sick leave. Some countries have introduced measures specifically
aimed at the self-employed.
Firms: Ensuring travel and tourism business survival.
o
Countries for which the impact of the pandemic on tourism is most drastically felt have
focused on providing financial relief to tourism SMEs, such as postponed VAT payment.
Liquidity injections have been introduced to ensure business survival in the immediate term.
Other assistance efforts include information on helping to prevent the spread of the virus,
support to provide flexibility and relief for companies and workers in the reduction of working
hours, temporary lay-offs and sick leave, financial instruments to reduce the impact (e.g. tax
relief, guarantees, grants), measures regarding procurement and late payments, and
actions to help SMEs adopt new work processes and find new markets.
Sectoral Policy: Fostering co-ordination for targeted responses.
o
Some countries have put in place co-ordination mechanisms, such as taskforces, to monitor
the impact of the pandemic on tourism and respond to a fast-evolving situation. Dialogue
with the industry has been made a priority to ensure targeted and efficient responses
measures.
o
Some countries are also looking at marketing efforts to encourage demand from alternative
markets and change the country image. The crisis is also highlighting shortcomings in the
availability of timely and comparable data to support policymaking in quickly evolving
situations. Some countries have established tools for sharing updated data with businesses.
Note: The OECD has created a Digital Hub on Tackling the Coronavirus (COVID-19), which includes policy briefs and country-by-country
COVID-19 economic measures and it is intended to grow and be continuously updated. Consult www.oecd.org/coronavirus/en.
Source: OECD (2020[89]), Tourism Policy Responses to the Coronavirus (COVID-19), https://www.oecd.org/coronavirus/policyresponses/tourism-policy-responses-to-the-coronavirus-covid-19-6466aa20/.
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Tourism policy, implementation and financing
Acknowledging the importance of tourism as a crucial factor in the Greek economy, a separate Ministry of
Tourism was established in November 2016. The ministry formulates the country’s tourism policy,
introduces legislative reforms, undertakes tourism planning and co-ordinates activities with other ministries
in order to boost investment and improve the quality and competitiveness of Greek tourism. The Greek
National Tourism Organisation (GNTO) is a public entity under the supervision of the ministry. Its mission
is to organise, develop and promote Greek tourism, within the country and worldwide, utilising its
16 overseas offices. The Hellenic Chamber of Hotels is the state’s institutional consultant and the
competent authority responsible for the official classification of hotels, rooms and apartments for rent. The
Ministry of Tourism has 14 Regional Tourism Offices, located in each region, which are responsible for
licensing and inspecting tourism businesses, conducting quality control, monitoring official classification
and imposing administrative sanctions on tourism businesses. At the local level, regions and municipalities
design and implement programmes and activities for tourism development and promotion. Regarding
tourism promotion activities, in particular, it is mandatory for all public (national or local) authorities to obtain
prior approval from the GNTO, with a view to harmonising tourism promotion campaigns with the overall
tourism promotion strategy of the country (OECD, 2019[87]).
Figure 3.6. Organisational chart for tourism bodies
Source: OECD, adapted from the Ministry of Tourism, 2020.
The total budget for the Ministry of Tourism rose by 6.7% from EUR 59.9 million in 2017 to EUR 63.7 million
in 2018. From this budget, the GNTO received EUR 20.6 million, with investment in tourism projects and
related infrastructure totalling EUR 23.9 million (OECD, 2019[87]).
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The Partnership Agreement for the Development Framework 2014-202069 (ESPA 2014-2020), guides the
development of the tourism industry, providing support to innovation, infrastructure, projects, skills and
SMEs for the period. The overall objective of the Partnership Agreement (ESPA 2014-2020) is to turn
Greece into a sustainable, innovation-driven and outward-looking economy with sustainable growth and
jobs. To this end, five key strategic priorities have been identified: i) strengthening the competitiveness and
extroversion of enterprises; ii) capacity building and development of human resources; iii) environmental
protection – transition to a climate-friendly economy; iv) modernisation – completing infrastructures for
economic and social development; and v) enhancing institutional capacity and the efficiency of public
administration and local governance. The different actions and investment priorities proposed focus mainly
on dynamic productive sectors of the Greek economy which are the main pillars of the country’s
development: tourism, the agro-food system, energy, the environment, blue growth and logistics. Greece’s
National/Regional Research and Innovation Strategies for Smart Specialisation (RIS3), which plays a key
role in the 2014-20 programming period, also identify “tourism, culture and creative industries” has a priority
area of intervention (together with agro-food; health; information, communications and technologies;
energy; the environment and sustainable development; transport; materials and construction). The EC
initiative LEADER, within the current RDP 2014-2020, constitutes an additional significant financial tool for
Greece in creating infrastructures for the development of tourism in the countryside.
Since 2015, the Ministry of Tourism has been implementing a new tourism policy to promote Greece as a
globally attractive destination offering unique and authentic travel experiences, 365 days a year. All
initiatives are geared towards increasing international travel share, further enriching the tourism offer and
enhancing competitiveness. In response to this strategy, a number of specific actions have been
implemented to increase tourism flows and lengthen the season, including in the field of tourism education
and training and tourism product innovation (OECD, 2019[87]).70
A key challenge for the tourism sector in certain regions is congestion caused by excessive volumes of
tourists, especially during the peak summer season. In this respect, the ministry has developed a futureoriented policy of dispersal across time and place. New legislation relating to the development of thematic
product creates the legal framework for product differentiation, with the ultimate strategic goal to reduce
acute seasonality. Along with major tour operators, the plan aims to highlight emerging destinations and
attract potential visitors to experience lesser-known hidden assets during the shoulder months. Embracing
digital transformation is a key priority as well and important development will concern the creation of a
digital ecosystem for Greek tourism in four strategic pillars: i) digital transformation of services to citizens
and enterprises; ii) digital upgrading of tourism education; iii) integrated system of online data collection
and processing; and iv) utilisation of new technologies in tourism promotion.
Policy challenges
Main issues for tourism in Greece
Tourism in recent years has served to shore up the Greek economy against the recession and the tourism
sector is one of the few areas to draw the interest of investors. As a result of its significance, tourism is a
key driver of growth in Greece. To ensure continued and sustainable growth, a number of issues need to
be addressed. They include:
Horizontality. Tourism is an activity determined by the demand it generates for products and
services, whereas in manufacturing or the primary sector, activities are associated with production
and supply (Box 3.21). Tourism affects many sectors of the economy, such as transport (e.g. travel
by airplane and transfer by bus), accommodation (in a hotel or elsewhere), dining (in restaurants
or bars inside or outside the accommodation establishment), entertainment (including visits to
sites) and consumption in stores (INSETE, 2019[88]). Since tourism affects many and different parts
of the social and productive fabric of a country (or a region), an overall tourism-focused crosssectoral strategy is difficult to design and implement. This is the case also of Greece, where there
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is no comprehensive tourism national strategy or plan and the sector is sustained through
measures and actions within non-tourism-specific national or regional Operational Programmes.
Value. Between 2008 and 2017, Greece saw an increase in the share of tourism employment from
7.5% to 10.0% of total employment. Despite international arrivals nearly doubling over the same
time frame, income from tourism remained stagnant as the value of the international receipts rose
only by 8%. Although tourism contributed by 6.8% to the GDP in 2017 – an increase from its 5.5%
share in 2008 – tourism in Greece still plays a less important role than it does in other OECD or
EU countries such as Mexico, Portugal and Spain, even if above the average of 4.5% for OECD
countries (in 2017) (Chapter 2).
Seasonality. While tourism has been important in terms of income and employment generation for
regions in the post-crisis period, territories relying mostly on the tourism industry in Greece have
higher levels of vulnerability because of the combined effect of seasonality and intensity of tourism
(Batista e Silva et al., 2018[90]) (Chapter 2), as tourism in Greece remains highly focused on “sea
and sun” without taking advantage of the possibilities offered by Greece’s natural and cultural
attractions. As a result of this, the tourism product is very unidimensional and visitors tend to
concentrate in a small time period over summer, in relatively few places and revisit Greece less
than other competing destinations.
Competition. Three recent studies of INSETE71 have shown that, in tourism, Greece is competing
mostly against well-developed European destinations in the Mediterranean and not against Turkey
or other North African destinations. This implies that, to remain competitive, infrastructure and
service have to be at par with those of developed European destinations.
Environment. Integrating environmental concerns within tourism policy remains a challenge, both
in terms of conserving nature, water and energy resources, and of more effectively minimising the
generation of solid waste, wastewater, congestion and noise. These issues affect almost all the
regions in Greece, with island regions being more exposed.
Local communities. For an increasing number of Greek destinations, continued tourism growth is
causing pressure on infrastructure, the environment and local communities (including housing).
Thus, the need to work more closely with industry and local communities to better manage tourism
flows at destinations, encouraging tourism development in alternative areas to spread the benefits
and minimise any potential negative impacts are key challenges for Greece (OECD, 2019[91]).
Box 3.21. Upstream effects of tourism expenditure in national economies
The OECD produced Tourism Trade in Value Added (TiVA) estimates that uses "non-resident
expenditures by households" as a proxy for tourism. The study shows that in terms of upstream effects of
non-resident expenditure, on average, across all countries, 1 euro of non-resident expenditure results in
89 cents in domestic value-added and 11 cents in foreign value-added. For each euro of direct domestic
value-added generated by non-resident tourism expenditure, an additional 61 cents of indirect valueadded is generated in upstream industries. Figure 3.7 illustrates how this upstream contribution is
distributed, pointing to the important role of services as upstream providers to those industries that
produce the products purchased by tourists. Looking at the origin of the indirect domestic value-added
content of tourism expenditures, these new results highlight the predominant role of services industries,
with major contributions especially from the distribution, transport and business sectors.
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Figure 3.7. Upstream effects of tourism expenditure in national economies
Hotel and restaurant
Agriculture
Food products
Other manufacturing
Transportation
Business services
Wholesale and retail
Personal services
Other
100%
80%
60%
40%
20%
0%
Source: OECD (2019[92]), "Providing new OECD evidence on tourism trade in value added", https://doi.org/10.1787/d6072d28-en.
Strengthening attractiveness and sustainable tourism in Greece
Sustained development of the tourism sector will depend upon its ability to adapt to emerging economic,
social, political, environmental and technological trends. Fulfilling tourism’s potential as an engine for
sustainable and inclusive growth requires the development of sound policies, integrated strategies, interministerial structures and mechanisms that involve the private sector and other stakeholders in tourism
governance. A large majority of countries have developed dedicated tourism policies, strategies and plans
for the medium to long term. There is much similarity between countries in their tourism policy priorities,
which a focus on improving competitiveness, sustainability and inclusiveness, addressing seasonality of
demand and enhancing the quality and appeal of the tourism offer.
The last two years have seen a growing recognition of the importance of the development, management
and promotion of local destinations, supported by regional or local structures and funding, and the
preparation and execution of destination management plans (OECD, 2019[87]). Many government and
institutional actors and stakeholders interviewed during the project expressed the position that tourism
should feature as a distinct activity in both sectoral and regional OPs with the aim to expand its activity
both in terms of new destinations and reduce seasonality. Measures should support destination
management as an overall objective.72
There is an enduring policy commitment by many OECD governments to use tourism as a catalyst for
regional development. Tourism can be a powerful agent for positive change in communities which may
have few other economic options. Such a policy can help spread the benefits of tourism away from capitals,
historic destinations and coastal areas to lesser-developed, often rural communities where the
opportunities for the development of other industries may be limited. Regional development policy is also
being used to create new tourism clusters that can help diversify a tourism industry that may be over-reliant
on seasonal demand and/or based on coastal assets (OECD, forthcoming[93]).
A significant dimension of many national tourism policies is the increasing emphasis on regional and local
destinations as the location for planned and integrated action. A number of EU and OECD countries
(e.g. Iceland, New Zealand, Portugal and the United Kingdom) have been implementing programmes
based on selected local destinations, identified on account of their tourism potential or economic need.
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This is seen as an effective way of focusing resources and harnessing stakeholder engagement.
Destinations, in turn, require their own policies and plans in order to achieve successful, well-supported
and integrated tourism development. Frameworks and guidelines for this can be provided by the central
government (OECD, 2019[87]). Developing regional development initiatives is a key priority for Greece for
tourism to spread its economic benefits further afield and potentially reduce the load on existing highvolume destinations. To address this challenge, Spain, for example, via the Smart Tourist Destination
Programme, aims to improve destination planning, development and governance.
Targeted policy intervention should support actions for:
Implementing selective infrastructure investments in islands and regions with major touristic
potential, related to: i) transportation – e.g. port facilities/marinas in most places, improvement of
safety and signage on island roads, motorways in Crete etc.; ii) energy – e.g. to avoid power
shortages, particularly taking into account anticipated trends; iii) water – e.g. to ensure adequate
water supplies, particularly taking into account anticipated trends; iv) solid waste and wastewater
recycling and treatment facilities. For instance, in Norway, as part of the new Action Plan for Green
Shipping, ports are investing in new infrastructure to be able to offer on-shore power supply to
visiting cruise vessels, enabling them to turn off their diesel engines and so reduce emissions.
Implementing selective investments in key cultural sites (archaeological sites and museums) to
encourage access and facilitate visitation so that they are incorporated in the tourism product,
rather than just being precious cultural resources. In Portugal, as a joint initiative between the
Ministries of Economy, Culture and Finance, the government is opening up state heritage
properties to investment from the private sector on the basis of allowing concessions for developing
tourism businesses. This aims to streamline the redevelopment of vacant public property for
tourism-oriented uses to support regional development and lengthen the season.
Fostering integrated approaches to tourism thematic product development and marketing by all
stakeholders. Product development should take into account the close linkages of tourism with
gastronomy and culture, particularly as those two aspects are of high importance to older travellers,
a demographic segment whose importance is growing both in terms of market size as well as
spending power. In Croatia, for example, the Istria County Tourism Board (ICTB), developed
Gourmet Tourism Product since 1995 with the establishment of the first Wine Road of Istria, which
today has an estimated 150 000 visitors a year. Following the example of wine roads, Olive Oil
Roads were created in 2002. Today, Istria has a total of 8 roads, 137 listed olive growers and about
60 000 visitors a year. Within this product, ICTB successfully organises the Istria Gourmet Festival
with the aim of educating main stakeholders on the development of Istrian gastronomy
(restaurants, taverns, producers of local products, etc.).
Better connecting tourism to local value chains, 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 and certain
territories) of resources required by tourist and residents. In Peru, for example, the programme
Al Turista, Lo Nuestro promotes the direct incorporation of local products (agricultural, livestock,
fishery, handicrafts, etc.) in the provision of tourism services.
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. Canada, to address challenges
associated with seasonal tourism, developed the Canadian Experiences Fund, which commits
CAD 58.5 million toward developing quality and unique products and experiences. The fund will
invest in winter and shoulder-season tourism by funding projects such as onsite experience
development, tours, excursions, special events and tourism facilities.
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Developing a comprehensive agro-tourism policy. Agro-tourism in Greece was initiated in the
1980s supported by the EU agricultural policy. However, technical and functional specifications for
agro-tourism activities were set only in 2014 (Law 4276/2014), while operating standards for agrotourism enterprises were defined in 2018 (Greek Government Gazette 3089/30.7.2018). A
structured agro-tourism policy is still missing in Greece. This type of tourism has been based
heavily on private 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 tourists to visit rural areas,
including The Greek Breakfast initiative, which was launched by the Hellenic Chamber of Hotels in
2010, to enrich breakfasts offered by Greek hotels with local products and dishes from all Greek
regions. Another example of a co-ordinated approach to agro-tourism is in Austria, where the
Culinary Network was established as an initiative by the Federal Ministry for Sustainability and
Tourism and the Austrian Market Organisation for Agriculture (AMA) with the aim of bundling all
culinary and regional initiatives in Austria and developing them in a common direction.
Addressing labour and skills shortages in the tourism sector. This may require action to improve
the awareness and attractiveness of careers in tourism and the availability of relevant training
programmes leading to certification and closely linked to the needs of the sector. Keystones of
such programmes, for example, may be improved quality and integration of tourism activities other
than the sun and beach – particularly related to culture and gastronomy – into Greece’s tourism
offer. The need for enhancing digital skills is also a key priority. To respond to the challenge of
skills shortages in the sector, Finland launched the Matkailudiili programme to improve the
workforce’s employment and recruitment prospects. The projects included training programmes for
job seekers, marketing campaigns aimed at those aged 16-26, initiatives to employ workers from
other sectors (e.g. forestry) in tourism businesses during winter season lay-offs, and digital
platforms and training to alert people to tourism industry vacancies.
Clarifying and simplifying spatial planning processes and facilitating the alignment of spatial
planning with national and regional tourism development policies. As an example of initiatives to
clarify processes for land use, Switzerland conducted a study to identify challenges in tourism
projects resulting from spatial planning regulations and which create an important barrier for
tourism businesses. The work should help to reduce regulation costs and therefore reduce the
administrative strain on companies within the tourism industry.
Incorporating environmental and sustainability criteria into tourism public financing and investment
supports and encouraging the uptake of green financing instruments for tourism projects, notably
by leveraging private investment. This will call for improved co-ordination across different levels of
government and policy areas, including tourism, the environment and innovation (OECD, 2019[87]).
In France, for example, the national railway company SNCF issued green bonds in 2017 to finance
rail investment. An annual audited report will enable green investors to monitor the use of funds
and their environmental impact, including the reduction of CO2 emissions.
Implementing a tax reform in relation to the tourism sector to foster its competitiveness. According
to the WEF Travel and Tourism Competitiveness Index, Greece ranks 133rd out of 136 countries
regarding the “effect of taxation on incentives to work” and 134th out of 136 countries regarding the
“effect of taxation on incentives to invest”. Among the taxes most damaging for the competitiveness
of the Greek tourism product are the high rate of VAT (13% vs. 10% or less in competitor countries)
and the tax levied on occupied rooms. Some countries have recently implemented tax reliefs to
stimulate growth – for example, in 2018, Austria and the Slovak Republic reduced VAT on tourism
to 10% while Norway prioritised tax reliefs and simplified reporting to aid business competitiveness.
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Fostering digitalisation
Particular attention should be paid to digitalisation since the digital revolution has had a profound and
ongoing impact on tourism. It presents both opportunities and challenges for destinations and individual
tourism businesses, which need to fully embrace new technology to remain competitive.
There are three main areas in which digitalisation is having a profound impact on actions to develop,
manage and market tourism (OECD, 2019[87]):
The first is in the process of communicating with tourists: e.g. web-based marketing messages and
information; use of social media and commercial channels to influence choice and share
experiences; customer rating of tourist facilities; online travel agents; mobile technology in
delivering instant information to visitors during their stay. A further aspect of digitalisation is the
opportunity it presents for new and creative ways of enhancing the visitor experience (e.g. virtual
reality), not only for attractions but also for branding and marketing.
The second major impact of digitalisation is in the opportunities it presents for handling transactions
and in the capturing and processing of information and data on tourism supply and demand. Work
in this area in the tourism sector is still in its infancy. A number of countries are embarking on new
projects for the systematic handling of digital information, such as the Data Tourism project in
France.
The third major impact is on the future of work in the tourism sector. The sector is highly dependent
on quality human resources to develop and deliver a competitive tourism offer. Technology is
reshaping the content and tasks of many occupations, changing the nature of many tourism jobs
and generating new business models, opening up new opportunities for entrepreneurship and
employment, and transforming the skills needed in tourism-related sectors.
While all countries are taking action, a number of countries have prepared specific strategies on
digitalisation in the tourism sector. This is the case, for example, of Austria (Box 3.22).
Box 3.22. A digitalisation strategy for Austrian tourism
Digitalisation is transforming the tourism sector at a rapid pace, with strong implications on both demand
and supply. In view of an active role in this process, the Ministry of Science, Research and Economy
together with the Austrian National Tourist Office (ANTO) and the Federal Economic Chamber launched
a digitalisation strategy for Austrian tourism in September 2017. The strategy has been developed in
an open innovation process with the involvement of many stakeholders (national and regional, industry
experts from tourism, technology and the creative economy, universities and research, etc.) and
pursues three strategic objectives: i) to shape digital change; ii) to strengthen the innovation capacity
of enterprises; and iii) to create skills and processes for digital transformation. The strategy defined 22
measures to meet these objectives including nationwide coverage of broadband technology, good
information and co-operation structures for data management, support for digital innovation in SMEs,
as well as for the development of digital skills for the sector.
Source: Ministry of Science, Research and Economy; OECD (2018[59]), “Greece”, https://doi.org/10.1787/tour-2018-19-en.
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Fostering quality employment and social inclusion
The labour market, education and skills development
Expanding employment is among the top priorities in Greece and is cardinal for fostering
inclusive growth and redressing poverty
After the deep losses over the crisis, employment is now recovering. The unemployment rate increased to
27.5% at its peak in 2013 and subsequently fell to 23.9% in 2016 and further to 19.3% in 2018. Participation
in the labour force has continued to expand, particularly among women. More workers are obtaining
employee positions, rather than being self-employed. Wages have stabilised. However, full recovery
remains distant. Employment at the end of 2017 was still 14% below its 2008 peak. Many of the new jobs
are part-time or temporary and pay the minimum wage; the share of the working poor is rising. While
unemployment is decreasing, the share of the long-term unemployed has increased, especially among
those with less education and skills (Chapter 2) (OECD, 2018[8]).
At the territorial level, the economic crisis and long recovery impacted negatively the labour market of all
Greece’s regions and worsened their position relative to other OECD regions. Because of widespread
unemployment increases, by 2016, all Greek regions moved down to the bottom 20% OECD regions in
terms of unemployment rates. Western Macedonia had the highest unemployed rates across OECD
regions in 2016, at 31.3%. Continental Greece, Thessaly and Western Greece are in the top 10% regions
with the highest unemployment rate in OECD countries in 2016, together with the Mayotte region in France,
four Spanish regions and the Mardin region in Turkey (Chapter 2).
All regions in Greece except South Aegean employ fewer people today than before the crisis, however
effects are uneven. All regions in Greece, except South Aegean, employ 10% to 20% fewer people than
before the crisis. In absolute terms, the largest decreases in employment between 2007 and 2016 occurred
in Attica (a loss of 270 000 jobs, mostly in Athens), followed by Central Macedonia (144 000 jobs, mostly
in Thessaloniki) and Western Greece (54 000 jobs). The only region where employment increased during
the period was South Aegean, albeit only by 1 400 jobs (Chapter 2).
Regional differences in employment are growing across the OECD and in Greece. Generally speaking,
regional disparities are largest in Greece, Italy, Spain and Turkey, where unemployment rates between
the best- and worst-performing regions vary by approximately 20% (OECD, 2018[94]). In fact, in OECD
countries, jobs are increasingly concentrated in a smaller number of regions: over 2006-16, in 15 out of
the 27 countries considered, more than 30% of net employment was generated in the capital region (for
example, in Denmark, Finland, Ireland and Japan, more than 80% of job creation occurred in the capital
region). In Greece, 43% of employment was created in Attica (the capital region), 16% in Central
Macedonia, and from 2 to 6% in all the other 11 regions.
Table 3.10. Employment outcomes in Greek regions, 2006-16
Employment rate (%)
Unemployment rate (%)
Long-term unemployment share (%)
2006
2016
2006
2016
2006
2016
Attica
61.7
54.1
8.6
23.2
54.3
72.6
North Aegean
56.4
52.5
9.7
18.7
55.3
66.8
South Aegean
56.7
57.2
9.1
17.8
29.4
43.6
65
52.7
7.5
23
36.4
55.7
Eastern Macedonia
59.9
51.4
11.3
23.2
60.5
68.7
Central Macedonia
59.6
50.8
9.6
24.8
55
75.3
Western Macedonia
55.2
46.6
14.4
31.6
68.6
65.8
Crete
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Employment rate (%)
2006
2016
Epirus
59.6
Thessaly
60.9
Ionian
Western Greece
Unemployment rate (%)
Long-term unemployment share (%)
2006
2016
2006
2016
50.7
10
24.9
66.2
76.7
50.2
8.5
26.1
49.6
72.2
59.6
56.7
11.5
16.4
24.3
50.5
56.6
47.4
9.9
30.3
55.6
75.3
Continental Greece
60.7
50.3
9.4
25.4
58.7
77.2
Peloponnese
60.6
52.7
7.8
19.8
63.9
73.8
Greece
60.4
52.2
9.2
23.9
54.1
73.1*
Note: (*) Data from 2015. The rates are for the working-age population 15 to 64 years old. The long-term unemployment share is the ratio of the
long-term unemployed to all unemployed.
Source: OECD (2019[95]), OECD.Stat, (database), (accessed on 14 February 2019); (Chapter 2).
Box 3.23. The impact of COVID-19 on local employment and economic development
In less than three months as of the first quarter of 2020, the COVID-19 crisis developed into a global
pandemic. Half of the world’s population is experiencing a lockdown with strong containment measures.
Estimates undertaken in April 2020 predict that the share of jobs potentially at risk in the short term as
a result of confinement measures ranges from less than 15% to more than 35% across 314 regions in
30 OECD and 4 non-OECD European countries. Within a country, differences in the share of regional
employment potentially at risk vary by more than 20 percentage points. The economic consequences
of COVID-19 are likely to affect regions very differently, with tourist destinations and large cities
suffering the most in the short term. Regions have different sectoral specialisations, exposure to global
value chains, focus on tradeable vs. non-tradeable sectors, and shares of non-standard employment.
Sectors most at risk include: manufacturing; construction; wholesale and retail trade; air transport,
accommodation and food services; real estate services; professional service activities; and arts,
entertainment and recreation.
Regional and local governments are an essential part of tackling the emergency and recovery,
implementing national schemes and complementing them with locally tailored responses. Local action
is particularly important for helping disadvantaged groups who will bear the brunt of the crisis. Some
populations will be more vulnerable to short-term job losses and long-term re-integration challenges.
Local employment services will be called upon to help these groups, and to connect with other local
social services that address multiple disadvantages.
The COVID-19 crisis may accelerate change for job creation, location and access to services. Relevant
identified factors include:
The rise in teleworking. The short-term rise in teleworking could spark broader acceptance of this form
of work over the long term. This could contribute to some decentralisation of jobs away from major
metropolitan areas, as workers are freer to locate where the cost of living is lower or quality of life is
higher. It therefore opens up opportunities for more rural communities or smaller metropolitan areas.
Online delivery of local education and training, and other public services. Likewise, as education and
training providers have had to adapt rapidly to online delivery, such methods may become more
common over the long term. This could help overcome challenges related to economies of scale in
delivering services (including public employment services) to a greater number of people and less
dense places.
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The shift from bricks-and-mortar to online commerce. It could accelerate purchasing from online
commerce, given that containment measures are hitting small stores but less so online sales. Local
development actors will likely face renewed challenges to maintain a vibrant local SME fabric and
prevent the hollowing out of downtowns and other community centres, with implications for the quantity
and quality of local jobs and their location.
Increased pressure on digital infrastructure. This increased reliance on digital tools has put additional
pressure on digital infrastructure and makes public investment and regulatory barriers even more salient
to addresses the upgrade of infrastructure in rural and other places with insufficient access.
Note: The OECD has created a Digital Hub on Tackling the Coronavirus (COVID-19), which includes policy briefs and country-by-country
COVID-19 economic measures and it is intended to grow and be continuously updated. Consult www.oecd.org/coronavirus/en.
Source: OECD (2020[96]), From Pandemic to Recovery: Local Employment and Economic Development,
http://www.oecd.org/coronavirus/policy-responses/from-pandemic-to-recovery-local-employment-and-economic-development-879d2913/.
Policy implementation and financing
The Ministry of Labour and Social Affairs is the responsible and principal actor for employment and labour
policies (at the national, regional and local levels) in Greece. It determines objectives and strategies, guides
the decision-making process and governs policy implementation. The Ministry of Education and Religious
Affairs and the Ministry of Development and Investments, which manage the NSRF-ESIF system, have
also significant competencies in a number of fields related to job creation and inclusion (e.g. in relation to
education, skills, etc.).
Crucial is the role of Manpower Employment Organisation (OAED), a legal entity of public law supervised
by the Ministry of Labour, which supports the implementation of the government’s active and passive labour
market policies and vocational education and training (VET) in Greece. The OAED’s structure includes a
Central Administration, 7 Regional Directorates,73 a network of 121 local public employment services
(PES) – called Employment Promotion Centres (KPA2) –, and its educational units (namely 51 vocational
schools [EPAS], 31 institutes of vocational training [IEK], and vocational training centres [KEK]). The
OAED’s ΙΕΚs are supervised by the Institute of Adult Continuing Education (IDEKE). Finally, there are also
six Employment Offices for Special Social Groups (in Athens, Heraklion-Crete, Larissa, Patras,
Thessalonica and Volos) whose aim is to integrate into the labour market the population groups that are
faced with the risk of social exclusion. KPA2 (local PES) are operating as one-stop-shops and were formed
by a merging of employment services and social insurance services formerly operated by the OAED at the
local level. Services provided by KPA2 include: i) personalised counselling and job placement (matching
of employment supply and demand); and ii) the payment of benefits and other social security allowances.
Education provided by the vocational schools (EPAS) around the country is based on the apprenticeship
system, which combines in-class activities with remunerated on-the-job training (traineeship) in
businesses.
Other important actors include workers’ unions, which co-operate with the Ministry of Employment (e.g. for
the formulation of policies) and a number of local actors and institutions which participate directly or
indirectly in the implementation of policies.
Employment policies in Greece are designed at the national level taking into account the guidelines of the
European Employment Strategy and are mainly (but not solely) developed within the partnership
agreement (ESPA) 2014-2020, which defines funds and objectives (notably i) to promote sustainable and
quality employment, social inclusion and the fight against poverty; and ii) to address structural problems in
the labour market by improving the education and training system and the transition to the labour market
and active inclusion).
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Funding comes from national financing and mostly from the European Social Fund (ESF) and the Youth
Employment Initiative (YEI),74 mainly deployed within the context of the national OP for Human Resources
Development, Education and Lifelong Learning and, to some extent, within the national OP for
Competitiveness, Entrepreneurship and Innovation and the 13 ROPs.
In more detail, the OP for Human Resources Development, Education and Lifelong Learning targets: 53%
of its total funding to promote employment and support labour mobility; 43% of funds to invest in education,
skills and lifelong learning; and a marginal 3% to promote social inclusion and combatting poverty since
such actions are covered by the 13 ROPs; while technical assistance counts for 1.7% of the OP budget.
Beneficiaries of OP actions include youth not in education, employment and training (NEETs), the longterm unemployed, the unemployed with low qualifications, the unemployed 30-44 years of age, women,
students, teachers and researchers. The OP for Human Resources Development, Education and Lifelong
Learning also finances (through ESF) the KPA2/PES whose creation as one-stop-shops was promoted by
the EC in ESPA 2014-2020. The OP for Competitiveness, Entrepreneurship and Innovation75 uses ESF
funding for action targeted at the "adaptability of employees, enterprises and entrepreneurial environment
to the new development requirements".
Policy challenges
Unemployment is declining from very high levels but is becoming increasingly long-term, while a large
share of youth inactive. Job-skill mismatch is high. Greece has undertaken a number of reforms to
strengthen education, skills and training and to try to better connect them to labour market needs. For
example, Greece has undertaken decisive steps towards the development of an efficient system that will
design, implement and evaluate active labour market policies (ALMPs). It is important to continue
expanding successful and cost-effective active labour market programmes, as part of the new ALMP
framework, reallocating resources from programmes that are less effective.
Tackling youth unemployment and underemployment is an important aspect for economic
growth, social cohesion and well-being
Regional youth unemployment rates in Greece are among the highest in Europe and can be twice as high
as the general unemployment rate. The youth unemployment rate across regions in Greece ranges from
29% to 58% in 2017. Regions in Greece, together with regions in French overseas territories, the south of
Italy and Spain, have the highest levels of youth unemployment in Europe. Eastern Macedonia, Epirus and
North Aegean had 55% to 58% of youth unemployed. On the other side of the spectrum, Crete and South
Aegean had around one-third of youth unemployed. Increasing youth unemployment is consistent with
increasing inactivity rates of young people. Average regional inactivity rates of young people increased
from 19% in 2007 to 29% in 2014. Attica and Central Macedonia have the most active youth, yet almost
25% of them are not employed nor follow any training or education; Continental Greece and Peloponnese
have 43% and 40% of their youth inactive (Chapter 2).
Policy intervention should support actions for:
Developing a comprehensive strategy targeting youth. The OECD has developed an Action Plan
for Youth. To achieve the desired effects, a mix of instruments should be utilised. Fostering youth
employability requires a comprehensive and forward-looking skill strategy to achieve a better match
between the skills youth acquire at school and those needed in the labour market. This is not
sufficient alone. Specific programmes should be put in place to help youth start businesses
(e.g. policy should target resources at young people with the best chance of success, providing
integrated packages of complementary support rather than one-shot instruments). Further,
financial literacy is a core life skill for participating in modern society. OECD national surveys show
that young adults have amongst the lowest levels of financial literacy. Even from an early age,
children need to develop the skills to help choose between different career and education options
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and manage any discretionary funds they may have. Other measures may be directed at:
i) providing adequate income support to unemployed youth but subject to strict mutual obligations;
ii) tackling demand-side barriers to the employment of low-skilled youth; and iii) strengthening VET
and encouraging employers to expand quality apprenticeship and internship programmes.76
Tackling education and skills mismatch with the labour market
Although Greek society places a strong value on education, the country ranks in the bottom 20% of
countries in regards to the alignment of skills with the labour market, which is reflective of a complex skills
environment (OECD, 2019[9]).
On the one hand, Greece lags behind in terms of skill levels by international comparison and one-fifth of
positions are filled with underqualified employees (OECD, 2018[8]). Although rates of early school leaving
in Greece are under the EU average, rates are higher in rural than in urban areas (OECD, 2018[97]).
Students in isolated areas or with an immigrant background are especially at risk of falling behind. In
particular, integrating the high number of refugee students into the formal education system has been
challenging, despite extended measures taken by the government and funding through EU grants. There
are also indications that drop-out rates are higher in VET than in other types of secondary education. Those
differences seem particularly relevant in view of concerns about the shortage of technical skills and the
efficiency of the labour market outside of agglomerations. Fifteen-year-olds in Greece tested by the OECD
Programme for International Student Assessment (PISA) scored lower than the OECD average in reading,
mathematics and science in 2018 and every other year in which it participated (OECD, 2019[98]). The
average science performance in Greece has declined steadily since 2006, while performance in
mathematics and reading peaked in 2009 again with lower results in recent years. Results from the OECD
Survey of Adult Skills suggest that Greece ranks in the bottom 20% with regard to the skills of tertiaryeducated adults, adults’ foundational skills and adults’ possession of a broad set of skills (OECD, 2019[9]).
Adults were found to lack opportunities to re-skill via on-the-job training or professional courses in Greece.
On the other hand, there is evidence that already now almost a quarter of employees are overqualified and
the high prevalence of underuse of skills on the job is an important concern. Greece performs in the bottom
20% of countries on the intensity of skills use in workplaces and on the adoption of high-performance
workplace practices, which are found to stimulate skills use in the workplace (OECD, 2019[9]). Employment
outcomes for the high number of tertiary graduates in Greece are poor, especially for young people. The
employment rate of tertiary-educated 25-34 year-olds is below the OECD average and the unemployment
rate of tertiary-educated 25-34 year-olds is more than 4 times as high as the OECD average (OECD,
2019[9]). Returns to education (in terms of employment probabilities) are low, with the exception of Athens
and Thessaloniki, suggesting labour market inefficiencies at least outside of those agglomerations
(Monastiriotis and Martelli, 2013[99]). Greece’s university graduation rate is above the OECD average
among younger demographics and near average for the overall workforce. Tertiary education
encompasses both universities and technical institutes (which were absorbed by universities in 2018
legislation). As in many countries, students’ perception of technical institutes is poorer and enrolment rates
are lower than for universities and fell during the crisis. Tertiary education has focused more on theoretical
than professional skills, which is consistent with the prevalent skills mismatch in the labour market.
Greece’s top graduates are able to achieve international success; for example, Greece’s diaspora ranked
tenth globally for the number of patents registered relative to the population (Bulman and Pisu, 2018[100]).
Back home, the mismatch seems to take at least two forms: i) highly educated candidates take up jobs
that underutilise their skills to avoid unemployment; and ii) employers in industries with high skills
requirements hire candidates under the desired level in absence of sufficient supply(OECD, 2018[97]).
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Policy intervention should support actions for:
Further aligning education 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 underqualification.
o
Greece should continue its efforts to reduce early school leaving, especially in rural areas and
in the area of VET (OECD, 2018[97]). This also involves exploring more targeted measures to
help students at risk of falling behind ahead of time, for instance by fostering student
engagement, reviewing the effectiveness of education priority zones and ensuring that at least
the most disadvantaged students have access to all-day schools providing additional support.
o
For older students, strengthening skills and competencies through a better tuned and more
competitive tertiary education is essential for improving employability, income and well-being
in Greece. In view of the brain drain of top graduates and employers’ challenges to find qualified
candidates for high-skilled jobs, better co-ordination between business, academia and the large
international community of Greeks could help guide efforts of stakeholders and the
government. At the regional level, universities seek to offer training programmes that match
the needs of regional employers for specialised skills.
o
The delivery of education in schools and universities needs to be improved so that students
indeed acquire the knowledge and skills needed to fuel economic and social development
(OECD, 2018[97]). Some actions for improvement have already been taken across the
education system. All-day primary schools have been introduced and the school curriculum
has been modernised (OECD, 2018[97]). Two laws, one to extend compulsory early childhood
education and care to 4-year-olds and another to evaluate teacher and (self-evaluate) schools
were approved in 2018. Other recent laws merge all technological institutes into existing
universities (except in Attica and Crete, where a new university was established in the place of
the former Technological Educational Institute of Athens), reducing drastically the number of
academic institutions and also reducing to some lesser extent the number of academic
departments. VET and apprenticeship programmes are also being upgraded (OECD, 2019[101]).
One additional lever for improvement could be a review of the governance of the tertiary
education system as a whole and its institutions to ensure greater alignment between funding
and strategic goals for higher education set by the government, i.e. balancing greater autonomy
with greater accountability for delivering the desired outcomes (OECD, 2018[97]).
o
Across the education system, it is fundamental to continue to introduce assessment
frameworks and professional development schemes; develop regular and broad assessments
of students’ learning; better connect vocational education with local labour markets needs and
certify the quality of courses (OECD, 2019[101]).
o
To succeed in achieving Greece’s objectives in education policy, an overarching strategy
incorporating the various existing initiatives and identifying long-term and medium-term
priorities could help ensure the coherence of the government’s efforts (OECD, 2018[97]).
Shortening unemployment duration
The crisis had a considerable and long-lasting effect on average unemployment duration across Greece’s
regions. Long-term unemployment is problematic as the integration of the unemployed persons into the
labour market is harder after a longer unemployment spell. A large share of the workforce being long-term
unemployed underlines the structural weakness of the economy as well as the mismatch of the supply and
demand of skills on the labour market. Re-employment probabilities of the long-term unemployed require
active labour market policies (ALMPs), retraining and skill improvement. Finally, the prevalence of informal
hiring has increased, although it is difficult to measure precisely to what extent. In 2017, 73% of the
unemployed in Greece had not had a job for at least 1 year, compared to 31% in OECD countries. Already
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prior to the crisis, Greece had a higher share, about one-half, of long-term unemployed workers than the
OECD average but, clearly, the crisis exacerbated the problem. Across regions, long-term unemployment
rates increased in all regions except for Western Macedonia between 2006 and 2016, and in 2016 were
highest in Continental Greece (77.2%) and lowest in South Aegean (43.6%) (Chapter 2).
Policy intervention should support actions for:
Strengthening mechanisms and actions to better match job seekers and employers. Better
matching job seekers with employers can reduce unemployment and support labour productivity
and firm growth. Improving vacancy registration and access via online databases and social media,
coupled with better engaging with the unemployed through employment offices, were effective
elements of Portugal’s public employment service reforms (Bulman and Pisu, 2018[100]). The Greek
public employment service (OAED) engaged with about one-quarter of unemployed and 4% of
newly employed found a job via the employment service (Bulman and Pisu, 2018[100]). Greece’s
large number of SMEs would particularly benefit from greater recruitment support from the OAED,
given that most lack internal human resource departments. Strengthening and supporting the role
of the OAED and similar job matching agencies can enhance the capacity to match the skills with
available vacancies (Chapter 2). It is important to continue recent strengthening in the capacity of
the public employment service to match jobseekers with positions through enhanced profiling tools
and well-trained counsellors (OECD, 2019[101]). The OAED is also expected to integrate into the
new network of community service centres. These efforts are welcome and should be furthered
and finalised (Bulman and Pisu, 2018[100]).
Anticipating local labour market dynamics and reducing the risk of job automation
The concentration of certain types of jobs at high or low risk of automation in different places can contribute
to regional divides (Box 3.24). A higher risk of automation may be associated with several regional
characteristics, such as lower education levels, a more rural economy and a larger tradeable sector.
Further, places with a larger share of less-educated workers can be more affected by increasing
automation. With some exceptions, the risk of automation decreases as the educational attainment
required for the job increases (OECD, 2018[94]). Thus, a number of jobs are at risk of automation in
Greece’s economy. Over 2011-16, only the region of North Aegean (category A, see Box 3.24) created
jobs in occupations at low risk of automation (e.g. health professionals and business and administration
associate professionals), while the other 11 regions (category C, see Box 3.24) experienced a reduction
of employment, even though mainly in occupations at high risk of automation (e.g. cleaners and helpers,
building and related trades workers, and sales workers). The reduction of employment in the Ionian Islands
was in occupations at low risk of automation (e.g. business and administration associate professional and
teaching professionals) (OECD, 2018[94]). Besides the number of jobs created or lost, it is their “quality”
that matters for development and inclusion.
Policy intervention should support actions for:
Developing a deeper understanding of regional labour market dynamics, and generally more robust
actions to gather regional data and information (e.g. for the identification of skills available and
business’s needs in a region or locality). This can be used to inform more targeted and effective
policy. For example, the poor link between education and employment outcomes in regions such
as Crete and the Peloponnese can “direct policy towards actions that selectively attempt to diversify
the skills of the better-educated in those regions or to increase their mobility (while pursuing in the
longer-run a strategy to increase the demand for skills in these labour markets)” (Monastiriotis and
Martelli, 2013[99]). In contrast, in the regions of Thessaloniki and Western Macedonia, where
education does lead to employment premiums, policies may focus on increasing the educational
qualifications and labour market skills of the local workforce and/or attracting educated workers
into these regions (Monastiriotis and Martelli, 2013[99]). Given the relatively centralised Greek
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employment policy design system, a larger use of Local Development Pacts 77 may help to address
the dynamic sectors of the economy while conducting targeted spatial interventions in areas that
exhibit high unemployment and low job creation. 78
Box 3.24. Trends in jobs at risk of automation, Greece
According to a new OECD regional typology for employment creation in the face of technological
disruption, regions can be classified into four categories depending on whether they gain or lose jobs
and whether the gains or losses occur in sectors with high or low risk of automation. They are:
A. Creating jobs, predominantly in less risky occupations (e.g. North Aegean region).
B. Creating jobs, predominantly in riskier occupations (e.g. all the regions).
C. Losing jobs, predominantly in riskier occupations (e.g. Attica, Central Macedonia, Continental
Greece, Crete, East Macedonia, Epirus, Peloponnese, South Aegean, Thessaly, Thrace, West
Macedonia, Western Greece regions).
D. Losing jobs, predominantly in less risky occupations (e.g. Ionian Islands region)
Type A and Type C regions experienced an increase in the share of jobs at low risk of automation with
respect to occupations at high risk of automation. Type B and Type D regions experienced an increase
in the share of jobs at high risk of automation. In both Type A and B regions, aggregate employment
grew, while in type C and D regions employment declined.
Regions that create jobs in occupations with a low risk of automation (Type A) improve their job situation
in the short term and also reduce their long-term risk of unemployment from automation. In contrast,
regions that create jobs in occupations at high risk of automation (Type B) improve their short-term job
situation but do so at the expense of moving towards a riskier job profile in the future. Regions that are
losing jobs primarily in areas that are at high risk of automation (Type C) have the typical profile of
regions in the process of undergoing a structural change caused by automation. While jobs are being
lost to automation today, the risk of further job losses due to automation decreases. Lastly, regions that
are losing jobs predominantly in occupations that are at low risk of automation (Type D) face the greatest
challenge. They suffer current job losses combined with an increasing risk of further job losses in the
future due to automation.
Source: OECD (2018[94]), Job Creation and Local Economic Development 2018: Preparing for the Future of Work,
https://doi.org/10.1787/9789264305342-en.
Preserving and fostering job quality
Data from the Greek Statistical Authority (ELSTAT) shows that 253 000 new jobs were created in the
period 2013-17 but that the vast majority of these jobs were in seasonal, low-skilled and low-paid sectors
(excluding Industry, 111 000 in hotels and catering, 45 000 in commerce, 44 000 in business activities and
33 000 in processing).79 The growth of non-standard work (defined as temporary, part-time and selfemployment) offers job opportunities for many individuals thanks to the greater flexibility. However, these
forms of employment often come with reduced access to social protection and health benefits. They do
not give an incentive to invest in skills upgrading in the same way as for a standard employee. Temporary
and part-time work has expanded across OECD countries but with some differences. In Belgium, France,
Greece, Hungary, Italy and Spain, the gap between the regions with the highest and lowest share of nonstandard work exceeds 10%. By contrast, regions with a larger tradeable sector tend to employ fewer
workers in temporary contracts. While the rise in temporary work pre-dates the crisis, since 2011, the share
of temporary contracts is increasing in regions that are also underperforming in terms of labour productivity
(OECD, 2018[94]).
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Policy intervention should support actions for:
Developing dedicated regulatory frameworks for non-standard work and job quality. The rise of
non-standard contracts creates a trade-off between job creation and job quality. Countries can
address this challenge by improving their regulatory framework in order to include these new forms
of jobs (e.g. clarifying the working status of “false” self-employment). Yet, the presence of large
regional differences in the share of non-standard work requires local approaches to complement
national ones. For example, to improve the quality of temporary and part-time work, local policies
should develop the skill set of workers in underperforming regions, where the high share of
temporary work is more likely the result of workers’ low bargaining power than a choice of the
worker (OECD, 2018[94]).
Smoothening the effects of the (relative) rigidity of the labour market and limited labour
mobility
Greece’s labour market is less flexible than in other OECD countries as measured by part-time
employment, total working hours and average tenure. By 2017, unemployment remains high and
employment rates low, more than half of all part-time employees are in search of a full-time position and
the share of unemployed that have not had a job for more than a year is over 40 percentage points higher
in Greece compared to other OECD countries (Chapter 2). Further, labour mobility in Greece is limited
compared to other European countries. This may be due to a generalised lack of opportunities, to the
characteristics of the labour market in Greece and also to the exceptionally high rate of owner-occupied
housing (80%) and social and cultural factors in which immediate and wider family connections play an
important role and constitute an informal but exceptionally strong network of social protection (EURES,
2019[102]).
Targeted policy intervention should support actions for:
Facilitating self-employment. Self-employment covers a wide range of working arrangements,
which have in common the autonomous nature of the work. While many self-employed workers
pursue market opportunities as entrepreneurs, others see self-employment as a job opportunity of
last resort (many also hide irregular or seasonal or part-time work). The proportion of workers who
are self-employed varies across countries and regions. Variations among regions in the same
country can attain 25 percentage points, such as in Greece, or about 10 percentage points, such
as in France and Spain. Policy support should include entrepreneurship and business management
training, coaching and mentoring, and business counselling, as well as improve access to start-up
financing and entrepreneurship networks. Policy initiatives should be designed and delivered in an
integrated manner and according to the specific needs of local communities, guiding the
entrepreneur from the start-up to post start-up phases (OECD, 2018[94]).
Retaining youth and talents
Greece lost half a million people nationwide to outmigration between 2000 and 2017. This had a much
larger negative impact on the share of working-age population in urban regions including Attica (10%
decrease) compared to intermediate and rural regions (2% and 3.5% decrease respectively). 80
Policy intervention should support actions for:
Developing regional strategies specifically targeted at retaining young people and talents and
bringing back those who have emigrated in search of opportunities (e.g. enhancing collaboration
between business and academia and facilitating business creation and investments through
incentives and via the large Greek international community for example). Although demand for
talent and the 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.
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Regions and cities could: i) better identify the need for 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; and vii) improve broadband connectivity in rural and remote
areas to improve opportunities for youth (European Committee of the Regions, 2018[103]).
Box 3.25. How can regions and cities tackle brain drain?
A study presented at the SEDEC Commission of the European Committee of the Regions in November
2018 has offered insights into how regions could boost their attractiveness to retain or get back young,
skilled people.
Brain drain is a problem affecting not only Greece but many regions across Europe. There is a high
correlation between the socio-economic conditions of a territory and its brain drain/gain dynamic.
Structural migration inflows, especially of young highly skilled individuals, usually occur in regions that
have a comparative advantage and play a dynamic role in competing for international talents.
Ad hoc policies or measures implemented locally or regionally to retain, attract or regain a highly
educated workforce can be effective.
A first recommendation is that local and regional authorities (LRAs) in sending regions should
become aware of the brain drain problem. LRAs should also identify the talent they want/need
to retain, attract or regain. Establishing a dialogue with the talent in question appears to be
essential. This is especially true for young talent.
A second recommendation relates to the need for the co-ordination of players and the synergy
of resources to focus on talent-based growth strategies. These circumstances both occur, for
example, when a Smart Specialisation Strategy exists. Examples of other valid instruments are
physical spaces, virtual spaces or quadruple/triple helix–based approaches/mechanisms.
Co-ordination among relevant players is also intended to improve the local/regional matching
of the demand and supply of talent. Similarly, it is intended to strengthen the talent-producing
capacity of a region by nurturing its gifted youth.
A third recommendation relates to the opportunity to identify key driving sectors for
retaining/attracting talent.
A fourth recommendation is to stimulate the absorption of talent from outside. This could be
achieved by attracting international talent and/or regaining such talent that had previously
moved away. It may involve the setting up of specific projects or medium-term strategies as well
as branding initiatives or initiatives aimed at rewarding talent.
A fifth recommendation is for LRAs to work on the removal of structural impediments/barriers
which may, for example, be related to infrastructure (e.g. physical and/or technological),
services and facilities, the reputation of the locality/region and culture (e.g. gender-biased
mentality).
Finally, as brain gain automatically leads to competition for the same resource (i.e. talent), it is
suggested that public authorities facing the same challenges should seek co-operative and/or
shared solutions.
Source: (European Committee of the Regions, 2018[103])
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Social exclusion
Poverty rates have increased in almost all regions from pre-crisis levels
Poverty and social exclusion occur when people are prevented from participating fully in economic, social
and civil life and/or when their access to income and other resources (personal, family, social and cultural)
is so inadequate as to exclude them from enjoying a standard of living and quality of life that is regarded
as acceptable by the society in which they live.
According to Eurostat, the crisis hit many people very hard and in 2015 every third person in the country
was at risk of poverty or social exclusion.81 ELSTAT (Hellenic Statistical Authority) data suggest that 50.3%
of the poor population was facing food deprivation in 2018 which amounts to more than
450 000 households in the Hellenic Republic. 82 The Ministry of Labour commissioned a study to estimate
the level of homelessness in the country and how variables such as Airbnb renting and sub-prime mortgage
might influence this trend. As noted in Chapter 2, household incomes decreased in all regions and regional
poverty rates increased across more regions in Greece than in any other OECD country in the past decade.
All regions in Greece, with the exception of the Ionian Islands and South Aegean regions, experienced a
drop in their pre-crisis household income and poverty rates increased. The largest increases in the
percentage of people at risk of poverty or social exclusion occurred in the Aegean Islands and Crete. The
regions with the highest risk of poverty in Greece before and after the crisis are located along the northern
border as well as in regions within the Peloponnese; the regions with medium or medium-to-high rates of
risk of poverty are close to metropolitan areas (OECD, 2018[104]).
Social exclusion is experienced by those living in poverty and the unemployed as well as other
disadvantaged and marginalised groups such as migrants and the Roma population. These populations
have some territorial dynamics. The Roma population in Greece, according to the mapping from the
Special Secretariat of Roma Inclusion (Ministry of Labour and Social Affairs), is estimated to be around
104 000 individuals residing in 354 settlements and neighbourhoods, often suburban areas. In 2015-16,
Greece has been at the forefront of the European Refugee Emergency with over one million people arriving
in total, the vast majority from war-afflicted countries like Afghanistan and Syria (OECD, 2018[105]). After
the closure of the so-called “Balkans route” and the implementation of the Joint EU-Turkey Agreement of
18 March 2016, arrivals to Greek islands decreased significantly yet the length of stay in national facilities
increased. After the agreement, 98% of arrivals applied for asylum in Greece. In 2019,83 migrants’ long
waits in overcrowded island camps were still making the headlines. Uncomfortable conditions and risks of
violence are reported by rights groups and United Nations (UN) agencies.84 The Greek government plans
to speed up its process for asylum application and appeals. The UN Refugee Agency UNHCR estimates
that there are around 45 000 refugees remaining in Greece. Up to 15 000 are on the islands and some
30 000 on the mainland, including 22 000 in UNHCR-sponsored accommodation (UNHCR, 2019[106]). The
EC has awarded over EUR 816.4 million in emergency assistance since the beginning of 2015. This
emergency funding was inter alia allocated to Greece for migrant reception centres and improving
conditions, in part directly to Greek authorities and in part allocated to international organisations and EU
agencies.85 Beyond measures for reception of migrants and refugees, the Ministry of Citizen’s Protection
(established 2016, formerly the Ministry of Migration) is now focusing on the national strategy for integration
which is to be implemented across different levels of government.
Policies and actors addressing poverty and social exclusion in Greece
Numerous policy measures address poverty and social exclusion such as minimum income 86 policies,
public pension systems and a broad range of social assistance programmes and support. The economic
crisis and ensuing austerity in Greece changed the landscape of social provisions, with a shift from
comprehensive policies to targeted ones focusing on the most in need. At the same time, welfare benefits
were cut. For example, prior to the crisis, social provisions for the elderly comprised almost half of all social
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allowances; these amounts declined substantially in the intervening years as the pension system was
reformed (Karl, 2016[107]). Currently, food and basic material assistance are given to all extremely poor
people (around 400 000 in 2018) including those who are homeless.87
Several ministries are involved in measures for social inclusion and solidarity: the Ministry of Education,
the Ministry of Finance, the Ministry of Culture, the Ministry of Citizen Protection, the Ministry of Health and
the Ministry of Labour, Social Insurance and Welfare. The Hellenic Manpower Employment Agency
(OAED) under the Ministry of Labour has the mandate for unemployment service and benefits. While local
authorities have no competency in designing and financing of social policy, they have, since the Kallikratis
reform (2010), gained competencies in responding to social emergencies. Regional social programmes
are formulated by the regions as a result of the regionalisation of the National Strategy and ROPs. Some
cities, such as the city of Athens, also develop their municipal social programme for 2015-19.
The Greek government adopted in December 2014 a National Strategy for Social Inclusion (NSSI). This
framework of principles, priorities and targets was designed by the Ministry of Labour, Social Insurance
and Welfare and aimed at the co-ordination, monitoring and evaluation of all policies on the national,
regional and local levels to combat poverty and social exclusion (Gabriel and Fotini, 2015[108]).88 The
strategy is territorialised: targets and priorities have been adjusted to local needs. Regional action plans
have been designed by local authorities (regions and municipalities). Many of the regional social inclusion
strategies are financed through the technical assistance grant from the managing authorities of EU funds
and through ROPs. The strategy focuses on three axes. The first is combatting extreme poverty, in
particular child poverty, through access to basic goods i.e. health, housing, electricity, justice, recreational
activities, access to adequate resources in the form of a Guaranteed Minimum Income Scheme, and
covering fuels needs through cash benefits. The second is promoting inclusion through services and
allowances for the unemployed and most vulnerable groups. The third axis focused on the governance of
inclusion policies and provides for strengthening co-ordination through a national mechanism for
co-ordination, a Regional Social Inclusion Observatory and an observatory for social care organisations.
The strategy aims at strengthening human resources, social pluralism and innovation to ensure a more
efficient implementation of inclusion policies.
For instance, the Attica Regional Social Inclusion Observatory was the first one to be established and
produced a report on social cohesion policies in collaboration with 66 municipalities, the statistical
authority, manpower agency and civil society.
Regions have the mandate for designing and implementing the Regional Strategies for Social Inclusion
(PESKE) once the Ministry of Labour certifies that they are aligned with the National Strategy for Social
Inclusion (ESKE). They also design projects related to Thematic Objective 9 as part of the ROP, of which
the majority of the interventions have been defined by the relevant line Ministries of Labour and Health in
line with the existing national strategies. This is not the case for other policy sectors such as labour market
inclusion and vocational training, which remain mostly the responsibility of national authorities. However
regional authorities claim that interventions across these sectors could be better linked. In particular, data
on social vulnerabilities should be linked to information on labour markets and entrepreneurship to design
projects that are more coherent with actual needs. More so, some regional actors would like greater
involvement when designing the national strategy and question the fact that their regional plans have to
align with nationally set priorities, when they have better knowledge of needs on the ground.
In terms of consultation with non-state actors, the existence of a well-established strategy ensures regular
consultation with associations.89 For instance, the Greek Federation for Persons with Disabilities is
regularly consulted just as it is consulted when the OPs for EU funding are formulated. However, noninstitutional stakeholders claim they are not regularly involved in the monitoring and evaluation of the
strategy’s implementation. Overall, several associations claim that disabled groups are not systematically
taken into account when formulating government actions and investment in public infrastructures.
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National, regional and local strategies for Roma integration exist across Greece. For example, it is worth
mentioning the specification, by the Ministry of Labour, of the National Roma Strategy into an operational
plan, which contains dedicated measures for each axis. In addition, approximately 47 municipalities have
developed local Roma inclusion strategies.
One of the measures implemented since 2017 is the national Guaranteed Minimum Income scheme,
known as Social Solidarity Income. As of May 2018, around 286 000 households, corresponding to about
600 000 individuals, were enrolled in the scheme. For the first time in the country, it provides income
support (EUR 220/month). Municipalities are in charge of registering and distributing these benefits to the
beneficiaries. The municipality of Athens and all of the other municipalities in the country in which
community centres were created (through the ESF) are planning on linking the beneficiaries of Social
Solidarity Income to the social and welfare system of the municipality itself to afford more integrated
support to those in need. A three-pillar approach is followed in all municipalities: i) benefits; ii) quality
services; and iii) promotion to employment. Migrants can access this support if they hold a five-year work
or student resident permit. The threshold for support eligibility was set to EUR 3 000 per person per year
– that is approximately half of where the national poverty line stands at the moment – and in Athens alone
20 000 people registered (Athens-EP-F). However, it should be noted that the Social Solidarity Income is
targeting extreme poverty (and not poverty in general). The scheme connects beneficiaries to social
services and provides labour market activation measures. The scheme has been prepared by the Greek
government, with the help of technical support provided by the World Bank, co-ordinated by the Structural
Reform Support Services and supported by the Fund for European Aid to the Most Deprived (FEAD,
established in 2014) (EC, 2018[109]). The Social Solidarity Income scheme, besides FEAD, has been also
supported by national measures such as “social groceries” and “social pharmacies”, implemented through
the ESF.
A large number of additional actions targeting social inclusion are also operated across the country, such
as Structures for Supported Living for the disabled (SYD), Day Care Centres for People with Disabilities
(KDIF), Day Care Centres for the Elderly (KIFI), mental health projects, combatting addiction programmes,
etc.
EU funding for social inclusion
The growing demand for social services at the same time as budget constraints and limited human
resources has led to an incredibly challenging operating environment. EU programmes have been a stopgap measure to provide desperately needed services. Social inclusion measures are funded principally
through Thematic Objective 9 “Promoting social inclusion, combatting poverty and any discrimination” of
the ROPs, although, also relevant for combatting exclusion are Thematic Objectives 8 “Promoting
sustainable and quality employment and supporting labour mobility” and 10 “Investing in education, training
and lifelong learning”. Three-fourths of the social-inclusion-related objectives are funded by the European
Social Fund (ESF) and the remaining fourth is funded through the European Regional Development Fund
(ERDF) (Gabriel and Fotini, 2015[108]). Outside the NSRF, the Fund for European Aid to the Most Deprived
(FEAD)90 also contributes to financing social inclusion objectives. For the period 2014-20, 6.9% of total
ESIF has been allocated to Thematic Objective 9 which makes Greece the second last among EU
countries in terms of relative ESIF spending on this objective (Figure 3.8). However, in absolute terms,
Greece ranks 18th out of 28 EU countries in terms of ESIF spending on Thematic Objective 9
(EUR 1 002 billion).
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Figure 3.8. Thematic Objective 9: Social inclusion by country for 2014-20
Financial allocation for Thematic Objective 9 as percentage of total ESIF
45
40
35
30
25
20
15
10
5
0
Source: Author elaboration based on ESIF database, https://cohesiondata.ec.europa.eu/2014-2020/Thematic-Objective-9-Social-inclusion-byCountry-f/2xqi-a87n.
Almost 2 000 projects are being implemented in Greece under Thematic Objective 9 through ESF or ERDF
according to the ESIF database.91 Over 100 projects target the elderly: people over 54 years of age who
are unemployed or not, including the long-term unemployed or inactive not in education. Some projects
target participants with disabilities. Over 100 projects target migrant participants with a foreign background
and minorities (including marginalised communities such as the Roma). Several regions have formulated
projects that target people from rural areas, i.e. Central Macedonia, Crete, Epirus, North Aegean,
Peloponnese, South Aegean, Thessaly, Western Greece and Western Macedonia.92 The formula applied
to distribute funds for Thematic Objective 9 across regions is based on the size of the population. The
region that has invested most in social objectives in the programming period 2014-20 is Attica, with a
EUR 306 million budget for 150 approved projects, while the second is Central Macedonia with
EUR 266 million.93
Community Centres and Local Health Units bring social services closer to people across
Greece
The Public Employment Service and social services are supported by the European Social Fund. For
example the latter supported the establishment of a new network of ‘Community Centres’ (3+3 years with
a budget of EUR 130M) — these are one-stop-shops at municipal level (for cities of over 10 000
inhabitants). The Community Centres operate as information centres and entry points for various social
services: social welfare, social inclusion and employment programmes. These centres facilitate the
connection between different service providers active in the area, including with the Public Employment
Service (i.e. OAED). They are operated by the staff of municipal social services and are co-ordinated and
monitored by the central administration. Some Community Centres have also operating branches for Roma
and immigrants and they implement specific measures targeted at these groups. The Ministry of Citizen
Protection has expressed the will to fund cultural operators in these centres in order to facilitate equal
access to services for the migrant population. The Community Centres provide information and referrals
regarding a range of national, regional and local programmes and services (e.g. Social Solidarity Income;
FEAD, ESF-supported social structures), support citizens who would like to benefit from these programmes
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(e.g. support for the application procedure for SSI). The Centres may also offer psychosocial support, legal
support, advisory services for labour market integration and educational support for vulnerable groups.
There are currently 239 Community Centres in operation (January 2019) in various municipalities across
Greece and there have been over 200 000 beneficiaries to date. All operating community centres are
connected to the IT system designed by IDIKA (National Social Security Service) with three digitalised
registers (beneficiaries, agencies, programmes). They are a pilot action financed by the ESF until 2023.
Social issues are complex and – as a one-stop-shop – community centres help navigate the complexity of
needs. However, the centres are understaffed at present and find it difficult to fulfil their functions
effectively. For example, some employ as few a 1-3 people and have approximately 1 300 clients per
annum.
Prior to the creation of Community Centres, municipal social services were mostly provided on an ad hoc
basis to address specific problems. Under the last two to three EU Cohesion policy programming periods,
some new services were established at the local level – e.g. daily care for the elderly, assistance to the
Roma population, wherein there have been overlapping competencies. Presently Community Centres act
more as a registration point for the centralized Greek welfare system; however, they could be used to
provide client-centred services currently dispersed across multiple departments which reduces their
accessibility. For example, at present, four separate approvals are needed from different entities in order
to receive a wheelchair through state support. Community centres have access to data which can be used
to identify needs. This raises the question of what kinds of services are ideally provided locally and which
ones are better managed at the national level.
Such a comprehensive service would need alternative sources of funding beyond EU funds. A concern
emerging from OECD interviews with Greek public authorities94 regarded the sustainability of the
Community Centres without EU support.
Since 2017, 127 (out of 239 planned) TOMY – local health units providing primary care – have been
operated by the government. Some municipalities, such as Athens, are trying to get their own health
facilities (six integrated health clinics in the case of Athens) recognised as TOMY to make sure users are
better connected to the national health system while maintaining the operation under municipal auspices
(OECD, 2018[105]).
Box 3.26. Social services in Athens – The role of NGOs as a stop-gap measure to provide
services over the crisis period
The downward pressure on the spending power of Athens, deriving both from real cuts in central
government grants and real falls in tax revenues, has resulted in a reduction of the municipal budget by
over 20% in the 2010-16 period; funding for social policy and personnel-related costs declined by
approximately 30% (Chorianopoulos and Tselepi, 2019[110]). The municipality of Athens’s workforce
declined from 12 000 employees to 7 000 and, partly as a consequence of the hiring freeze, the
municipality responded by turning to civil society to fill the gaps through such initiatives as the Solidarity
Hub, the Athens Partnership and the Reception and Solidarity Centre (Chorianopoulos and Tselepi,
2019[110]).
The Athens Partnership (AP, established in 2015) is an example of successful co-ordination
between the municipality of Athens and philanthropic initiatives. The AP was launched with
support from the Stavros Niarchos Foundation to facilitate innovative public programmes in
Athens. The AP gathers the municipality, private sector and philanthropic partners to finance
and support programmes addressing the general needs of the Athenian population. One of the
initiatives that the AP runs since 2017 with the municipal department responsible for the support
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and social integration of migrants and refugees is the Athens Coordination Centre for Migrant
and Refugee Issues (ACCMR). This co-ordination platform brings together 75 members
including national and international NGOs, international organisations, public services, etc.
which jointly set the priorities and organise services delivery for migrants and refugees. The
platform is run by a municipal team who has been recruited thanks to AP support.
The Athens Solidarity Centre95 (established in 2013) is located close to Athens’ central station
and offers to most vulnerable groups residing in the city – including Greek, migrants and refugee
populations – food, a clothing bank, basic social and medical services, psychological support,
assistance in applying for jobs, legal aid and day care for children.96 The centre operates as a
central hub for civil society organisations in Greece to implement their individual projects, while
at the same time providing a space for these organisations to collaborate, co-design
programmes and jointly execute actions that help address poverty alleviation and social
integration for marginalised and vulnerable populations Assistance is means-tested and the
respective municipal database currently includes approximately 6 000 families (Athens-EP-F).
Expanded to include a voucher scheme for 8 000 citizens and complemented by social work,
the Solidarity Centre has been created by Solidarity Now and is run by the municipality of Athens
and the Open Society Foundation together with civil society groups and organisations. The
centre is supported by international organisations (UNICEF, UNHCR), foundations, as well as
Iceland, Liechtenstein and Norway who contributed through a EUR 63.4 million European
Economic Area (EEA) Grant.
The Athens Development and Destination Management Agency (ADDMA, or EATA in Greek)
is part of the municipality and has implemented several projects aiming at increasing the
employability of most socially vulnerable groups including migrants. Projects were funded by
the region of Attica and by the OAED.
The Reception and Solidarity Centre (KYADA, established in 1999) is a municipal – yet
autonomously run – structure that focuses on the needs of the city’s growing number of
homeless or at risk of homelessness people. The structure is funded by the municipality
(EUR 2.5 million per year adjusted to needs) and raises additional funding from private entities.
It operates as one-stop-shop for social emergencies: it offers basic services (shelter, cloth, food,
etc.) to all vulnerable groups including irregular migrants and a referral system to its network of
partners and public services. Overall, the centre supports 9 000 beneficiaries (an estimated 25
000 people including family). The same municipal department has also set up the Social
Grocery Store on its premises. This foodbank-type of initiative covers the basic needs of
approximately 200 families (500 people) for a 6-month period and is sponsored by a major
supermarket chain. Moreover, KYADA launched the Family Solidarity programme, supporting
in kind (food and clothing) and offering mental health counselling to an additional 149 families.
The programme is sponsored by two major companies and a corporate NGO, sharing the
respective costs.
Collaboration with NGOs has grown as a vehicle for austerity management, a pragmatic and easily
available way to ameliorate social deprivation; but the ability of the municipality to develop a social
policy strategy that reflects local interests is constrained. The promotion of municipal goals is
conditioned upon the degree to which they coincide with the priorities of the funding bodies. By means
of example, municipal social policy objectives appear in the city’s blueprint for the 2015–19 period,
underscored by the annotation “subject to funding availability” annotation, their materialisation being
reliant upon funding opportunities secured by the partners. The views of civil society groups
collaborating with the city on these issues also paint an unsettled picture.
The fragmentation of social intervention measures into a number of distinct projects, centring on
provisions in kind, is seen as incapable of alleviating the multiplicity of exclusions noted in the city. The
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limited presence of preventative social policy measures and the short time span of actions endorsed
further support this conclusion, shaping what has been elsewhere described as “… an emergency
model of social crisis management” (Arapoglou and Gounis, 2015[111]). In addition to that, public
oversight is missing from these policies.
The newly founded municipal schemes are marked by the thorough absence of citizens’ groups in their
governance structures, despite the growing grassroots mobilisation noted recently in the city
(Chorianopoulos and Tselepi, 2019[110]).
Source: Adapted from Chorianopoulos, I. and N. Tselepi (2019[110]), “Austerity urbanism: Rescaling and collaborative governance policies
in Athens”, http://dx.doi.org/10.1177/0969776417733309; OECD (2018), Working Together for Local Integration of Migrants and Refugees
in Athens, https://dx.doi.org/10.1787/9789264304116-en.
Strengthening social inclusion through the social economy
EU-financed programmes have been instrumental in raising the importance of measures to address
poverty and social exclusion e.g. the Community Centres, TOMY and funding for NGO poverty alleviation
measures that have helped to raise public awareness on minority issues such as for the Roma population
and refugees and asylum seekers (Liargovas, Petropoulos and Huliaras, 2016[112]).
Inclusion is a multidimensional concept, which depends on various aspects of people’s lives, from income
and access to education to health and social networks. The challenges of social inclusion cannot be met
by a single actor – governments, whether at national, regional or local level – must work with others,
including the private sector (OECD, 2019[113]). However, an actor which is frequently overlooked is the
“social economy” – a label given to a wide range of organisations which inhabit the space between the
state and the market, including associations, co-operatives, foundations and social enterprises. Rooted in
local communities, social economy organisations (SEOs) are in an excellent position to identify the needs
of their localities and to respond quickly to social and economic changes at the local level. At the same
time, they are also often in a position to be able to reach those groups that are “hard to reach”, further
increasing their effectiveness in addressing social exclusion. The local embeddedness of SEOs, and their
ability to harness resources (such as volunteers) from their local communities, is critical to their contribution
to fostering social inclusion.97
SEOs, including traditional types and newer forms such as social enterprises, all share a common
approach that puts people at the core (Box 3.27). Such entities are well known for their capacity to identify
and implement innovative approaches to integrating disadvantaged groups in the labour market. SEOs are
estimated to account for 6.3% of jobs in the EU28. In addition, their strong local roots enhance their
capacity to address the special considerations of disadvantaged populations in a particular place. To better
capitalise on the potential of SEOs, policies can provide a more appropriate regulatory environment for
their development as well as encourage activities in labour market integration. The contribution of SEOs
is of course not limited to employment and work integration of disadvantaged groups. These entities also
produce goods and services that create a social, economic and/or environmental impact in different sectors
of activity. For instance, they create innovative health services for the elderly or new and sustainable forms
of tourism, transportation and delivery of renewable energy. The different social innovations that support
inclusion are further potential benefits to developing this social economy (OECD, 2018[94]).
Specific legal frameworks to support the social economy have been introduced in Greece. A first law (Law
4019/2011) was introduced in 2011 to regulate social economy and social entrepreneurship. However, the
law was too restricted to the inclusion of vulnerable groups and social care, which led to its replacement
in 2016 by a new law on social and solidarity economy (Law 4430/2016). This law has created different
legal forms, one of which focuses on the inclusion of vulnerable or special social groups: the Integration
Social Cooperative Enterprise (KoinSEp Entaxis). The law being relatively new, the number of these
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Integration Social Cooperative Enterprises remains low (24 Social Cooperative Enterprises in 2019) but
the data show rapid growth in the number of social enterprises. The percentage of employees from
vulnerable social groups in these social enterprises is another interesting statistic to consider as it confirms
the relevance of these legal forms as a tool to foster social inclusion. In 2016, 37.71% of the workforce
were people from vulnerable groups.98
Policy actions to increase the impact of social economy organisations (SEOs) and social
enterprises
In Greece, there is untapped potential within SEOs and social enterprises that requires policy action to
unlock. These entities can help build a more inclusive and sustainable society in each of Greece’s regions
(Box 3.28). Much of the policy needs concern the development of enabling ecosystems. Building a
conducive ecosystem for social economy development includes (OECD, 2018[94]):
Raising awareness and visibility of SEOs, including social enterprises. This can be done through
dedicated and enhanced framework laws or national strategies that define the nature, mission and
activities of SEOs and therefore help policymakers to target their support more effectively. To this
end, existing Law 4430/2016 could be strengthened. This can also be done through lighter policy
options such as setting up communication campaigns or providing specific support to networks that
connect social entrepreneurs to investors and public sector representatives.
Providing business support to social enterprises throughout their developmental phase. Specific
public support for structures such as hubs, accelerators or incubators can facilitate the
development of social enterprises across territories and activity sectors.
Supporting a diversification of financial sources. While public support (predominantly through
grants and subsidies) is a major financial source for a number of social enterprises, an increasing
number now seek to access financing provided by mainstream or new funders (e.g. commercial
banks or impact investors). Still, mainstream funders or impact investors perceive social
enterprises – especially in the early stages – as high-risk clients and are therefore reluctant to
invest in them. Policymakers need to raise awareness through capacity building, along with efforts
to share the risks with mainstream funders, impact investors and commercial banks, through
guarantee schemes for example.
Fostering social entrepreneurship skills in the education system. In the long run, education and
skills that breed entrepreneurial behaviours need to be developed. For example, educational
programmes on social entrepreneurship can provide students with opportunities to develop new
solutions to unresolved social challenges and learn about business creation processes and
planning at the secondary and higher education levels.
Ensuring institutional continuity and political support for social enterprise development. Political
impetus can act as a catalyst for both nascent and/or well-established ecosystems, fostering and
accelerating favourable conditions for the growth of social enterprises. However, challenges may
emerge when political support for developing the sector of social enterprises fluctuates owing to
government changes. Sustained policy support is essential to establish an enabling ecosystem
allowing social enterprises to thrive over time. Concerning policy actions that are specifically
designed to support the employment creation role of SEOs, policymakers could promote:
o
Funding stability. Ensure that public financial support goes beyond short-term contract funding
so that longer-term employment plans can be developed.
o
Public procurement. An important tool to sustain social enterprises is public procurement, for
example including “social clauses”, using “reserved contracts” or applying “best quality/price
ratios” so that social enterprises can compete in getting public contracts.
o
Employment subsidies. An ecosystem favourable for the social economy can be also facilitated
through the use of employment subsidies for social enterprises working with disadvantaged
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individuals to offset the costs stemming from the loss of productivity associated with hiring
individuals whose job performance is less than normal.
Box 3.27. Defining the social economy and social enterprises
Social economy organisations (SEOs) traditionally refer to the set of associations, co-operatives, mutual
organisations and foundations whose activity is driven by values of solidarity, the primacy of people
over capital, and democratic and participative governance. Among SEOs, social enterprises, which
emerged more recently, distinguish themselves by a more pronounced entrepreneurial approach – their
source of income coming primarily from commercial activities rather than grants and donations. Social
enterprises may emerge from the social economy or be outside of the social economy.
Social enterprises are identified by the OECD as “any private activity conducted in the public interest,
organised with an entrepreneurial strategy, whose main purpose is not the maximisation of profit but
the attainment of certain economic and social goals, and which has the capacity for bringing innovative
solutions to the problems of social exclusion and unemployment”.
More recently, the EC has defined a social enterprise as being “an operator in the social economy
whose main objective is to have a social impact rather than make a profit for their owners or
shareholders. It operates by providing goods and services for the market in an entrepreneurial and
innovative fashion and uses its profits primarily to achieve social objectives. It is managed openly and
responsibly and, in particular, involves employees, consumers and stakeholders affected by its
commercial activities”.
Source: OECD (2018[94]), Job Creation and Local Economic Development 2018: Preparing for the Future of Work,
https://doi.org/10.1787/9789264305342-en.
Box 3.28. Improving social inclusion at the local level through the social economy
Participative and collaborative in its essence, the social economy can produce inclusive economic
development. However, the social economy and its value-added are often not well understood and its
drivers are not well focused and coherently supported. Reform, development and co-ordination of
existing structures as well as capacity building and leadership are required.
Key issues and policy requirements
Opportunity
New interest and political will could reinvigorate the social economy.
Potential to deliver public services more efficiently in light of budget constraints.
Suggestions
General
Draft specific legislation and ensure legal and fiscal frameworks that are not burdensome.
Ensure the institutional framework provides access to markets, particularly public procurement.
Implement a set of entrepreneurial policies consistent with distinctive features of social
enterprise.
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Develop a strategy to support the social economy sector in similar ways to the SME sector.
Allow the social economy to create its own representative structure.
Develop a system of partnerships and co-governance to support the design and delivery of
policies.
Co-operatives
Deliver modernisation measures to build capacity, assist in independence and strengthen trust.
Develop a programme to promote new work integration co-operatives and user-based welfare
services.
Improve information about and access to tenders and support structures.
Not-for-profit organisations
Address lack of seed capital and cash flow support.
Develop a programme to support NGOs to become social enterprises and encourage NGO and
non-profit mergers.
Develop programmes for strengthening volunteer involvement and facilitate this as a transitional
arrangement for work integration, ensuring that such activities are compatible with the benefits
system.
Social enterprises
Improve sustainability within the tender regime.
Use EU funding to develop a social enterprise strategy.
Develop a supportive environment through seed money, incubators, loan funds and new
networks.
Source: Presentation of the OECD report “Improving social inclusion at the local level through the social economy”, 17 February 2011,
Ljubljana, Slovenia.
Enhancing connectivity and sustainable development
Transport infrastructure and connectivity
Greece has often been criticised in past programming periods for actions that have focused too much on
delivering basic infrastructure investments and not enough on competitiveness and social cohesion actions
(Bartzokas, 2007[7]). In fact, infrastructure investments have been the dominant type of investment in
Greece across each EU Cohesion Policy’s programming period. While these investments have been very
important for the country, they have not fully delivered on the goals of increasing competitiveness, creating
jobs and raising well-being, especially in rural areas and in small islands.
Infrastructure investments were negatively impacted by the economic recession. National investment in
infrastructure declined over this period and EU funds (Cohesion Fund and ERDF) were the main financing
mechanisms for the vast majority of infrastructure projects. There were also demand-side effects. For
example, in the 2 major metropolitan areas, Athens and Thessaloniki, the freight volumes decreased by
42% between 2008 and 2014 (Moschovou and Tyrinopoulos, 2018[114]). Still, in 2018, the rate of
infrastructure investment was around 1.4% of GDP, falling short of the historical pre-crisis average of 3.0%
and the European average of 2.1% of GDP. PricewaterhouseCoopers (PwC) estimates that the current
infrastructure’s project portfolio is much more geared towards energy and transport (91% of the pipeline of
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all projects) and short on tourism (5%) and environment (4% for waste management and water supply)
(PwC, 2018[115]).
The economic benefits of accessibility
Accessibility to towns and cities matters for a number of reasons. 99 Larger agglomerations have more
dynamic and diversified economies and a greater range of public and private services available, including
specialist services that are unlikely to exist in smaller communities (e.g. healthcare specialists and postsecondary education institutions). Agglomeration benefits given by proximity to urban areas or cities is an
important driver of growth and productivity “catching-up” of the lagging regions. Rural regions could take
advantage by “borrowing” agglomeration benefits from nearby cities if they are well-connected. This
includes but is not limited to physical transport connections since digital and ICT are also crucial for
example (OECD, 2018[2]). In contrast, regions with more limited accessibility – such as Greece’s many
islands – face higher transportation costs and seasonal transport variability, problems of water supply and
waste disposal, are poorly connected to core energy infrastructure and often obtain their electricity primarily
from inefficient, expensive and polluting diesel generators (Roinioti and Koroneos, 2019[116]) (Chapter 2).
Yet, while theory suggests that accessibility will, on aggregate, be positive for the economic performance
of an area, there are some caveats to this view. First, the scale of economic impact will vary in different
contexts. Second, the benefits are uneven: some firms and sectors will benefit more than others, while the
benefits will be skewed to particular cities or regions. Also, some important questions remain. In particular,
it is hard to assess whether new transport infrastructure results in a net economic gain for the country or
simply reallocates economic activity from areas with lower accessibility to those with higher accessibility.
Second, the benefits are often realised because of a change in the composition of workers and firms, rather
than benefits to existing workers and firms. Improving accessibility may lead to aggregate benefits at the
regional or county level, but the benefits do not apply to all in the local area. Lastly, another issue is to
consider the economic benefits of accessibility in relation to the cost of transport schemes or potential
alternatives (Lee and Lembcke, 2019[117]).
Policy implementation and financing
Greece’s recent National Growth Strategy outlines amidst priorities the need to further develop and
upgrade Greece’s road and rail networks, improve the efficiency of maritime transport and invest in a
comprehensive national digital/ICT strategy (Hellenic Republic, 2018[1]). In June 2019, Greece has adopted
a new National Strategic Transport Plan, co-ordinated by the Ministry of Transport and Infrastructure, which
contains “high-level objectives” and “investments pillars” and sets the direction for strategic and
co-ordinated investments. They are:
High-level objectives
o
Promote economic growth and efficiency.
o
Increase regional and international connectivity.
o
Ensure environmental sustainability.
o
Increase personal accessibility and social inclusion.
o
Ensure safety and security.
Investments pillars
o
Enhancing safety, sustainability, efficiency and competitiveness of transport.
o
Building stronger international land connectivity.
o
Supporting the tourism sector.
o
Enhancing connectivity to the Greek islands.
o
Improving the efficiency of the logistics sector.
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o
Developing an efficient urban and suburban public transport system to support national
transport system.
o
Fostering regional mobility and growth.
o
Exploring further opportunities (concerns investments that will be reviewed in the future).
The plan spans 20 years and determines the actions that may receive financial support from international
financing institutions and donors, especially the EU and the EIB (Hellenic Republic, 2018[1]).
Further, the National Action Plan for Logistics supports the country’s goal (outlined in the growth strategy)
to become a leading logistics hub by increasing transit and developing value-added services. The National
Ports Strategy outlines initiatives to enhance shipping efficiency, maritime operations and to upgrade port
technologies. Since maritime transport is vital for Greece’s territorial cohesion, it also supports upgrading
commuting and communication between the islands and the mainland, which is another priority outlined in
the National Growth Strategy. The National Digital Strategy (NDS) is the road map and framework
supporting the country’s digital development so that Greece may join the European digital map by 2021
(Hellenic Republic, 2018[1]).
In the EU, infrastructure development has been one of the most prominent priorities under cohesion policy
and the largest category of structural/ESI fund spending over the past five programming periods since
1989. To help EU countries develop the Trans-European Transport Network (TEN-T Network), the EU
adopted a regulation in 2013 providing union guidelines for transport investment. The regulation
establishes a legally binding obligation for EU countries to develop the so-called "core" and
"comprehensive" TEN-T Networks. In addition, the regulation identified projects of common interest and
specified the requirements to be complied with in the implementation of such projects. The Connecting
Europe Facility (CEF) regulation, adopted in 2013, allocated a seven-year budget (2014-20) for the
transport sector. Recently, the EC has taken several initiatives to further foster the development of the
Single European Transport Area. Progress towards this goal has been made, e.g. with the 4th Railway
Package, the Blue Belt initiatives for maritime transport, the proposed Single European Sky II, the EU
Aviation Strategy, and the NAIADES Programme for inland waterways. The focus post-2020 remains on
developing the Trans-European Network, with a particular priority on cross-border sections and missing
links of the TEN-T Core Network, which is planned to be completed by 2030 (EC, 2019[118]).
In this framework, EU cohesion policy funding has been crucial to finance all the major infrastructure
investments in Greece so far. Many important infrastructure projects were completed (e.g. Attiki Odos, the
Metro in Athens, Egnatia Odos, the PATHE north-south road axis, etc.), allowing for new transportation
networks that have dramatically reduced distances and have reshaped the regional map of Greece.
However, despite these many investments, Greece continues to have many competing priorities for (and
with) infrastructure investments. While national funding for infrastructure projects has been limited, the
major source of investment remains the EU Partnership Agreement (ESPA 2014-2020), of which one of
the 5 objectives refers to “Modernisation – Completing infrastructures for economic and social
development”. To this end, the PA allocates about EUR 3 billion for “Promoting sustainable transport and
removing bottlenecks in key network infrastructures”, within the OP for Transport Infrastructure,
Environment and Sustainable Development.
Policy challenges
Efficient transport and connectivity infrastructure and services are important for exploiting the economic
strengths of a country and its regions, supporting the internal market and growth and enabling economic
and social cohesion. They also influence trade competitiveness, pricing and have strong implications on
production processes and the choice of trading partners. With such a central role, transport and
connectivity are by definition also inter-related with various policy areas, such as environmental and social
policies (EC, 2019[118]).
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Greece stands at the crossroad of three continents and has long been a strategic node for transportation.
It is in the challenging position of needing to link mountainous and island territories. Its unique geography,
maritime connections and position at the periphery of the EU makes connectivity a top priority for public
investment. Greece is ranked 24th among EU countries in terms of quality of its infrastructure and Greek
firms report more often than companies in other EU countries inadequate transport infrastructure as a
significant obstacle to investment (EIB, 2017[119]). Moreover, poor intermodal connections – especially
between ports and railways – raise the costs of doing trade and in addition to cumbersome customs
procedures lower the quality of logistics in Greece. 100
To ensure continued and sustainable growth and well-being in Greece’s regions, a number of challenges
regarding transport and connectivity need to be addressed. They include the following points.
Advancing in the National Digital Strategy (NDS) and strengthening digital infrastructure
across regions
Digital infrastructure is underdeveloped, especially in rural and remote areas. The performance of Greece
in the digital infrastructure is uneven, with relatively low mobile broadband penetration. In terms of
connectivity, SMEs lag in their high-speed broadband connections compared to large firms. In 2018,
Greece had the poorest penetration rates in the OECD; less than 10% of all firms with more than
10 employees were connected to fixed high-speed broadband. Some actions to fill the ICT gap are ongoing
but should be accelerated (e.g. the Next Generation Access Programme will deploy fast and super-fast
broadband in rural areas and islands with support from EU funds) (OECD, 2019[54]).
Policy intervention should support actions for:
Developing ICT and digital infrastructure. Fully investing in a comprehensive NDS is crucial for
Greece’s economic transformation and can lead to productivity gains, greatly improve the quality
of life of citizens and the quality of public services. Priorities include ensuring inclusive access to
digital infrastructure (especially to rural areas and islands), accelerating the transition to high-speed
Internet, providing an adequate legal framework, building a modern e-government and helping
economic sectors and SMEs take advantage of productivity-enhancing digital tools (Hellenic
Republic, 2018[1]).
Strengthening the transport primary and secondary networks for people and goods
Greece has made investments in highways and major roads but the secondary road networks for which
regions are responsible are underdeveloped. Some projects are underway but generally advance slowly.
The density of the rail network per surface and population is one of the lowest in the EU. The low capacity
of the railway lines places a limit on the number of (high-speed) trains that can use the existing network.
The limited coverage of the rail network and its low capacity put severe limitations on mainly cargo but also
passenger traffic flows. The share of rail freight in the modal split remains low also due to the nondeveloped market and missing links with the main seaports. The modal share of rail passenger inland
transport is one of the lowest in the EU. Further, the extensive network of non-TEN-T ports is facing
difficulties in obtaining the necessary funding to cover maintenance and re-investment costs (EC,
2019[118]).
Policy intervention should support actions for:
Enhancing regional road networks. Greece has made important investments in highways and major
national roads but the basic regional road networks should be completed and better linked to
motorways, ports and airports to shorten travel and export/import lead times fostering regional
productivity, competitiveness and citizens’ well-being.
Strengthening railway and maritime transport. Railway and maritime transportation need to
overcome bottlenecks and better integrate amongst themselves and with the road systems. The
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lack of high-quality infrastructure or low-performing rail and port services can result in significant
extra costs for shippers, transport operators and consumers. For EU companies, port and terminal
costs can represent up to 25% of the total door-to-door logistic cost. Some action has been taken
(e.g. the Ports Regulation of 2017-18 introduces rules on transparent public funding to improve
market access and make port investments and operations more efficient) (EC, 2019[118]). However,
it is necessary to further act on administrative simplification, port capacity and efficiency,
connection to the hinterland and access to financing especially for the network of non-TEN-T ports.
Fostering practices and capacities for project planning, design and implementation.
The main factors contributing to a systematic shortfall of infrastructure investment in Greece are poor
planning, slow process of political consensus and delays that curtail infrastructure positive economic
impact. Infrastructure projects in Greece suffer from systematic slippage both in preparation and execution,
with an average 23 months of slippage in preparation/design and 28 months of slippage in
execution/construction (PwC, 2018[115]). An additional important aspect to consider is the fact that regions
have taken on greater responsibility for aspects of transportation and other types of infrastructure in recent
years but many of them lack adequate resources and capacities.
Policy intervention should support actions for:
Improving project planning, design and implementation. Project planning and implementation need
to be accelerated and better linked to strategic plans for public investment and spatial planning.
Speeding up the preparation and execution of projects would require enhanced co-ordination
across the whole process and full use of concessionary and private funding. To do so, there could
be a single state organisation mandated with the planning, design and management of all major
infrastructure projects to reduce delays and maximise private funding (PwC, 2018[115]).
Enhancing regions’ and municipalities’ capacity to plan, co-ordinate and deliver local infrastructure
investments. Greece’s decentralisation reforms ushered in new responsibilities for regions and
municipalities for certain aspects of transportation, communications, energy and waste
infrastructure. The national government remains responsible for large infrastructure such as main
roads and is responsible for approvals of infrastructure projects. Regions and municipalities often
lack resources, staff and capacities to accomplish their increasing tasks. New and extended forms
of technical assistance and more flexible ad hoc support for subnational authorities to plan,
co-ordinate and deliver local infrastructure investments should be envisaged for the next
programming period.
Fostering stakeholder consultation and partnerships. Transparent and early engagement with all
stakeholders is key to building political ownership of long-term public investment strategies.
Inclusive consultation allows any regulated party or member of the public to contribute or comment
on proposals, ensuring that all concerned interests are heard (OECD, 2018[8]).
Prioritise investments and diversify financing for infrastructure
The growing need for infrastructure spending, combined with the limited capacity of state funding and the
balance sheet constraints of the Greek banks call for new sources of funding. Traditional funding sources,
such as loan facilities and the PIP are limited. The financing involvement of the private sector is also limited
(PwC, 2018[115]; EC, 2019[118]).
Policy intervention should support actions for:
Fully exploiting all the available financing options. Given the scarcity of national financing, EU funds
have been crucial for infrastructure projects in Greece. However, there are many competing
pressures for infrastructure and there needs to be a more robust system to prioritise and finance
investments across local, regional and national scales. Existing financing instruments should be
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better exploited; these include: i) private investment in infrastructure in partnership with the public
sector (PPP); ii) use of project bonds, which could provide a significantly higher private sector
participation in infrastructure funding adding a low-risk element in institutional investors’ portfolios;
iii) tax increment financing earmarks incremental property tax revenues to service debt incurred to
develop new transit infrastructure; iv) municipal asset management to generate additional value
that can be invested in infrastructure; and v) value capture leverages (e.g. the value of property
made viable by new infrastructure such as a subway line extension) to finance that new
infrastructure, etc. (PwC, 2018[115]).
Developing better local data. New and more efficient indicators and data are needed to conduct
population forecasts, prioritise investments and monitor change. A dedicated unit within the
Ministry of Transport might take the task to harmonise existing data and developing new survey
which should help to address these issues in the future.
Tackling territorial difficulties for accessibility and service provision
Greece’s rather unique geography characterised by a mountainous land and almost 6 000 islands. This
shapes the distribution and access of people and resources across the territory. Around a third (32%) of
Greece’s population lives in rural and remote areas. Across the OECD, this is comparable with the most
sparsely populated countries, like Norway or Sweden. As a result, a quarter of the population cannot reach
a town with at least 50 000 inhabitants within an hour travel time (by any transportation mode). This matters
because larger agglomerations have more dynamic and diversified economies and a greater range of
services available.
Policy intervention should support actions for:
Developing dedicated strategies for special areas such as islands and remote rural areas. The
heterogeneity of the Greek territory and the islands’ landscape, in particular, pose some unique
infrastructure challenges because of the size and fragmentation of territories and scarce
connectivity and accessibility. This reflects in weak services (e.g. business, health, administration)
and lack of adequate transport infrastructure for citizen and tourism, high costs of transportation
for citizen and goods and high pressure on the local environment (e.g. energy use, water and waste
management). All this calls for a strong place-based approach and dedicated solutions/incentives
when planning future use of the ESIF under the cohesion and regional policy.
Sustainable development
Greece’s rich natural environment is among the country’s major economic assets. A vast part of the territory
is not exploited or only lightly so. This is especially the case in mountain areas and remote islands.
However economic development driven by tourism and infrastructure building has often increased the
pressure on the environment. The majority of the population, infrastructure and economic activities are
concentrated in the coastal plains. Uncontrolled construction has led to the degradation of nature and
landscapes in some areas. Tourism is highly seasonal: the population rises two to tenfold on islands and
coastal areas during summers, often overloading water and waste services. Much of the agricultural
produce is intensively grown with excessive use of irrigation, fertilisers and pesticides, impacting on climate
change and natural resources. Industry generates increasing environmental pressures, particularly for
disposal of solid and liquid waste. Greece has made important steps to control these pressures.
Nonetheless, further efforts are needed to achieve environmental convergence within the EU and the
OECD.101
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Policy implementation and financing
The Ministry of the Environment and Energy (MoEE) holds most environmental policy and regulatory
powers at the central level, together with the Ministry of Rural Development and Food. Decentralised
administrations of the national government have significant environmental management responsibilities,
particularly with respect to spatial planning. Regions regulate activities with low environmental impact,
municipalities deliver water and waste-related environmental services. In 2018, Greece renewed its
commitment to sustainable development in a voluntary national review on implementation of the
2030 Agenda (Government of Greece, 2018[120]). Among its priorities are strengthening the protection and
sustainable management of natural capital as a basis for social prosperity and transition to a low-carbon
economy. The 2019 National Strategy for Sustainable and Fair Growth 2030 (NSSFG) guides Sustainable
Development Goal implementation until an action plan is developed (Government of Greece, 2019[85]).
The Greek environmental policy is largely based on EU environmental regulations and directives. Current
environmental policy in Greece focuses on encouraging the use of renewable energies and applying
energy efficiency and waste management measures that promote eco-innovation.
As depicted in Chapter 2, EU Structural and Investment Funds (ESIF) represent an important share in
Greek public investments (which fell since the crisis as Greece targeted debt reduction through
consolidation programmes). Environmental policy and sustainable development have been important
priorities for each of the last three EU Cohesion Policy programming periods (Tzifakis, Liargovas and
Huliaras, 2015[121]).
Protection of the environment and transition to a more environmentally friendly economy is one of the main
strategic priorities of the Partnership Agreement (ESPA) for Greece 2014-2020. It refers to ESIF thematic
priorities: 4 – “Support the transition to a low-carbon economy in all sectors”; 5 – “Promotion of the
adaptation to climate change, risk prevention and management”; and 6 – “Preservation and protection of
the environment and promotion of efficient use of resources” (Table 3.11).
To this end, specific measures are contained in the national OP for Transport Infrastructure, Environment
and Sustainable Development and in each of the 13 ROPs (Table 3.12). The Rural Development102 and
the Fishery and Maritime Programmes 2014-2020 also include nature conservation policies (Tables 3.13
and 3.14). The partnership agreement (ESPA) 2014-2020 allocates the largest share of ESIF (21% out of
total funding),103 to promote innovative technologies and practices for environmental protection, waste and
water management, soil contamination and air pollution. ESIF support also includes related businesses,
research and development activities, data acquisition and monitoring.
Table 3.11. Total (EU and national) contribution for ESIF Thematic Objectives 4, 5 and 6
Thematic Objective
Objective 4. Supporting the shift towards a lowcarbon economy in all sectors
Objective 5. Promoting climate change adaptation,
risk prevention and management
Objective 6. Preserving and protecting the
environment and promoting resource efficiency
Commitments
(EUR)
Budget of calls
and tenders
(EUR)
Contracted
(EUR)
Payments
(EUR)
2 390 385 946
4 024 026 176
2 619 800 403
1 216 346 532
421 809 483
330 857 938
184 648 420
81 178 803
3 890 347 020
4 274 805 821
1 765 463 273
927 139 086
Note: They are: support the transition to a low-carbon economy in all sectors (obj. 4), promotion of the adaptation to climate change, risk
prevention and management, preservation (obj. 5) and protection of the environment and promotion of resource efficiency (obj. 6).
Source: ANAPTYXI (n.d.[122]), Homepage, www.anaptyxi.gov.gr (accessed on 15 April 2020).
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Table 3.12. Total (EU and national) contribution of Regional Operational Programmes (2014-2020)
for Thematic Objectives 4, 5 and 6
Commitments
(EUR)
Budget of calls and
tenders
(EUR)
Contracted
(EUR)
Payments
(EUR)
Attiki
331 434 053
318 025 112
253 321 835
110 026 836
Voreio Aigaio
127 112 042
120 254 367
48 775 044
27 257 239
Notio Aigaio
50 652 414
66 678 404
26 474 761
13 033 644
Kriti
189 437 310
162 588 897
71 957 625
39 353 682
Anatoliki Makedonia-Thraki
190 973 793
180 027 453
57 035 819
28 635 852
Kentriki Makedonia
214 316 607
265 299 538
66 607 570
25 580 564
Dytiki Makedonia
125 836 652
117 059 334
42 914 015
23 461 335
Ipeiros
132 221 552
144 172 267
70 175 038
42 051 189
Thessalia
116 700 000
129 014 331
23 682 756
11 634 782
Ionia Nisia
89 920 977
89 052 598
34 826 562
19 508 349
Dytiki Ellada
160 238 844
171 290 087
70 322 874
47 341 917
Sterea Ellada
45 507 756
32 718 947
17 372 443
12 016 524
Peloponnisos
60 618 839
66 552 132
20 533 151
11 607 517
Region
Note: The Thematic Objectives are: 4 – “Support the transition to a low-carbon economy in all sectors”; 5 – “Promotion of the adaptation to
climate change, risk prevention and management”; and 6 – “Preservation and protection of the environment and promotion of efficient use of
resources”.
Source: ANAPTYXI (n.d.[122]), Homepage, www.anaptyxi.gov.gr (accessed on 15 April 2020).
Table 3.13. Financing of measures of the Rural Development Programme 2014-2020 that are related
to natural rural amenities
Measures
Amount (EUR)
07 - Basic services and village renewal in rural areas – biodiversity
84 401 320
08 - Investments in forest area development and improvement of the viability of forests
12 - Natura 2000 and Water Framework Directive payments
251 265 500
7 500 000
Source: EAD (n.d.[123]), Rural Development Programme of Greece 2014-2020, https://ead.gr/home-en/grdp-en/.
Table 3.14. Budget for the areas of the network NATURA 2000 for 2014-20 in Greece
Investment priority
Total (KEUR)
Completion of the National System of Protected Areas and management structures of Natura 2000 areas
227 200
Supervision, monitoring and planning of the management of Natura 2000 areas
56 300
Organisation and functioning of the environment explanation system – Actions of information and sensitisation for the
biodiversity of Natura 2000 areas
40 350
Habitat management plans/species and management implementation for the measured improvement of the conservation
situation
91 800
Actions to upgrade the operation and organisation of the management of Special Protection Areas
21 600
Management measures for the reduction of influences from the invading species
13 000
Advancement of specifications, compilation of plans for sustainable development of forests by incorporating measures to
promote biodiversity in forest management plans
4 800
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Investment priority
Total (KEUR)
Completion of the Maritime Network of Natura 2000
36 500
Organisation and promotion of ecotourism in national and regional parks
24 190
Continuous training of staff and personnel of the system of natural environment
4 500
Reinforcement and promotion actions of ecosystems and protected areas
146 930
Total
667 190
Personnel/Administration operation costs
18 046
New total
685 236
Source: (EC, 2014[124])
Greece’s commitment to green growth through a circular economy
The transition to a low-carbon, resource-efficient and circular economy is of key importance for Greece to
ensure environmental protection but also to boost green growth, create new jobs, fight unemployment and
support innovation in production, consumption, value chain of materials, sharing use methods and
reduction, reuse and recycling of waste, in order to extend the life circle of products and optimise the
resources, water and energy. In 2018, Greece’s Governmental Economic Policy Council endorsed a
National Strategy and an Action Plan on Circular Economy to set the country on a path towards the longterm adoption of circular economy principles. The long-term (2030) goals of the Strategy on Circular
Economy can be summarised as follows:104
Moving up the waste hierarchy by focusing on preventing waste and improving recycling.
Supporting circular entrepreneurship by promoting “industrial symbiosis” and business clusters.
Supporting circular consumption patterns of re-using, restoring and repairing rather than buying
new products, especially for electrical and electronic devices.
Enhancing multi-stakeholder partnerships across industry, academia and civil society.
Monitoring progress towards a circular economic model through SMART (specific, measurable,
achievable, relevant and time-bound) indicators.
Policy challenges
One enabling factor for future regional growth is Greece’s environmental capital. An almost untouched
natural environment and a unique and rich cultural heritage characterise wide areas of Greece. Over the
last years, important progress was made in the implementation of national and EU environmental
legislation. However, the renewed economic growth has led to increased pressures on the environment,
which already included unplanned construction, degradation of some coastal zones and some islands,
increasing air emissions from electricity generation and problematic use of irrigation water. Although much
is undergoing, overall, further efforts are needed to achieve environmental convergence within the EU and
the OECD. To meet these challenges, Greece needs to thoroughly develop and implement its
environmental and land use policies, which should be better integrated into sectoral policies. Also, law
enforcement remains a major issue and should be strengthened to foster the effectiveness of regulations
and permitting.105
To ensure continued and inclusive growth and well-being in Greece’s regions, a number of challenges
regarding the environment and sustainable development need to be addressed. They include the following
points. (For additional complementary analysis and recommendations, please also consult the “OECD
Environmental Performance Review Greece 2020”, OECD 2020).
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Implementing the circular economy in all Greek regions
Greece adopted a National Circular Economy Strategy and Action Plan in 2018 and the 2017 Law on
Recycling aligned existing legislation with circular economy principles. A circular economy can strengthen
entrepreneurship and development, along with high-level environmental conservation. Investing in a
circular economy, energy efficiency and facing climate change may become a lever for changing the Greek
productive model, thus reversing the prevalent trends of de-investment, while also promoting new
investment and creating new jobs throughout the supply chain of industrial products.
Policy intervention should support actions for:
Fully implementing the Circular Economy Strategy enforcing its action plan. The Greek government
has set implementation of circular economy objectives through a Circular Transition Business Plan
of Greece, as one of its key cross-sectoral priorities. Action should be enforced and accelerated at
three levels: i) setting criteria for green and circular public procurement including through incentives
for enhancing secondary raw material markets and industry; 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.
Improving waste management
There are structural problems with waste management in Greece and the country has been far behind EU
standards for waste management (e.g. in 2014, it was fined by the European Court of Justice for
uncontrolled waste disposal sites and landfill use, in contravention of the EC Waste Directive). Greece
disposes of the majority of its municipal waste in landfills (80%, vs. EU average of 24%), with only 19%
being recycled (EU average 46%) (EC, 2019[125]). The 2012 pay-as-you-throw (PAYT) scheme to reduce
waste in landfills and encourage people to separate their waste for separate collection is not yet being
applied. A landfill tax was created in 2014 but it was suspended in 2017. This fee remained low and did
not apply to residues of waste treatment processes. In 2017, the EC called Greece to “Properly enforce
and gradually increase landfill taxes to phase-out landfilling of recyclable and recoverable waste”. 106
Low fees and illegal landfills do not encourage recycling over disposing of waste. Municipalities are
responsible for the collection of waste and develop waste plans together with regional waste management
agencies, which are national government deconcentrated agencies. According to OECD interviews,
inefficiency and bureaucracy are a major block to improve waste management and co-ordination
(e.g. across ministries involved and also at subnational levels) is often lacking or not effective. For instance,
in continental Greece, only a few municipalities are reported to manage waste efficiently. Greece’s many
islands have a delicate ecology and a face a lot of environmental pressures due to geographic specificities,
lack of adequate infrastructure and services and tourism pressure.
Policy intervention should support actions to:
Continue upgrading waste management infrastructure in more in-need regions/municipalities.
Policy innovations are being recently introduced and should be further developed. For instance,
there is a plan to co-finance waste management units by the private sector and for this purpose,
the government is creating a pricing plan for municipalities to be debited by the regional agencies.
The construction of appropriate waste treatment units should be accelerated and the preparation
of a new set of PPPs urged. More investments in waste management targeted at specific needs of
different regions and localities are also needed to meet European standards; this will also ultimately
help to create jobs.
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Fostering decarbonisation and the use of renewable energies
Greece ranks among the ten most carbon-intensive economies in the OECD due to its strong reliance on
fossil fuels (OECD, forthcoming[23]). Although the country is slowly shifting from oil and coal to natural gas
and renewable resources, there is much room to foster the use of renewable energies, which can stimulate
eco-innovation and help to move towards a more circular economy. The establishment of energy audits
(2016) and an energy efficiency obligation (EEO) programme (2017) are important steps in the right
direction. In 2019, a National Renewable Energy Action Plan was created to foster energy saving and
renewables, in accordance with the EU Renewable Energy Directive. 107 The plan includes updates in the
legal framework and risk assessment. Natural gas is subsidised by the government and there are
facilitations for integrating natural gas in households, which compete with renewables. 108 Improvements in
energy efficiency are however affected by lack of public funding, low public awareness and limited data
and monitoring of implemented measures.109
Policy intervention should support actions for:
Making decarbonisation and improvements in energy efficiency a major priority for (national and)
subnational governments. The establishment of energy audits (2016) and an energy efficiency
obligation (EEO) programme (2017) are important steps in the right direction (OECD,
forthcoming[23]). The necessary completion of the National Energy and Climate Plans (NECPs) for
2021-30 within the EU “Clean Energy for all Europeans” strategy110 will be an important step
forward. Greece’s NECP, submitted to the EC in December 2019, sets ambitious energy and
climate targets, including a detailed plan for phasing out 14 lignite power plants amounting 3.9 GW
(about one-third of conventional installed capacity in Greece) by 2023. To this respect, Greece
needs to further detail a broader national decarbonisation plan and design a focused sustainable
development and regeneration strategy for the carbon-dependent areas. Decarbonisation will have
an enormous effect on the energy sector, the environment as well as the future prospects of the
region of West Macedonia and the area of Megalopolis in Peloponnese. In order to pursue an
energy efficiency goal, it will be necessary to strengthen investments in biomass, geothermal, wind
and solar-thermal energy (OECD, forthcoming[23]). Investments should consider specificities and
needs of territories. Local authorities should be supported through know-how and financially by the
central government to implement local practical plans to have renewable resources, energy
savings, demand-side management and production of clean electricity. Public awareness should
be raised through ad hoc actions and monitoring of the impact of implemented measures should
be dramatically strengthened.
Increasing environmental investments and ensuring stable financial resources to fully
implement all aspects of environmental policy
Further to the above discussions, additional challenges that the national and subnational governments
need to consider high in their policy actions refer to:
Climate change. Both urban and rural areas across Greece are feeling the impacts of climate
change – from major floods to forest fires – and there has been major damage to property and
infrastructure in recent years, as well as loss of life.111 Environmental challenges linked to urban
planning are also anticipated. Urban settlements are expected to scale up by 2030 and there is a
need to improve planning, infrastructure and anti-flooding measures. Greece adopted the EU
Adaptation Strategy on climate change in 2016. The Greek National Adaptation Strategy (NAS) is
an overarching policy document, which defines goals, principles and priorities to make the climate
more resilient. The NAS includes adaptation measures and actions for socio-economic sectors that
are likely to be affected by climate change. 112 The NAS provides guidance, insight and priorities,
which should be further detailed at the regional level and translated into Regional Adaptation Action
Plans. These plans should take into account strategic environmental assessments and sectoral
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
220
strategies for renewables, water and flood risk management. The law also calls for the
establishment of a National Climate Change Adaptation Committee to advise the Ministry of the
Environment and Energy (MoEE) and co-ordinate policy design and implementation. However, the
work to fulfil NAS requirements and define the related implementation system is moving slowly and
should be accelerated and better integrated with other policies (EC, 2019[125]).
Water management. Greece is endowed with freshwater resources but spatial and seasonal
distribution and use vary widely. The Greek National Action Plan against Desertification 113
considers that about 30% of the land is in several stages of desertification. The regions of the
Aegean islands, Central Macedonia, East Macedonia-Thrace and Thessaly are at high risk of water
deficit due to climate change (EC, 2014[124]). Greece has one of the OECD’s highest rates of water
abstraction per capita due to irrigation (which is subsidised through water pricing and tax-exempt
electricity use) and to leakages in the distribution system, which contributes to inefficiency and
potentially creates health hazards (OECD, forthcoming[23]; EC, 2018[126]; National Bank of Greece,
2015[127]).
Air pollution. Despite recent improvements, Greek cities and metropolitan areas (first of all Athens
and Thessaloniki) are amongst the most polluted in Europe (Chapter 2). Car emissions and
residential heating are two major sources of ambient PM pollution that determine air quality of
cities. Air pollution is not exclusive to metropolitan areas in Greece. Crete and South Aegean have
had the highest pollution levels across regions over time. Other Greek regions experience smaller
exposure to pollution, with Continental Greece, the Ionian Islands and Thessaly being the least airpolluted regions in Greece. Yet, in 2017, all Greek regions have higher air pollution levels than an
average OECD region. Almost all emissions in Peloponnese and Western Macedonia come from
the energy sector, as they are specialised in mining and energy production. In Attica, Central
Macedonia, Crete, Epirus, Ionian Islands, North Aegean Islands and Western Greece, between
30% and 51% of emissions come from the transport sector, with the energy sector counting for
17% (Chapter 2).
Cities and regions have the brunt of the significant economic and human costs of climate change, both in
terms of rebuilding and recovery efforts that follow climate-related disasters, as well as the investments
that can support climate mitigation and adaptation efforts. Climate-related events, such as storms,
droughts and heatwaves, put residents, the local economy and social cohesion at risk; they also have the
potential of entrenching existing inequalities, as disadvantaged populations suffer disproportionately from
climate change damages.
ESIF rules oblige EU countries to promote the environment and climate in their funding strategies and
programmes for economic, social and territorial cohesion, rural development and maritime policy. Use of
ESIF is essential if Greece has to achieve its environmental goals and integrate these into other policy
areas. However, achieving sustainability involves also mobilising national public and private financing
sources. Greece spent EUR 2 752 billion on environmental protection in 2016, an increase of 8% from
2015, 48% for reducing pollution, 41% for waste management, and 0.1% for protecting biodiversity and
the landscape (EC, 2019[125]).
Policy intervention should support actions for:
Harnessing the potential of subnational governments to deliver sustainable development. This
includes: i) strengthening data collection, statistical systems and methodological approaches to
track policy implementation; ii) mobilising funding to help subnational governments address
environmental priorities; iii) making greater use of land value capture tools to support climate and
inclusive growth objectives; iv) exploring the potential for green bonds to achieve both climate and
inclusion goals; v) fostering effective horizontal co-operation, in particular in metropolitan areas –
for instance, some financing instruments (e.g. congestion charges, ecotaxes) should be applied at
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
221
the regional/metropolitan scale, not only in city centres; and vi) developing a green fiscal strategy
and action plan, and integrating green priorities in budgeting (OECD, 2019[128]).
Reinforcing administrative structures and procedures
In recent years, Greece has made major efforts to streamline administrative structures, processes and
legislation to reduce delays and bottlenecks affecting the country’s competitiveness and growth. This
included environmental and spatial planning. However, ensuring compliance with environmental laws and
regulations is still a challenge for Greece, which faces a highly fragmented regulatory environment – with
co-competencies and overlapping competencies, a complex public procurement framework, extensive use
of red tape and rigid controls set at different administrative levels. This scenario is further complicated by
persisting lack of financial resources and competencies, mainly at subnational levels. 114
Policy intervention should support actions for:
Fostering administrative capacity and quality. Central, regional and local administrations must have
the ability to carry out their own tasks and work effectively with each other within a system of
multilevel governance (see Chapter 4). The MoEE is responsible for producing a global
environmental policy, preparing plans and programmes and monitoring them. The ministry is also
in charge of transposing EU environmental directives into national law. At the decentralised level,
the regional and municipal authorities have certain environmental competencies for their
geographical areas. Regional and municipal authorities assure the practical application of various
environmental measures such as water quality, waste management and impact assessments.
Difficulties in meeting deadlines and requirements of the EU environmental legislation may be
explained by relatively few (and decreasing in recent years) human resources to deal with the
complex body of environmental legislation, combined with the bottlenecks created by lengthy and
complicated administrative procedures, which often involve too many actors from various levels of
public administration (EC, 2019[125]). Although a number of measures and mechanisms are already
in place (e.g. for water and waste management), there is room to improve formal and informal
vertical co-ordination, streamline environmental legislation and procedures, simplify the public
procurement framework, reduce the use of red tape and increase skills and capacity of regional
and local actors.115
Fostering legislative systematisation and mapping. The systematisation of environmental
legislation has been initiated with support from the EC and should be speeded up and promptly
completed. This action complements the ongoing systematisation of the cadastre and spatial
planning and aims at better enabling citizens and investors to access and understand
environmental legislation (EC, 2019[26]). Further, the Greek government is (slowly) advancing in
the preparation of the so-called “forest maps”. As of May 2019, 55% of the territory has been
mapped. In order to accelerate the ratification of the maps, some areas with building settlements
within forest land were temporarily excluded from the maps. The rationale was to cover the vast
majority of the country with permanent and definitive maps, while the state would decide on how
to proceed with the more controversial areas, where whole settlements were built within forest land
at a later stage (EC, 2019[26]). This very important mapping exercise should be speeded up and
finalised, including all the designed areas without further delays.
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Notes
1
Non-profit sector, third sector or social economy (e.g. NGOs, non-profit organisations, community groups,
co-operatives, etc.) are distinct but interconnected concepts that partially overlap and are sometimes used
as synonyms (OECD, 2003[134]; Salamon and Sokolowski, 2014[135]).
2
The legal basis of Cohesion Policy can be found in Art. 174 of the Treaty of the Functioning of the
European Union (TFEU). As is fixed there, cohesion policy focuses on reducing regional disparities: “In
particular, the Union shall aim at reducing disparities between the levels of development of the various
regions and the backwardness of the least favoured regions” (Auslandsbüro Griechenland, 2015[131]).
3
The main policy goals of the Europe 2020 strategy is to deliver more and better jobs and a socially
inclusive society. This is achieved through three broad socio-economic goals based on: i) sustainable
growth; ii) smart growth; and iii) inclusive growth.
4
European Commission – Regional development and cohesion – legal texts and factsheets.
5
National Strategy for Sustainable and Fair Growth 2030, https://www.nationalgrowthstrategy.gr/en/.
6
The European Structural and Investment Funds (ESIF) are: the European Regional Development Fund
(ERDF), the European Social Fund (ESF), the Cohesion Fund (CF), the European Agricultural Fund for
Rural Development (EAFRD) and the European Maritime and Fisheries Fund (EMFF). The ERDF and ESF
together form the so-called European Structural Funds (EU-SF).
7
The principles and priorities of cohesion policy for the seven-year period are distilled through a process
of consultation between the EC and EU countries (and in certain cases between the countries and their
regions). They are outlined in “partnership agreements” stipulated by each state with the EC. Each
partnership agreement examines the economic and institutional context in order to outline a strategic
framework for the optimal use of the ESIF. It sets out the strategy for investments under the cohesion
policy, rural development as well as the fisheries and maritime policy (in line with the targets of Europe
2020).
8
The EU Structural Funds (EU-SF) are composed of the European Regional Development Fund (ERDF)
focused on innovation and research, digital agenda, support for SMEs and a low-carbon economy, and
the European Social Fund (ESF) focused on employment, education, training, social inclusion and
institutional capacity.
9
Less developed regions are those regions with GDP per capita of less than 75% of the EU-27 average;
transition regions are those with GDP per capita of greater than 75% but less than 90% of the EU-27
average and finally, more developed regions at those with GDP per capita of greater than or equal to 90%
of the EU-27 average.
10
EU contribution from: https://ec.europa.eu/regional_policy/el/atlas/; https://ec.europa.eu/info/foodfarming-fisheries/key-policies/common-agricultural-policy/rural-development/country/greece_en;
https://ec.europa.eu/fisheries/cfp/emff/country-files.
The European Territorial Cooperation (ETC), also known as “Interreg”, is one of the goals of Cohesion
policy which provides the framework for the implementation of joint actions and policy exchanges among
national, regional and local actors from different partner states. The overarching objective of ETC is to
promote a harmonious economic, social and territorial development of the union as a whole.
11
12
As a consequence of the change in government after the July 2019 elections, the Ministry of Economy
and Development has been renamed the Ministry of Development and Investments.
13
Non-profit sector, third sector or social economy (e.g. NGOs, non-profit organisations, community
groups, co-operatives, etc.) are distinct but interconnected concepts that partially overlap and are
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
233
sometimes used as synonyms (OECD, 2003[134]; Salamon and Sokolowski, 2014[135]).
14
Source: Ministry of Development and Investment.
15
For example, financing the Special Purpose Developing Programs in the regions of North and South
Aegean.
16
Source: Ministry of Development and Investment.
17
Source: Ministry of Development and Investment.
The main goals are to: stimulate “extroversion” and innovation; create new jobs; utilise the country’s
human resources with emphasis on the employment of skilled human capital to reverse the migration of
young Greek scientists; encourage the production of high added-value products and services; improve the
technological level and competitiveness of enterprises; achieve smart specialisation; develop networks,
synergies, co-operative initiatives and generally support the social economy; encourage mergers;
strengthen through reform and intervention healthy and specialised entrepreneurship with an emphasis on
SMEs; re-industrialise the country; reduce the ecological footprint.
18
19
The Development Council is composed of a Scientific Committee and the Social Partners and Public
Administration Committee. The scientific committee is composed of experts and has the task of preparing
proposals and provide expertise on the country’s National Growth Strategy and on the design of national
and European development programmes. The Social Partners and Public Administration Committee
(SPPAC) is composed of public administration officers from local and regional authorities and social
partners.
20
Relevant aspects concern: i) simplification of licensing for the strategic investments and introduction of
fast-track provisions and incentives for urban-planning; ii) fast-track audit and certifications procedures for
investment projects; iii) consolidated digital map/integration of land-related data in one system;
iv) facilitation in the Athens-Attica Regulatory Plan for certain aspects of urban planning for the
re-industrialisation of Attica (e.g. related to “Green Investments”); v) modernisation and simplification of
business parks provisions; vi) simplification of the licensing process for industrial activities;
vii) establishment of a one-stop shop for business related licenses; viii) facilitation of certain aspects of
environmental licensing; ix) reform of collective and individual labour relations and measures to tackle
undeclared work; x) digitalisation of administrative legal procedures; xi) speeding up of public procurement
procedures; xii) simplification and digitalisation of procedures for the Hellenic Commercial Registry.
Source: Ministry of Development and Investment; “Law4635/2019: an overview”, KLC Law Firm,
5 December 2019. www.klclawfirm.com.
21
22
Over the 2014-20 programming period, self-governed regions elaborated and managed Regional
Operational Programmes (ROPs) for the first time. In 2007-13, ROPs were also planned by the regions
but managed by the Ministry of Development and Investments through a system of delegations back to
the regions.
Greece has a National Spatial Strategy which sets out principles and objectives for the country’s spatial
development. Regional Frameworks of Spatial Planning and Development are also the responsibility of
the central government. Sub-regional governments, including regions and municipalities, have approval
and oversight roles in planning document development.
23
24
In Greece, there is 1 national and 13 regional RIS3s. The identification of key development priorities
through Research and Innovation Strategies for Smart Specialisation (RIS3) at the regional and/or national
level is an ex ante conditionality of the European Structural and Investment Funds (ESIF) implementation
procedure. The choice as to whether the smart specialisation strategies should be prepared at a regional
level or a national level rests with the EU member states. All of Greece’s national and regional ESIF
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
234
Operational Programmes try to incorporate the RIS3 process according to the content of their priority axis
and the nature of interventions.
25
Smart specialisation strategies involve three distinct areas: i) the underlying role of scientific,
technological and economic specialisation in the development of comparative advantage and more broadly
in driving economic growth; ii) policy intelligence for identifying domains of present or future comparative
advantage; and iii) governance arrangements that give a pivotal role to regions, private stakeholders and
entrepreneurs in the process of translating specialisation strategies into economic and social outcomes.
26
Notably the Ministry of Economy, Infrastructure, Marine and Tourism, the Ministry of EducationResearch and Religious Affairs, the Ministry of the Environment and Energy, and the Ministry of Labour,
Social Insurance and Social Solidarity.
27
In fact Thessaly has also a significant industrial base in the cities of Larissa and Volos.
28
Typology of Greek regions informed by Komninos et al. (2014[133]).
29
The hiring of permanent staff by ministries, independent agencies, decentralised and local government
and the public bodies supervised by them is subject to a hiring ratio of 1:4 (previously 1:5) attrition rule laid
out in the memorandum of understanding (MoU), meaning one new hire is permitted for every 4 (previously
5) departures.
30
Between 2004 and 2018, the share of population distrusting the EU increased by 48 percentage points,
the highest share among EU member states (Dijkstra, Poelman and Rodríguez-Pose, 2018[129]).
31
See also: Rodríguez-Pose, Psycharis and Tselios (2016[137]); Rodríguez-Pose, Psycharis and Tselios
(2016[138]).
32
www.anaptyxi.gov.gr/el-gr.
Some regions – e.g. in Argolis and Arcadia (Peloponnese), Continental Greece, Drama (Eastern
Macedonia), Epirus and Western Greece – have fewer than 30 people for square kilometre. Meanwhile,
Continental Greece and Epirus are entirely composed of predominantly rural regions, and North Aegean,
Peloponnese and Western Macedonia regions have all above 73% of population living in rural remote
areas.
33
34
OECD Principles on Urban Policy (2019), https://www.oecd.org/cfe/urban-principles.htm.
35
Also referred to as the Second Bailout package or the Second Memorandum.
36
Also referred to as the Third Bailout package or the Third Memorandum.
37
This has implied the reduction of the planning levels from six to three, excluding master plans at the
metropolitan level and unifying the plans at the lower levels (e.g. city plans), renaming them Urban
Implementation Plans.
38
See also OECD (n.d.[136]).
39
See also the Urban Agenda of the EU.
40
Although this is not the case of Greece, many EU states (e.g. Italy) have gone beyond the minimum of
5% and have implemented Integrated Territorial Investments, committing additional non-urban funding to
territorial development.
41
See: https://urbact.eu/what-are-integrated-territorial-investments.
42
The New Master Plan of Athens-Attica applies to the region of Attica and gives strategic directions for
the whole region and specific directions for each spatial unit.
43
Carried out accordingly to the EC Commission Delegated Regulation EU 1698/2005.
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
235
This increase may reflect that individuals sold off their homes over this period – often to foreign buyers
(though there are no national figures on the extent of this).
44
45
The largest share of GVA for both predominantly urban regions and predominantly rural regions close
to cities is in the trade, transport, accommodation, food sector (at 23% and 22% respectively in 2015).
46
This ministry which co-operates with others for other relevant thematic fields such as the Ministry of the
Environment and Energy (for the protection of the environment), the Ministry of the Interior, the Ministry of
Finance (for financing, e.g. support of Special Protection Areas), the Ministry of Development and
Investments (for issues of infrastructure, e.g. forestry roads), the Ministry of Labour, Social Security and
Social Solidarity (for training issues), the Ministry of Health, the Ministry of Culture and Sports, and the
Ministry of Tourism.
47
https://www.europarl.europa.eu/factsheets/en/section/196/the-common-agricultural-policy-cap-.
The programmes are based on a combination of measures selected from a “menu” of European
measures detailed in the Rural Development Regulation (Regulation (EU) No 1305/2013) and co-financed
by the EAFRD.
48
49
The Special Management Service for the Rural Development Programme (managing authority) is
responsible for co-ordinating all stakeholders, ensuring the development of their monitoring capabilities,
guiding and facilitating co-operation between the stakeholders. Evaluation plans based on ensuring that
sufficient and appropriate evaluation activities are undertaken, in particular to provide information needed
for programme steering, for the annual implementation reports and the ex post evaluation, and to ensure
that data needed for RDP evaluation are available.
50
The financial support from the European Agricultural Fund for Rural Development is structured on
NUTSII level of regions which are classified according to the Rural Development Programme of Greece in
four categories: i) the less developed regions and the small islands of Aegean Sea; ii) the transition regions;
iii) the transition regions that are not included in the second category; and iv) the developed regions.
51
These measures are for all Aegean islands including Gavdos (South Crete), except Crete and Evoia
(Hellenic Ministry of Rural Development and Food, 2019[132]).
52
This measure will reduce the share of direct payments received above EUR 60 000 per farm and limit
payments at EUR 100 000 per farm, with a view to ensure a fairer distribution of payments.
53
Employment in agriculture constituted more than 10% of total employment in Romania (25.8%), Bulgaria
(18.2%), Greece (11.0%) and Poland (11.0%) in 2016 (EC, 2019[50]).
54
For example, the provision of free broadband network to the residents as well as to the employees of
the public sector in the remote islands of the country was facilitated by the state (Greek Government
Gazette 3532/Β’ 9/10/2017) in order to strengthen insularity and to provide equal opportunities and access
to communication and information systems to the employees of remote islands. The Next Generation
Access (NGA) programme aims to deploy fast and super-fast broadband technologies in rural areas with
support from EU funds (OECD, 2019[54]).
55
Formal agricultural education which is traditionally provided by vocational schools, technological
educational institutes and universities.
56
The CLLD outside of rural areas takes the form of urban-rural linkages and RURBAN, DG Regio;
Implementing CLLD in cities, URBACT and co-operation between LEADER LAGs and Fisheries LAGs,
FARNET.
57
Some positive examples include: i) the newly established Hellenic Institute for Research and Innovation
(ΕΛΙΔΕΚ) has been using funds loaned by EIB to support basic academic research and scholarships; and
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ii) EPANEK has funded the programme ΕΡΕΥΝΩ-ΚΑΙΝΟΤΟΜΩ-ΔΗΜΙΟΥΡΓΩ (Research-InnovateCreate) which has been very popular and successful in bringing together business and research institutes.
58
https://ec.europa.eu/maritimeaffairs/policy/blue_growth.
59
https://www.ugs.gr/en.
60
https://www.ugs.gr/en/greek-shipping-and-economy/greek-shipping-and-economy-2019/.
61
Greek Shipping and Economy 2019: The Strategic and Economic Role of Greek Shipping in Hellenic
Shipping News 07/08/2019, https://www.hellenicshippingnews.com/greek-shipping-and-economy-2019the-strategic-and-economic-role-of-greek-shipping/.
62
The research institute of the Greek Tourism Confederation (SETE), http://www.insete.gr/en-gb.
63
Foundation for Economic & Industrial Research, http://iobe.gr/default_en.asp.
64
Every euro created by tourism activity generated additional indirect and induced economic activity of
EUR 1.2 and therefore a total of EUR 2.2 in GDP.
65
Centre of Planning and Economic Research, https://www.kepe.gr/index.php/en/.
66
Which means that for every euro from tourism activity, an additional EUR 1.65 is generated from indirect
and induced economic activity, and therefore the GDP increases by EUR 2.65 in total.
67
It is based on regional distribution of incoming tourism revenue as reflected by the Border Survey of the
Bank of Greece. These data are compared with the GDP estimation of each region, taking into account
both the GDP of 2017 and the last available regional GDP distribution (2016). Due to the approximate
nature of the table data, the picture that emerges is largely indicative. INSETE “The contribution of Tourism
to the Greek economy in 2018”, May 2019.
68
Interview with INSETE.
69
The Partnership Agreement (ESPA) 2014-20 is implemented through 7 sectoral national Operational
Programmes (OPs) (they are: competitiveness, entrepreneurship and innovation; transport infrastructure,
environment and sustainable development; human resources development, education and lifelong
learning; public sector reform; technical assistance; rural development programme; fisheries and
maritime); 13 regional OPs, one for each of the 13 administrative regions of the country; 11 territorial
co-operation programmes, 5 of which in co-operation with the countries bordering Greece.
70
The strategic pillars of the New Tourism Policy are: i) extending the tourism season by innovative product
development in close co-operation with all 13 regions; ii) promoting new thematic tourism products and
special interest tourism with an emphasis on cultural tourism, pilgrimage tourism, cruises, yachting, diving
parks, wellness and spas, medical tourism, luxury tourism, city breaks, and Greek gastronomy; iii) targeting
new dynamic source markets (China, India, South Korea, Middle East) while enhancing Greece’s presence
in traditional markets in Europe, Russia and the United States; iv) increasing air connectivity/direct flights
from central and regional foreign airports to existing and new destinations in Greece; v) attracting
investments of high quality and added-value to upgrade the overall tourism product and accommodate the
expected increase in demand in the coming years; vi) creating and promoting synergies with other
economic sectors (e.g. agro-food, manufacturing).
Study “Benchmarking experience of tourist in Greece vs competition”; Study “Showing loyalty of travelers
to Greek vs competitive destinations”; Study: “Comparing spend of tourists in Greece and Spain”.
71
72
Interview with INSETE and other regional stakeholders.
73
In Attica, Central Macedonia, Crete, Eastern Macedonia, Epirus, Peloponnesus, Thessaly, Western
Macedonia. Each regional directorate supervises the operation of the services within its field of
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competency.
74
Which accounts for a total of EUR 5 039 444 058 in 2014-20 (EUR 3 899 892 473 from the EU and
EUR 1 139 551 585 from national co-financing).
75
Which aims to contribute to the proposed shift in the growth model of the Greek economy from nontradeable into tradeable sectors, and cluster development of innovative and out-turned sectors with a
sustainable competitive advantage.
76
See OECD work on Youth (https://www.oecd.org/youth.htm) and also The OECD Action Plan for Youth
- Giving Youth a Better Start; The OECD Skills Strategy; OECD-Financial education in schools.
77
Local Development Pacts are the result of the diagnosis of specific local needs as well as of specific
development capabilities, and their design and implementation is realised with the participation of the local
actors and stakeholders.
78
Territorial Reviews of Greece 2019 – Answers to questionnaires and from interviews.
“Recent Employment Developments and the Productive Model of the Greek Economy”, Institute of
Labour – Greek General Confederation of Labour’s - INE- GSEE, July 2018.
79
80
See Chapter 2.
81
https://eeagrants.org/news/helping-people-in-need-in-greece.
82
https://ec.europa.eu/social/main.jsp?catId=1239&langId=en&intPageId=3614.
83
https://www.infomigrants.net/en/post/19064/minor-killed-at-moira-migrant-camp-on-lesbosv.
84
https://www.bbc.com/news/world-europe-45372942.
85
https://ec.europa.eu/home-affairs/sites/homeaffairs/files/what-we-do/policies/european-agendamigration/201902_managing-migration-eu-financial-support-to-greece_en.pdf.
86
Currently national unemployment benefits (EUR 400/month for 15 months) continue to be distributed to
people registered in the national unemployed system who have worked a certain amount of days for
2 consecutive years.
87
https://ec.europa.eu/social/main.jsp?catId=1239&langId=en&intPageId=3614.
88
http://www.housingeurope.eu/blog-419/the-greek-national-strategy-for-social-inclusion.
89
OECD conducted several field missions to Greece, some of the findings for this section were collected
during the 1st (12-16 November 2018) and 2nd mission (16-18 January 2019).
90
The FEAD is managed nationally by the National Institute of Labour and Human Resources, under the
Ministry of Labour and Human Resources. The FEAD OP in Greece aims to provide food and basic
material assistance to the most deprived households, https://ec.europa.eu/social/main.jsp?catId=1239&l
angId=en&intPageId=3614.
91
https://cohesiondata.ec.europa.eu/2014-2020/ESIF-2014-2020-Achievement-Details/aesb-873i/data.
92
Author analysis from https://cohesiondata.ec.europa.eu/2014-2020/ESIF-2014-2020-AchievementDetails/aesb-873i/ (accessed on 27 August 2019).
93
http://anaptyxi.gov.gr/en-us/AT-A-GLANCE/Thematic-Objectives.
94
OECD conducted several field missions to Greece, some of the findings for this section were collected
during the 1st (12-16 November 2018) and 2nd mission (16-18 January 2019).
95
https://www.solidaritynow.org/en/κεντρα-αλληλεγγυησ/.
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96
https://eeagrants.org/news/helping-people-in-need-in-greece.
97
www.oecd.org/cfe/leed/improvingsocialinclusionatthelocallevelthroughthesocialeconomy.htm.
98
European Commission (2019), Social enterprises and their ecosystems in Europe. Updated country
report: Greece. Authors: Angelos Varvarousis and Georgios Tsitsirigkos. Luxembourg: Publications Office
of the European Union, https://europa.eu/!Qq64ny.
99
Economic theory suggests a number of potential benefits from accessibility. Two main sets of theories
are particularly relevant. One set relates to trade. Increased accessibility reduces the cost of trade, allows
territories to specialise in areas of production and increases competition. A second set of theories relates
to agglomeration. Research on the economics of agglomeration suggest that greater density (or
accessibility) of economic activity will aid economic activity in three ways: i) through improved sharing of
inputs into the production process, including infrastructure; ii) by better matching demand and supply in
markets, primarily the labour market; or iii) through learning, since economic actors in relatively close
proximity are better able to benefit from knowledge transfers from each other (Lee and Lembcke, 2019[117]).
100
In Greece, the export lead time (the time between the placing of an order and the receipt of the goods)
is 3 days for port and airport transportation and 6 days for rail and road transportation, against 2 days on
average in high income OECD countries. A similar gap exists for import lead times (OECD, 2018[8]).
OECD Environmental performance reviews 2010; OECD Territorial Reviews of Greece 2019 – Answers
to questionnaires and from interviews.
101
102
The Rural Development Programme 2014-2020 enhances the competitiveness of the agro-food sector,
promotes the multifunctional role of rural areas and protects the environment, thus including actions that
aim to enhance natural rural amenities. The RDP is supported by the EAFRD, https://ead.gr/home-en/grdpen/.
103
EU (ERDF, Cohesion Fund, European Agricultural Fund for Rural Development, and the European
Maritime and Fisheries Fund) and national.
104
European Circular Economy Stakeholder Platform, https://circulareconomy.europa.eu.
105
OECD Environmental performance reviews 2010 and forthcoming (2020); OECD Territorial Reviews of
Greece 2019 – Answers to questionnaires and from interviews.
106
http://www.cewep.eu/wp-content/uploads/2017/12/Landfill-taxes-and-bans-overview.pdf.
107
In December 2018, the revised renewable energy directive 2018/2001/EU entered into force, as part of
the Clean Energy for all Europeans package, aimed at keeping the EU a global leader in renewables and,
more broadly, helping the EU to meet its emissions reduction commitments under the Paris Agreement.
The new directive establishes a new binding renewable energy target for the EU for 2030 of at least 32%,
with a clause for a possible upwards revision by 2023.
108
In 2018, a major project (2018-22) to expand the Greek natural gas network will reach 43 cities,
including some of its main islands, making gas cheaper for over 32 000 new consumers. This will be 50%
financed by the Partnership Agreement for the Development Framework (ESPA), 40% by loans and the
rest by the Public Natural Gas Distribution Networks Corporation’s own funds. The region with the greatest
expansion will be Continental Greece, whereas the commodity is already available in Attica, Thessaloniki
and Thessaly, http://www.ekathimerini.com/230936/article/ekathimerini/business/natural-gas-set-toexpand-to-all-regions-of-greece-by-2022.
OECD Territorial Reviews of Greece 2019 – Answers to questionnaires and from interviews; OECD
Environmental performance reviews 2020 – Greece (forthcoming).
109
110
Under the Clean Energy for all Europeans package, EU countries are required to draft 10-year National
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Energy & Climate Plans (NECPs) for 2021-30, outlining how they will meet the new 2030 targets for
renewable energy and for energy efficiency. Member states needed to submit a draft NECP by
31 December 2018 and should have been ready to submit the final plans to the European Commission by
31 December 2019. Most of the other new elements in the new directive need to be transposed into
national law by member states by 30 June 2021.
111
OECD Territorial Reviews of Greece 2019 – Answers to questionnaires and from interviews.
112
These sectors are: biodiversity and ecosystems, agriculture and food security, forestry, fisheries,
aquaculture, water resources, coastal areas, tourism, energy, human health, the built environment,
transport, cultural heritage, industry, mining, and the insurance.
113
Ratified by the joint ministerial decision 99605/3719/2001 (Greek Government Gazette 974/Β’).
OECD Territorial Reviews of Greece 2019 – Answers to questionnaires and from interviews; OECD
Environmental performance reviews 2020 – Greece (forthcoming).
114
OECD Territorial Reviews of Greece 2019 – Answers to questionnaires and from interviews; OECD
Environmental performance reviews 2020 – Greece (forthcoming).
115
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4 Multi-level governance for regional
development
Previous chapters underline how Greece could benefit more from placebased development strategies. Delivering a place-based regional policy
requires a sound multi-level governance system that ensures co-ordinated
policy measures, the involvement of a broad range of stakeholders and
adaptation to the specific conditions of regions and localities. This chapter
provides a comprehensive assessment of the multi-level governance
system in Greece. First, it assesses how the territorial and decentralisation
reforms undertaken in the last years can further contribute to support
regional development. Second, it provides ways forward for Greece to
pursue progresses made during the 2014-20 programming period for the
strategic governance of EU funds and analyses how EU funds may be
further used as a lever to strengthen the overall multi-level governance
system for regional development and public investment.
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Introduction
As discussed in Chapter 3, Greece would benefit from place-based development strategies where
territorial and sectoral policies meet and interact in each place, generating multiplier effects. Place-based
policies might also help Greece exploit the growth potential of each region and ensuring that growth
benefits reach different population groups and places – from continental, mountainous and island localities.
A place-based approach to regional development and investment – compared to spatially blind policies
require an adjustment of the objectives, the intervention scale, the tools and actors involved in the
policymaking process, and how they interact during the whole policymaking process.
Moving towards a stronger place-based approach to regional policy in Greece as recommended in
Chapter 3 requires finetuning the overall multi-level governance (MLG) system of the country. This is the
approach taken by Greece since the early 2010s, with deep changes in the Greek institutional and fiscal
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, through the following
changes: i) a decentralisation agenda, in particular regionalisation; ii) a more strategic approach to
European Union (EU) funds management and a greater regional approach in the 2014-20 programming
period compared to the previous one.
Adopting a systemic approach to multi-level governance is crucial to enhance the effectiveness of public
investment and EU funds management more specifically. Indeed, institutional quality and governance
processes affect the expected returns to public investment and have a positive influence on the capacity
of public investment to leverage private investment, rather than to crowd it out (OECD, 2018[1]). Evidence
shows that government quality matters for regional growth and that, in particular, government quality
improvements are essential for low-growth regions (Rodríguez-Pose and Ketterer, 2019[2]). Thus,
delivering a place-based regional policy requires a sound multi-level governance system that ensures
co-ordinated policy measures, the involvement of a broad range of stakeholders and the adaptation to the
specific conditions of regions and localities (OECD, 2019[3]).
Fine-tuning the multi-level governance system is all the more important in the current COVID-19 crisis. The
COVID-19 global crisis has a strong territorial dimension impacting differently regions and cities within
countries, some of them being harder hit than others. The combination of national and subnational
measures and an ability to work together is fundamental for an effective response to this crisis. Regional
and local authorities are responsible for delivering critical short-term containment measures and more longterm recovery activity – from health and social care to economic development and public investment.
A co-ordinated response by all levels of government can minimise crisis-management failures. Effective
crisis response so far highlights that robust vertical and horizontal co-ordination mechanisms are more
important than ever. Furthermore, national and subnational governments will be leading the economic
recovery effort, including through regional and local recovery plans that are likely to include business
support and stimulus packages targeting public investment (OECD, 2020[4]).
Regional policy in Greece is largely driven by the European Cohesion Policy. Investments funded through
European Structural and Investment Fund (ESIF) account for 80% of public investment in the country
(OECD, 2018[5]). Structural funds have permitted Greece to invest in new infrastructure and modernise
small- and medium-sized enterprises (SMEs), among others. Cohesion Policy in Greece has also been a
key contributor to reducing territorial inequalities, in particular between island and continent regions and
municipalities.
To make the most of regional development policies in Greece it is important to focus on improving the
whole multi-level governance system of the country. This means: i) putting a strong focus on improving the
governance of EU funds within the country as they represent the largest part of regional policy in Greece;
and ii) using these improvements as leverage to improve the whole multi-level governance system.
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To assess the current multi-level governance system of regional development policies in Greece and
provide actionable recommendations in this matter, it is necessary to look at two interrelated dimensions:
1. Decentralisation and regionalisation reforms: Greece has established, in a short amount of
time, a new architecture to deliver regional polices. Decentralisation reforms undertaken during the
last 30 years have resulted in the creation of a new tier with directly elected regional governments
responsible for the implementation of regional development policies. With decentralisation reforms
Greek regions and municipalities can also have greater ownership over development policies,
playing a more active role in the definition of priorities.
2. The multi-level governance of regional policies: Regional policy in Greece is mainly delivered
through investments financed by European funds. For the current programming period 2014-20,
Greece has introduced a number of adjustments to the management and control system (MCS)
that govern the use of European funds in the country, including the creation of new institutions as
well as tools to ensure the appropriate co-ordination among them and more strategic use of funds.
Finetuning the multi-level governance framework for the implementation of EU funds in the country
is a lever to improve the multi-level governance system as a whole, encompassing also policies
and investments funded through the national investment programme.
Considering these two interrelated dimensions, this chapter provides a comprehensive assessment of the
multi-level governance system as a whole in Greece. It is informed by research interviews conducted with
key actors from across Greece’s 13 regions in order to understand how the multi-level governance
framework and instruments meet the needs of diverse regional contexts and by questionnaires answered
by Greek experts, data analysis, academic and grey literature.
The chapter first focuses on the territorial and decentralisation reforms that have taken place during the
last years in the country and assesses how these reforms can further contribute to support the regional
development policy agenda. The second part of the chapter focuses on the need to pursue the progress
made in the 2014-20 programming period for the strategic governance of EU funds. It then analyses how
EU funds may be further used as a lever to strengthen the overall multi-level governance system for
regional development and public investment.
New architecture to deliver regional policies: Consolidating the implementation
of the decentralisation and regionalisation reforms
Introduction
Greece has established, in a short amount of time, a new architecture to deliver regional polices.
Decentralisation reforms undertaken during the last 30 years have resulted in the creation of a new tier
with directly elected regional governments responsible for the implementation of regional development
policies. By granting regions and municipalities more responsibilities, the decentralisation and
regionalisation reforms have allowed Greek subnational governments to play a more active role in the
definition of their own development.
As decentralisation in Greece is relatively new, responsibilities are continuously evolving, including
responsibilities for elaborating and delivering regional policy, which sometimes overlap or are unclear. In
its current efforts to assess, clarify and potentially reassign responsibilities to the regional level, it is crucial
for Greece to clearly define the roles of and interactions between the different actors involved in the design
and execution of policies and ensure co-ordination.
In the transition towards a more locally-led policymaking to deliver place-based policies, the degree to
which Greek regions and municipalities are policymakers, as opposed to policy “takers”, is still limited.
Greek regions and municipalities have low autonomy compared to other OECD countries as they are highly
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reliant on central government and EU funds to carry out their activities. This in part results from the postrecession context, which has put strong pressure on regional and local governments. Limits on hiring of
new employees and significant budget shortfalls limit the capacity of regions and municipalities to deliver
on their new roles. Further strengthening the capacity of regional and local actors to identify their strengths
and opportunities and to build on them is fundamental to the success of modern regional policies. As
regional governments build capacity and increase own-source revenues, their role as policy “takers” will
change and they will be better places to adopt tailored solutions to local needs.
Recent decentralisation reforms represent important steps towards a more locally-led
policymaking
The Kapodistrias and Kallikratis reforms: A new landscape of subnational governments
Greece forms part of a large group of countries, within and beyond the OECD, that are increasingly
providing subnational governments, and especially regions, with more responsibilities and autonomy.
Since the 1960s, European countries are increasingly decentralising responsibilities from the national level
to the second tier of government to take advantage of economies of scale in public service provision,
improve co-ordination between municipalities and intermediate levels of government, and increase
competitiveness, among others (Box 4.1). Regions have a key strategic role, relative to local and national
governments, to implement a more integrated territorial development planning. This is why strengthening
the Greek second-tier needs to be seen as a strategic decision to enhance productivity and ultimately
inclusive development across the country.
The first major change took place in 1997 when the Greek government adopted the Kapodistrias reform
(Law No. 2539/1997). This reform reorganised the country’s administrative divisions reducing the number
of local authorities (communities and municipalities) and providing municipalities with more competencies.
This reform also aimed at modernising the economic and administrative management of municipalities. It
was part of a general effort to increase transparency and reduce the levels of corruption, especially at the
local level. The Politeia Programme of 2000, for example, contemplated the development of new
technologies and adoption of modern techniques of administrative control, the adoption of more efficient
financial management measures for public services, the reduction of administrative procedures and the
facilitation of citizen participation, amongst others (OECD, 2001[6]).
In 2010, the Kallikratis reform (Law No. 3852/2010) rearranged the distribution of power in favour of
subnational governments. Through institutional and territorial restructuring, the Kallikratis plan sought to
rationalise resources and local spending by creating economies of scale and improving service delivery to
citizens and enterprises at the local level. The reform put special emphasis on state efficiency and the
improvement of the management of human and financial resources.
To this end, the 13 administrative regions were transformed into self-governed regions with directly elected
regional councils. These 13 administrative regions were first introduced in 1986 (Law No. 1622/1986) with
the unique purpose of co-ordinating regional development policies and managing EU Structural Funds
(Kalimeri, 2018[7]). The Kallikratis reform transformed these administrative entities into new self-governed
regions with a regional council composed of members elected by direct universal suffrage for a period of
five years. This deliberative assembly is the regional authority’s decision-making body (Figure 4.2). The
regional council is composed of a number of committees, including the financial and the regional
committees for consultation. On the executive side, the Executive Committee is mainly responsible for
co-ordination of policies, while the Economic Committee is responsible mainly for economic affairs,
budgeting, public procurements and tendering procedures. Regions can also create a regional
“development enterprise” (private law entity) in order to promote development projects, as well as, in some
cases, non-profit companies (Hlepas, 2015[8]).
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Box 4.1. Trends in decentralisation and regionalisation
Since the 1970s, countries are increasingly decentralising responsibilities from the national level to the
regional level (second tier). Indicators that measure the authority of administrative regions, such as the
Regional Authority Index, show that decentralisation to the regional level is pervasive in all parts of the
world with available data (Figure 4.1). In western (mostly European) countries, the trend started in the
1960s and 1970s, with countries in Asia and the Pacific region following suit since the 1980s. To a
lesser extent, regionalisation has also taken place in Latin America since the 1980s. Of the 81 countries
covered by the Regional Authority Index, 52 experienced a net increase in the degree of regional
authority and only 9 experienced a net decline.
Figure 4.1. Regionalisation in America, Asia and Europe
Europe
America
Asia
Average Regional Authority
Index score
35
30
25
20
15
10
5
0
Note: Shown are average Regional Authority Index scores for 29 American, 11 Asian and 41 European countries.
America: Argentina, the Bahamas, Barbados, Belize, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Cuba, the Dominican Republic,
Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Suriname, Trinidad
and Tobago, the United States, Uruguay and Venezuela.
Asia: Australia, Brunei, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand and Timor Leste.
Europe: Albania, Austria, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Denmark, Estonia, Finland, the Former
Yugoslav Republic of Macedonia, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Latvia, Lithuania, Luxembourg, Malta,
Montenegro, the Netherlands, Norway, Poland, Portugal, Romania, the Russian Federation, Serbia and Montenegro (until 2006), Serbia,
the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey and the United Kingdom.
Source: Schakel, A. et al. (2018[9]), Final Report on Updating the Regional Authority Index (RAI) for Forty-Five Countries (2010-2016),
https://publications.europa.eu/en/publication-detail/-/publication/5562196f-3d3a-11e8-b5fe-01aa75ed71a1.
Through regionalisation, countries aim to take advantage of economies of scale in public service
provision, better responding to widening functional labour markets, improving co-ordination between
municipalities and intermediary levels of government, and increasing competitiveness, among others.
Relative to local governments, regions have more resources to implement effective regional
development strategies and the ability to foster intraregional co-ordination and implement more
integrated territorial planning. They may better target regional comparative advantages through access
to local knowledge, compared to the national government or fragmented local governments.
Source: OECD (2019[3]), OECD Regional Outlook 2019: Leveraging Megatrends for Cities and Rural Areas,
https://dx.doi.org/10.1787/9789264312838-en.
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A number of competencies were transferred to regions, notably in the areas of regional planning, transport,
employment and education, amongst others. The transfer of competencies followed, in general, the
homogeneous principle by which all regions were transferred the same competencies and functions at the
same time. The Executive Committee, composed of the head of the region and the deputy head, is
responsible for monitoring the implementation of regional policy.
The Kallikratis reform introduced a degree of differentiation in the transfer of competencies for urban areas
(see section “Making the most of Greece’s metropolitan areas). The reform provided the Metropolitan
Region of Attica and the Metropolitan Unit of Thessaloniki with more responsibilities in four strategic
sectors: transport and networks, environment and the quality of life, civil protection and security, spatial
planning and urban regeneration. The metropolitan status of these regions aimed mainly at promoting
environmental protection, improving quality of life and urban and land planning in these areas. Some of
their main tasks include implementing European development policies and promoting regional
development projects (Kalimeri, 2018[7]).
Together with the 13 regions, the reform created seven deconcentrated 1 authorities headed by a general
secretary appointed by the Ministry of the Interior (Figure 4.2). These deconcentrated administrations are
since then responsible for overseeing regional governments and municipalities to ensure the legality and
transparency of their actions and decisions. They also have responsibilities in regional and urban planning
and environmental protection, as well as in migration, citizenship and energy policies. As in other OECD
countries, such as France, Italy, Poland or Sweden, having such state representatives at the territorial level
means that the central level continues to play a key role in implementing national policies at the local level
(OECD, 2017[10]).
Figure 4.2. Greek multi-level governance system
Executive organs
Deliberative and advisory organs
National level
Parliament
(300 members)
elects
President
appoints
Prime Minister
Ministries
appoints
Subnational levels
Regions
Regional
Council
Consultation Committee
Committee for Gender Equality
Ombudsman
Municipalities
Municipal Council
Consultation Committee
Council on Immigrant Integration
presides
Regional Governor
(elected)
presides
Executive Committee
Economic Committee
Mayor
(elected)
presides
Ombudsman
7 Deconcentrated
State
Administrations
Economic Committee
Quality of life Committee
Executive Committee
Note: The 325 new municipalities are divided into 6 102 communities (deconcentrated entities), providing “some intra-municipal
decentralisation”. The Kleisthenis reform (Law 455/2018) abolished the distinctions between municipal communities and local communities. In
communities of more than 300 inhabitants, the governing bodies are the President of the Council of the Community and the Council of the
Community, the President of the Community in communities with fewer than 300 inhabitants.
In municipalities with more than 10 000 citizens, a deliberation committee is the authority that represents local social groups.
Source: Author’s elaboration based on CEMR/CCRE (n.d.[11]), CCRE: Greece, https://www.ccre.org/pays/view/44 (accessed on 14 February
2020).
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At the same time, the number of municipalities was reduced from 1 033 to 325 through a top-down process
of mandatory mergers. This important reduction of municipalities is generally considered a major
achievement (Council of Europe, 2017[12]). The reform established a one-island one-municipality principle,
with the exception of those with Polynesian character (“archipelagos”) and Crete which comprises
21 municipalities (Council of Europe, 2017[13]). With this restructuring, the average size of municipalities
increased significantly; municipalities now average 33 200 inhabitants, which is well above of the OECD
average of 9 700 inhabitants and the EU28 average of 5 900 (OECD, 2019[14]). A reduced number of
municipalities facilitates more efficient policymaking by taking advantage of greater economies of scale in
service delivery and infrastructure investments.
The 325 municipalities have a municipal council, composed of members elected by direct universal
suffrage for a 5-year term. This Deliberative Assembly is the decision-making body of the municipality. The
municipal council is composed of a number of committees including the Financial Committee, the Quality
of Life Committee and the Board of Immigrant Integration (Figure 4.2). The Executive Committee is
composed of the mayor and deputy mayors and monitors the implementation of municipal policy, as
adopted by the municipal council.
The Kallikratis reform has conferred more responsibilities to municipalities. They have competencies over
urban planning and environment being responsible for the design and implementation of local land use
and statutory plan. They also issue building permits and monitor their implementation. The construction
and management of waste disposal facilities is also under municipal responsibility. In terms of employment
policies, they take over employment support policies and citizens services centres. For education, they
care of adult day care centres, they set up and manage pre-school education centres, and construct and
maintain schools and sports venues. For transport, they have responsibilities regarding road network and
traffic management.
While the Kallikratis reform follows a homogeneous principle for the assignment of competencies,
functions, and internal structures of municipal authorities (as it is the case for the regional level), the law
also considers a certain degree of differentiation for island and mountainous municipalities. The law grants
the possibility to island municipalities to be conferred more competencies in four sectors, namely:
i) agriculture and fisheries; ii) natural resources, energy and industry; iii) transport and communication; and
iv) planning and environment. The law also considers that, in such cases, island municipalities would
receive additional personnel and technical infrastructure. However, the decree to apply this provision
considered by the law has not yet been adopted and, in practice, these competencies are now in the hands
of the regions (Council of Europe, 2017[13]).
Contextual challenges that impact the implementation of decentralisation reforms
The compliance with austerity measures explains the reform’s hastily enactment (CEMR, 2013[15]). The
implementation of the Kallikratis reform needs to be understood and assessed in the context of the Greek
government-debt crisis and the memoranda of understanding (MoUs) signed by Greece, with the European
Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF) in 2010,
2012 and 2015. These financial aid packages, and in particular the first and the second, had specific
provisions concerning local government’s role in ensuring austerity (Kalimeri, 2018[7]). The second MoU
set specifically rigid targets for the reduction of personnel and put a restriction on hiring (Dimitropoulos,
2012[16]). The amalgamation and reduction of the number of municipalities and public employees
responded to the general effort in creating a smaller state and cutting public spending.
The economic and fiscal crisis affected the success of the decentralisation reform’s implementation.
Perceived as imposed, local actors did not engage properly during the design and implementations
processes. Actors from regions and municipalities could not entail in any negotiation process and had to
accept memorandum provisions, undermining the commitment of local actors to a more collective
implementation of the reform (Hazakis and Ioannidis, 2014[17]; Ioannidis, 2016[18]; Ioannidis, 2015[19]). Not
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only decentralisation reforms but many policies have been imposed on the Greek state through bailout
conditions and this has impacted public trust in politicians and European institutions alike. Indeed, while
the proportion of citizens who have a positive image of the EU in Greece has increased by 8 percentage
points in the last 2019 Eurobarometer survey, still 62% of the population tend not to trust in the EU, the
higher ratio among EU countries (EC, 2019[20]; Dijkstra, Poelman and Rodríguez-Pose, 2018[21]). This
context of mistrust might affect the degree to which subnational actors own the reform and the degree to
which they perceive it as a promising way to enhance the productivity and development of regions and
municipalities.
Box 4.2. The first and second memoranda of understanding and their impact on local
governments
The first and second MoUs signed by Greece and the EC, the ECB and the IMF make explicit references
to measures that need to be taken at the subnational level, including all agencies and institutions
attached to regions or municipalities.
The cut on public spending has direct impacts on subnational governments. Memorandum II, in
particular, specifies very tight fiscal policy and supervision procedures for the municipalities and regions.
One of the provisions of this memorandum is the reduction of wages of all political officials by 10% with
effect on 1 January 2012. The agreement also considers reduction in the number of deputy mayors and
associated staff in 2013 with the aim of saving at least EUR 9 million in 2012 and EUR 28 million in
2013 and onwards. Moreover, the document specifies the requirement of reducing the number of fixedterm contracts. Overall, operational expenditure by the subnational government needed to be reduced
with the target of saving at least EUR 50 million.
Source: Dimitropoulos, G. (2012[16]), “The ’Kallikratis program:’ The influence of international and European policies on the reforms of Greek
local government”, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2518450 (accessed on 7 July 2019).
While Greek regional and local actors are eager to handle more responsibilities, there is a widespread
feeling that the reform is incomplete. In particular, actors have expressed that the reform needs some
adjustments to reflect regional disparities in terms of resources, capacities and geographic characteristics.
The weak ownership and the difficulties to communicate the advantages and challenges of the reform have
been also affected by the rooted centralised organisational culture of the Greek public sector.
The fast implementation of decentralisation and regionalisation reforms in Greece, especially the Kallikratis
plan, has also posed important challenges to the regions and municipalities, which often do not have the
adequate institutional, administrative and financial capacities to deal with the new responsibilities. Building
capacities at the subnational level requires time and is often a learning-by-doing process. Therefore, it
needs a long-term commitment from central and subnational government levels (OECD, 2019[22]).
In a context that imposes enormous challenges, regional governments and municipalities have done
important work in dealing with the new tasks they have been assigned. At the local level, administrations
actively responded to unprecedented demands for social services, which have been aggravated by the
current refugee and migration crisis affecting local communities (Council of Europe, 2017[12]).
Success with decentralisation reform depends on a number of preconditions (OECD, 2019[22]). Among
these, clarifying the responsibilities and functions assigned to each government levels is fundamental.
Other preconditions include allowing for territorially specific policies and the possibility for asymmetric
decentralisation, with differentiated sets of responsibilities given to different types of regions/cities, in
particular the metropolitan areas. Such mechanisms are critical to providing institutional and fiscal
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arrangements that best respond to local needs. Greece needs to address these preconditions in order to
ensure that decentralisation reform is an enabling tool to foster productivity and social inclusion across the
country. The OECD has identified ten guidelines to make decentralisation work (Box 4.3) which are key
elements that need to in place to enable effective outcomes from decentralisation policies. Some of these
key elements will be addressed in detail in the following sections.
Box 4.3. Making decentralisation work: 10 OECD guidelines
Decentralisation is not an end in and of itself but rather a means to deliver greater accountability, better
public services and more vigorous growth for regions and cities. This means more than just a zero-sum
transfer of resources or functions from one level of public power to another.
The way decentralisation is designed and implemented has a major impact on its associated outcomes.
The benefits depend on the system as a whole, including the adequate capacity of subnational
governments, accountability of local public decision-making and sound framework conditions.
When it is properly designed and implemented, there is evidence that decentralisation policies have a
number of benefits, from improved subnational public service delivery and greater citizen engagement
to reduced corruption and a positive impact on growth.
This is why the OECD has developed ten guidelines that help make decentralisation work as follows:
1. Clarify the responsibilities assigned to different government levels.
2. Ensure that all responsibilities are sufficiently funded.
3. Strengthen subnational fiscal autonomy to enhance accountability.
4. Support subnational capacity building, including through appropriate staffing and training
strategies.
5. Build adequate co-ordination mechanisms across levels of government.
6. Support cross-jurisdictional co-operation.
7. Strengthen innovative and experimental governance, and promote citizens’ engagement.
8. Allow and make the most of asymmetric decentralisation arrangements.
9. Consistently improve transparency, enhance data collection and strengthen performance
monitoring.
10. Strengthen national regional development policies and equalisation systems, and reduce
territorial disparities.
Source: OECD (2019[22]), Making Decentralisation Work: A Handbook for Policy-Makers, https://dx.doi.org/10.1787/g2g9faa7-en.
Administrative decentralisation contrasts with limited fiscal decentralisation
The shares of subnational public expenditure and investment are modest
Despite the transfer of responsibilities foreseen by the Kallikratis reform, Greece remains among the most
centralised countries of the OECD in terms of subnational spending together with Chile, Ireland,
New Zealand and Turkey. Subnational expenditures in Greece accounted for 3.5% of gross domestic
product (GDP) and 7.1% of total public expenditure in 2016, the lowest level in the OECD (EC, 2018[23]).
While public expenditure in Greece is relatively high when compared to the OECD average, subnational
public expenditure is considerably lower than the OECD average, even when considering only unitary
countries (Figure 4.3). Overall, the share of subnational expenditure (as of GDP and total public spending)
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has not increased compared to 1995 (OECD/UCLG, 2019[24]). The share of staff spending at the regional
and municipal levels (10.6%) is also among the lowest in the OECD and well below the OECD average for
unitary countries (43%) (EC, 2018[23]).
The reduced share of public expenditures of subnational governments results, in part, from the fiscal
consolidation measures taken by Greece, as well as the compliance with the MoUs. Fiscal consolidation
measures resulted in several budget cuts, including the downsizing of the subnational government public
sector through staff reduction, limitations in hiring new and qualified staff and pay cuts. Between 2010 and
2013, the Greek civil service was downsized by around 19% at the subnational level and subnational
spending decreased by 2.8% per year in real terms between 2007 and 2017 (OECD/UCLG, 2019[24]).
The modest share of subnational expenditures also reflects the fact that some of the most important public
service delivery systems, such as public education, public health services and social protection, are subject
to direct control by the central government (OECD/UCLG, 2019[24]). Moreover, regional expenditure is
subject to special restrictions controlled by the State Treasury and the Court of Audit (Article 98 of the
Constitution), which also controls public contracting (Hlepas, 2015[8]).
Figure 4.3. National and subnational public expenditure, 2016
Public expenditure (% of GDP)
65
High public spending and low decentralisation
60
High public spending and high decentralisation
Finland
France
Denmark
Belgium
55
Portugal
Hungary
Austria
Slovenia
50
Iceland
Norway
Germany Spain
Japan
Israel
New Zealand
OECD34
Czech Republic Poland
Ireland
40
Netherlands
United Kingdom
Luxembourg
45
Sweden
Italy
Greece
Slovak Republic
Australia
Estonia
Turkey
35
Canada
United States
Switzerland
Korea
30
Mexico
Chile
25
Low public spending and low decentralisation
20
0
10
20
Low public spending and high decentralisation
30
40
50
60
70
80
90
Subnational government expenditure (% of public expenditure)
Note: 2013 for Chile, Mexico and New Zealand, 2012 for Australia and 2011 for Turkey. Data stated in local currency were converted in USD
using purchasing power parity (PPP). OECD average is weighted.
Source: OECD (2020[25]), "Subnational government structure and finance", https://doi.org/10.1787/05fb4b56-en.
Greece also belongs to the group of countries with limited subnational investment. In Greece, regions and
municipalities are only responsible for 18.5% of total public investment – the third-lowest rate in the OECD
after Chile and Ireland, a rate that is much lower of the average of OECD unitary countries of almost 51%
(Figure 4.4). The low level of public investment at the subnational level is a result, at least partially, of the
crisis: between 2008 and 2017, public investment at the subnational level decreased on average 10% per
year in real terms. This number is also relatively low as an investment at the local level is primarily funded
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by the state and through EU Structural Funds, and the corresponding resources do not always appear in
local budgets (Torres Pereira and Mosler-Törnström, 2015[26]).
Figure 4.4. Public investment across levels of government, 2016
Local government
State government
State and local government
Rest of general government
% of public investment
100
90
80
70
60
50
40
30
20
10
0
Note: OECD9 and OECD26 refer to the average for OECD federal countries for OECD unitary countries respectively.
Source: OECD (2018[27]), “Subnational governments in OECD countries: Key data (brochure)”, https://www.oecd.org/regional/regionalpolicy/Subnational-governments-in-OECD-Countries-Key-Data-2018.pdf.
However, investment remains one of the most important tasks of subnational governments in Greece as it
represented 19.3% of their total expenditure in 2016, above the OECD average for unitary countries of
13.8% (EC, 2018[23]). The majority of local investment (64%) goes to economic affairs and transports (road
networks, urbanisation projects and land acquisition, etc.) while housing and community amenities (street
lighting, water supply networks, etc.), environmental protection (sewage systems, green areas) and
general public services (administrative infrastructure, buildings and equipment) accounted for the same
share (around 9%-10%).
Subnational governments rely on central government transfers
The crisis had a significant impact on subnational government revenues, which decreased, on average,
2% per year between 2007 and 2017 in real terms (OECD/UCLG, 2019[24]). This decrease came
particularly from cuts in grants by the central government, which were reduced on average by 3.5% per
year in real terms during those 10 years.
Greek subnational governments rely heavily on central government transfers, especially the regional level.
In 2016, central transfers accounted for more than 65% of subnational government’s revenue, well above
the OECD average for unitary countries that reaches 48.8% (Figure 4.5) (EC, 2018[23]). Revenues of
regions depend almost exclusively on state grants, which represent 95% of regional revenues. Regions
still do not collect taxes or raise any revenue to fund specific projects. Taxes, fees, charges and rates set
by law are a negligible part of regional revenues and ordinary resources essentially come from the special
grants and the so-called central autonomous funds (CAF) (Torres Pereira and Mosler-Törnström, 2015[26]).
Still, subnational governments have had to raise own-revenue sources (tax revenues, user fees) due to
recent fiscal adjustment measures combined with successive waves of responsibility transfers from the
central to local levels. As a result, the share of tax revenues and user fees in local revenues has risen
while the share of grants has fallen, reflecting a small decline in local government financial dependence
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on state funding (Greek Government, 2019[28]). Municipalities have greater discretion than regions over
their revenues. Almost one-third of municipal revenue comes from municipal fees, taxes and charges
(Torres Pereira and Mosler-Törnström, 2015[26]).
At the municipal level, the amount of the grants coming from the central level are defined by fixed
percentages of state revenues on property tax, income tax and value added tax (VAT). The allocation of
the central grants depends mainly on two variables: the number of permanent population registered in
municipalities – which is the most determinant one – and a variable that estimates the minimum operational
cost of every municipality (Council of Europe, 2017[12]; Council of Europe, 2017[13]).
Figure 4.5. Structure of subnational government revenue, 2016
Taxes
ISL
LVA
DEU
SWE
CAN
CHE
NZL
FRA
USA
OECD9
JPN
CZE
FIN
OECD35
ISR
CHL
SVN
EU28
PRT
ITA
ESP
OECD26
NOR
HUN
DNK
AUS
KOR
POL
LUX
BEL
GRC
IRL
GBR
TUR
NLD
AUT
SVK
MEX
EST
Grants and subsidies
Tariffs and fees
Property income
44.6
37.2
40.9
32.9
24.5
0
10
Social contributions
64.9
20
30
40
50
60
70
80
90
100
%
Note: Tax revenues do not include social contributions here.
Source: OECD (2018[27]), “Subnational governments in OECD countries: Key data (brochure)”, https://www.oecd.org/regional/regionalpolicy/Subnational-governments-in-OECD-Countries-Key-Data-2018.pdf.
Fiscal decentralisation in Greece has not been pursued to the same degree as political and administrative
decentralisation. This is partially explained by the debt-crisis context where subnational governments were
called to pursue austerity measures. The initial plan of fiscal decentralisation called the ELLADA
programme, that would have allowed subnational governments to develop their fiscal capacity by collecting
their own resources, was finally abandoned (Greek Government, 2019[28]).
While the Kallikratis reform had an important impact on fiscal consolidation – in particular for small
municipalities (Council of Europe, 2017[12]), there is consensus on the need for subnational governments
to further develop their fiscal capacity. Indeed, the share of tax of 24.5% is below the OECD average for
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unitary countries of 38.7%. Tax revenues are entirely own-source, benefitting municipalities almost
exclusively (regional tax revenues are negligible) and concentrated on the property tax which accounts for
92% of municipal tax revenue (EC, 2018[23]). Other minor taxes include street cleaning and lighting tax,
beer tax, advertising tax and the tourist tax, particularly important in several coastal areas. Tariffs and fees
coming from waste management, water and sewage services provided by local public companies, use of
public/communal space for professional activity, operation of cemeteries and the use of municipal water
resources by bottling and refreshment companies, and car licensing are also low by international
comparison (OECD/UCLG, 2019[24]).
However, the ability to set rates over these taxes is restricted (Table 4.1) (OECD/UCLG, 2019[24]). For
example, the property tax takes into account the location and the age of the building, both of which are
determined centrally by the Ministry of Finance, and municipalities can set rates within legally binding limits
(Torres Pereira and Mosler-Törnström, 2015[26]). It is also the central level that collects this tax for local
authorities through the electricity bills which ensures a very high level of collection (Torres Pereira and
Mosler-Törnström, 2015[26]). While in the past municipalities had greater space to set up the variables
defining the property tax, this levy was restricted through an act in 2000 which reduced their manoeuvre
considerably (Torres Pereira and Mosler-Törnström, 2015[26]).
Figure 4.6. Subnational government tax revenue as a percentage of public tax revenue and as a
percentage of GDP, 2016
Note: Tax revenues do not include social contributions here.
Source: OECD (2018[27]), “Subnational governments in OECD countries: Key data (brochure)”, https://www.oecd.org/regional/regionalpolicy/Subnational-governments-in-OECD-Countries-Key-Data-2018.pdf.
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Table 4.1. Municipal own-source taxes
Tax base
Scope to set tax
rates or tax base:
total, restricted,
no leeway
Weight in
Subnational
governments’
total tax revenue
(%)
Weight in
Subnational
governments’
total revenues
(%)
Administration in
charge of tax
collection
Street Cleaning and Lighting Tax
Land and
buildings
Restricted.
The revenue from
street cleaning
and lighting tax
cannot exceed the
cost of the
delivered service.
As well as, the
range between
higher and lower
rate cannot
exceed 10:1.
72
19
Collected by
electricity
providers
(primarily by
Public Electricity
Company (PEC))
and municipalities
for premises that
are not electrified
Immovable Property Tax (ΤΑΠ)
Land and
buildings
Restricted.
Municipalities can
set rates within
legally binding
limits.
9
2
Collected by
electricity
providers
(primarily by PEC)
and municipalities
for premises that
are not electrified
Electrically Powered Spaces Tax
Buildings and
uncovered
surfaces
Restricted leeway.
Municipalities can
set rates within
legally binding
limits.
7
2
Collected by
electricity
providers
(primarily by PEC)
Business Gross Income Tax
Business gross
income
Restricted.
Municipalities
cannot alter the
tax rate but have
the authority to
extend the tax
base (the types of
businesses
subjected to the
tax).
3
1
Municipalities
Advertisement Tax
Advertising
expenses
Restricted leeway.
Municipalities can
set rates within
legally binding
limits.
1
0.5
Municipalities
Accommodation Tax
Daily
accommodation
charges
No leeway at all.
1
0.3
Municipalities
Note: SNGs refer to Subnational Governments
Source: Greek Government (2019[28]), “Questionnaire B for the Territorial Review - Governance - Regional Policy in Greece Post 2020”,
Unpublished.
The crisis, together with the introduction of strict rules to manage debt at the local level, have resulted in
low levels of indebtedness of regions and municipalities. Greek subnational governments can engage in
medium- and long-term borrowing in the credit and capital markets (loans and bonds). Borrowing is
authorised to finance investment projects following the “golden rule” and to refinance existing debt under
better conditions. In 2013, Greece introduced stricter rules for subnational governments’ access to
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borrowing. Through Law 4111/2013, subnational governments have to comply with additional fiscal rules
limiting debt and need to receive the approval of the Minister of Finance to access any kind of loans.
Additionally, the law introduced a debt-brake for the few municipalities facing over-indebtedness problems,
which have to join a Special Economic Recovery Programme. Overall, the level of local debt remains low
as a percentage of GDP and total public debt, especially compared to the OECD average for unitary
countries (14.5% of GDP and 11.8% of public debt). In 2016, it was made up of financial debt (68%) and
other accounts payable (32%). Financial debt is exclusively composed of loans (OECD/UCLG, 2019[24]).
Borrowing autonomy, as shown by the Local Authority Index (Box 4.4) also shows a decrease in Greece,
which is most probably due to the financial crisis.
Regional and local authority are among the lowest in the OECD
The Regional Authority Index (RAI) presents a useful way to explore the authority or power of regions in a
large number of countries. This index is a comprehensive attempt to measure the real degree of power of
intermediate governments, going beyond fiscal indicators. The RAI specifically focuses on regional
government, which is defined as an intermediate tier of government between the lowest, local tier and
national government, with at least 150 000 inhabitants per regional unit on average control (OECD,
2019[22]). This indicator traces regional authorities across 10 dimensions in 81 countries between 1950 and
2010 (Hooghe et al., 2016[29]; Hooghe, Marks and Schakel, 2010[30]) (Box 4.4). When comparing the
Regional Authority Index (RAI) of Greek regions with OECD countries and beyond, Greece is part of the
group of countries with the lower index values.
Figure 4.7. Regional Authority Index in OECD and EU28, 2016
RAI Self-Rule Score
30
25
20
15
10
5
0
Note: The data includes only 33 OECD countries (all except Chile, South Korea and Mexico).
Source: Marks, G. (2019[31]), Regional Authority, http://garymarks.web.unc.edu/data/regional-authority/ (accessed on 15 May 2019); Schakel, A.
(2019[32]), Regional Authority Index (RAI), https://www.arjanschakel.nl/index.php/regional-authority-index (accessed on 15 May 2019).
Greek municipalities have also a limited degree of autonomy. The Local Autonomy Index (LAI) is an
attempt to measure decentralisation beyond recording the share of funds managed by local authorities and
should capture to what extent local authorities have a say in how these funds are spent (Ladner, Keuffer
and Baldersheim, 2015[33]) (Box 4.4). As per the LAI, Greek municipalities pertain to the group of mediumlow degree of autonomy together with Albania, Hungary, Slovenia, Ukraine and the United Kingdom.
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Box 4.4. The Regional Authority Index (RAI) and the Local Autonomy Index (LAI)
The RAI tracks regional authority on an annual basis from 1950 to 2010 in 81 countries. The sample
consists of all European Union member states, all OECD member states, all Latin American countries,
10 countries in Europe beyond the EU and 11 in the Pacific and South-East Asia. The unit of analysis
is the individual region/regional tier. The dataset encompasses subnational government levels with an
average population of 150 000 or more. Regions with a special autonomous statute or asymmetrical
arrangements are also coded separately.
Regional authority is measured along ten dimensions: institutional depth, policy scope, fiscal autonomy,
borrowing autonomy, representation, law-making, executive control, fiscal control, borrowing control
and constitutional reform.
Primary sources (constitutions, legislation) are triangulated with secondary literature and consultation
of country experts to achieve reliable and valid estimates. A regional data set contains annual scores
for regional governments or tiers and a country data set aggregates these scores to the country level.
The RAI has proven to have solid convergent content validity and has been used as a regionalisation
or a multi-dimensional decentralisation measurement.
The LAI aims to analyse and report changes in the scope of decentralisation of countries in the EU. It
attempts to measure decentralisation beyond recording the share of funds managed by local authorities
and should capture to what extent local authorities have a say in how these funds are spent. The LAI
was developed for 39 European countries and it reports changes between 1990 and 2014.
The conceptualisation of the LAI follows the methodology of the RAI. For the LAI, some adaptations
had to be made to capture the specific characteristics of local government. For example, it is not
appropriate to speak about non-deconcentrated local government or the endowment of an independent
legislature because these aspects are parts of local self-government by definition. . Furthermore, more
dimensions have been taken into account and some revisions of variables have been made.
The LAI contains 11 variables: institutional depth, policy scope, effective political discretion, fiscal
autonomy, financial transfer system, financial self-reliance, borrowing autonomy, organisational
autonomy, legal protection, administrative supervision, central or regional access. The first eight
variables measure the degree of “self-rule” of a local government, while the last three measure
“interactive rule”, i.e. the way the vertical relation is organised. These variables are combined with seven
theoretically and empirically meaningful dimensions of local autonomy: that is, legal autonomy, political
discretion, policy scope, financial autonomy, organisational autonomy, access and non-interference.
The overall index aggregates the seven weighted dimensions, giving greater weight to political
discretion, financial autonomy and legal autonomy in particular.
Source: OECD (2019[22]), Making Decentralisation Work: A Handbook for Policy-Makers, https://dx.doi.org/10.1787/g2g9faa7-en;
Ladner, A., N. Keuffer and H. Baldersheim (2015[33]), Self-rule Index for Local Authorities (Release 1.0); Ladner, A. and N. Keuffer (2018[34]),
“Creating an index of local autonomy – Theoretical, conceptual, and empirical issues”, http://dx.doi.org/10.1080/13597566.2018.1464443.
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Strengthening subnational finances for an efficient implementation of decentralisation
reforms
Improvements to the fiscal management framework
Greece has moved to ensure the fiscal consolidation of subnational governments and to increase the
effectiveness of management, accounting and financial control. For example, in 2012, Greece introduced
an internal stability pact for local government (based on a balanced budget constraint) in order to
strengthen tax and budget management. In addition, according to the Medium-Term Fiscal Strategy
Framework (MTFS) for 2015-18, approved by Law 4263/2014, subnational governments are required to
contribute to the overall fiscal effort. In 2014, the country put in place the Observatory for the Financial
Autonomy of Local Government (set up by Law 4111/2013 and further implemented by Laws 4270/2014
and 4555/2018) to monitor, on a monthly basis, the management and implementation of subnational
governments budgets (OECD/UCLG, 2019[24]).
Reducing the fiscal gap
The fiscal dimension has been the missing link in Greek decentralisation reforms. This has been the case
in a number of OECD countries as well. One of the most frequent challenges, particularly in countries at
an early stage of decentralisation, is the misalignment between responsibilities allocated to subnational
governments and the resources available to them. Unfunded or under-funded mandates – where
subnational governments are responsible for providing services or managing policies but without the
requisite resources – are common (OECD, 2019[22]).
The implementation of political and administrative reforms in Greece has created a mismatch between the
responsibilities of subnational governments and their financial capacities. The transfer of responsibilities
was not accompanied by a corresponding transfer of resources but rather by an attempt to reduce them
(George and Nikos, 2015[35]). This is not an exclusive feature of the Greek decentralisation process, as in
most OECD countries the alignment of responsibilities and revenues is an important concern (OECD,
2019[22]).
In Greece, subnational funding is based mostly on transfers from the central level. The population criteria
by which municipalities receive grants based on the number of permanent (registered) citizens does not
consider the differences in geographical conditions and economic strength of the Greek municipalities
(Council of Europe, 2017[12]). This criterion does not have specific provisions or complementary indicators
for insular and mountainous municipalities or localities that receive the most important influx of tourist in a
certain period of the year. This puts strong pressure on certain municipalities, in particular small touristic
islands, which need to ensure services for an important floating population without the corresponding
necessary funding. The effectiveness of the population criteria to determine grants is also put at stake by
the fact that official statistics and indicators are not necessarily updated regularly (Council of Europe,
2017[12]; Council of Europe, 2017[13]).
Beyond the challenges linked to the assignment of funds through the population criteria, different
institutions and scholars have highlighted some other key challenges of the municipalities’ financing
system. The Council of Europe, for example, has highlighted that some critical aspects of the system are
linked to: i) the lack of an up-to-date and reliable data source, in particular the municipality resident’s
registry; ii) small amount of transfers which often do not even cover municipality’s operating costs leaving
a small proportion for local authorities to dedicate to investments or other policies; iii) lack of transparency
of the transfer system resulting in some municipalities receiving less than was stipulated in the state budget
(Council of Europe, 2017[12]).
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The mismatch between responsibilities and revenues makes regions and municipalities very dependent
on European funding, in particular for public investment. The dependence on external funding entails some
important risks. First, as EU funding levels can change from one seven-year programming period to the
next, European funds are not necessarily sustainable in the long term, an extreme (or almost exclusive)
reliance on these funds can be risky in the long term and may prevent long-term planning (George and
Nikos, 2015[35]). The high dependence on European co-financing may also benefit more those regions and
municipalities that are more prepared in terms of administrative and institutional capacities to prepare
mature projects able to be funded by European funds.
A better balance between revenue-generating means with expenditure needs might help Greece in
creating better accountability and responsiveness to local preferences (OECD, 2019[22]). In Greece, a
series of laws and policy measures have drastically restricted space of discretion and initiative given to
local authorities during the previous years concerning financial resources management (Hlepas, 2015[8]).
However, evidence shows that subnational governments work best when local residents self-finance local
services through local taxes and charges. This enhances the efficiency and accountability of local service
provision by encouraging local residents to evaluate the costs and benefits of local service provision. It is
also a way of facilitating yardstick competition, which encourages local politicians to maximise the welfare
of local residents instead of promoting their own self-interested goals (OECD, 2019[22]). This might be
particularly relevant for the geographical and contextual specificities of Greek subnational governments –
especially islands – which might need particular financing policies to address higher costs of service
delivery and investments.
Better balancing revenue-generating means with expenditure needs is also crucial but more challenging
in the current COVID-19 crisis. This COVID-19 global crisis is putting strong pressure on subnational
finance in Greece as well as in all OECD countries. Subnational governments in most countries may
experience a large drop in revenue, including tax revenue, user charges and tariffs and asset income. A
strong decrease in tax revenues is expected, both from shared and own-source taxes. A strong decrease
in revenues combined with a continuous increase in expenditure (due to social spending and investment)
could result in a scissor effect and therefore in subnational government deficit, as was the case in 2007-08.
It is thus likely that central governments will design recovery strategies and counter-cyclical measures to
mitigate the impact of the crisis on subnational government budgets, prevent them from carrying out
pro-cyclical actions and ensure coherence in the overall government response to the crisis (OECD, 2020[4])
Towards a clearer assignment of responsibilities
A clearer assignment of responsibilities may enhance the effectiveness of regional
development policies
During the last years, regions and municipalities have been increasingly responsible for key policy areas
resulting from the transfer of competencies started in 2011. At the regional level, the new regions are
mainly responsible for regional planning and development, including the management of EU operational
programmes. At the municipal level, the law has defined eight specific areas of responsibilities, which
remain broad. The Kallikratis programme transferred additional responsibilities related to local
development, child protection, elderly care, social assistance to the unemployed/poor and preventative
healthcare.
The national and subnational levels in Greece share a number of responsibilities in different sectors, as is
the case in all OECD countries. Some of the competencies shared among the three levels of government
are linked to key policy sectors such as education (pre-school, primary and secondary education), health,
urban and regional planning, environment, and transport (urban roads), among others. In most countries,
due to the complexity of interactions in shared rule, there are many ambiguities in the assignment of
responsibilities (OECD, 2019[22]).
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Like in most OECD countries, responsibilities of national and subnational governments in Greece are often
overlapping, ambiguous or unclear. Regions and municipalities have almost no exclusive competencies
and the dividing lines between central and subnational governments for shared competencies are not well
established. Although the competencies of the central, regional and local governments are defined
legislatively, the practical division of responsibilities is not always clear, leading to implementation gaps or
overlaps (Koutalakis and Allio, 2016[36]). Overlapping and unclear assignment of competencies and
responsibilities between the deconcentrated authorities, regions and municipalities is particularly
challenging in key sectors like infrastructure and transport. For example, all three levels of government are
responsible for some aspects of road maintenance (Council of Europe, 2017[13]) and floodwater
management. Another example lies in the management of traffic lights, which is a responsibility that was
partially transferred to subnational levels. This makes it difficult to identify, for example, who is responsible
for changing a sign in a route. This lack of clarity for concurrent or shared responsibilities might contribute
to government failures or inefficiency and inequity in public service provision and negatively impacts
accountability (OECD, 2019[22]). In turn, this lack of clarity and accountability may affect transparency and
citizen’s trust in the public sector.
Regarding regional development responsibilities, the overlap of competencies is particularly acute between
the regions and the deconcentrated authorities. The role of the seven state administrations is especially
unclear as they become progressively weaker, as a consequence of the empowerment of regions (Torres
Pereira and Mosler-Törnström, 2015[26]). The seven deconcentrated administrative authorities exercise
devolved powers, in town and urban planning, environmental policy, forest policy, migration policy,
citizenship and energy policy (Council of Europe, 2012[37]). These deconcentrated structures are also
tasked with supervising regions and municipalities. Regional governments are the main party responsible
for the implementation of regional development policies through the management and implementation of
a considerable part of the EU Structural Funds. However, this role is partially hampered by the overlap of
competencies with the deconcentrated state authorities. This might contribute to policy delays, in particular
for critical infrastructure projects. The lack of any legal basis to establish co-ordination mechanisms
between these institutions impedes overcoming those overlaps for a more efficient policy planning and
implementation (Council of Europe, 2017[12]).
A clear and transparent division of powers is crucial for Greek subnational governments at all levels to
deliver on their mandates and be held accountable by citizens. National and subnational actors are strongly
aware of the need to review municipal and regional competencies in order to reduce the space of conflicts
in its allocation. Better clarity in the division of power is also critical for Greece to build subnational
government capacities as well as instituting mechanisms for intergovernmental partnership and
co-ordination (OECD, 2019[22]).
The Kleisthenis reform: Clarifying and re-defining the assignment of responsibilities
Greece is making important efforts to better define the roles of and interactions between the different actors
involved in the design and execution of policies. In June 2018, Greece approved Law 4555/2018 known
as the Kleisthenis reform. This reform touches upon various issues concerning subnational governments
such as the electoral system in local and regional elections, establishes a new system of representation in
local and regional councils and reorganises the supervision authorities (see Box 4.5).
One of the key issues addressed by the Kleisthenis reform is the introduction of new tools to monitor and
assess past and scheduled transfers of responsibilities to municipalities and regions. It also contemplates
reconsidering the current allocation of subnational government responsibilities. The law establishes new
Inter-ministerial Committees for the Redefinition of Competences and Procedures (Δ.Ε.ΑΝ.Α.Δ.) for each
sector or policy field with the task of recording the competencies and procedures of the central
administration, the deconcentrated administrations and regional and local government levels. These
committees should assess if the conditions to properly exercise competencies are in place and identify
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which are the main challenges and dysfunctions in its exercise. It also creates a permanent committee
within the Ministry of the Interior to evaluate every new bill that involves the transfer of responsibilities. All
of this follows the principles of proximity, subsidiarity and effectiveness.
Box 4.5. The Kleisthenis reform in Greece
Law 4555/2018 known as the Kleisthenis reform introduced some changes to the multi-level
governance system in Greece in various topics. First, it reforms the institutional framework of
subnational governments by introducing changes to the election system and its procedures at the
regional and local levels. It considers some minor adjustments to the community governance system
(regional, municipal and community councils, economic committees, ombudsman, etc.). It also
introduces some changes to strengthen the participation and improving the economic and
developmental function of local authorities.
One of the main objectives of the Kleisthenis reform is to address the overlap and unclear assignment
of responsibilities. For this, the law contemplates the creation of different Inter-ministerial Committees
for the Redefinition of Competencies and Procedures by sector or policy field. These committees seek
to assess whether the conditions for exercising competencies by different governments are in place,
and which are the main bottlenecks for the exercise of those competencies at different levels.
These inter-ministerial committees are composed of: representatives from the Ministry of the Interior
and the competent line ministry; one representative of the Central Union of Municipalities of Greece
(KEDE); and one representative of the Association of Regions of Greece (ENPE). Experts and
specialists may also be invited, depending on the competencies and procedures, as appropriate.
The purpose of these committees is to identify cases of fragmentation or duplication of responsibilities
and procedures between the central administration, the deconcentrated administrations and the two
levels of local government. The committee studies the possibility of simplifying the conditions for the
exercise of the competencies and procedures by consolidating them by public policy area or by subtheme and their assignment to the appropriate level of administration.
Each committee, within four months after its constitution, submits to the Minister of the Interior, to the
competent minister responsible and the Standing Committee on the Control of Local Authorities a report
with its conclusions and proposals and a draft of the proposed legislation. The finding of each committee
is communicated to KEDE, ENPE and the co-ordinators of the deconcentrated administrations to submit
their comments to the Minister of the Interior and the competent minister responsible.
Source: Greek Government (2018[38]), Law 4555/2018 - Lawspot, https://www.lawspot.gr/nomikes-plirofories/nomothesia/nomos-4555-2018
(accessed on 10 July 2019).
In the complex task of assessing the allocation of competencies among levels of government, the interministerial committees should ensure a balance in the way different responsibilities and functions are
decentralised. Balanced decentralisation means that the various responsibilities are decentralised to a
similar extent. In this respect, OECD work has shown that balanced decentralisation is important for local
economic development and growth (OECD, 2016[39]). It is also important to ensure balance in the way
various policy functions are decentralised to allow for complementarities across decentralised policies and
integrated policy packages (OECD, 2019[22]). Indeed, if decentralisation only takes place in two or
three policy areas (such as housing or education) in an unbalanced way vis-à-vis other policy areas, this
prevents subnational governments from designing integrated regional and local development strategies
(OECD, 2019[22]). Inter-Ministerial Committees could also explore the possibility of increasing the number
of exclusive competencies for regions and/or municipalities and reducing the number of shared ones.
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While there is no unique model for assigning responsibilities among levels of government, Greece can
consider some key elements for breaking down responsibilities (Box 4.6). The optimal assignment of
responsibilities within each public service area depends largely on the type of service. In many OECD
countries, the municipal level tends to manage community services (e.g. streetlights, local schools and
child day care). For municipal responsibilities, regulations often refer to the general clause of competency
or “subsidiarity principle”. This principle gives local authorities explicit freedom to act in the best interests
at the local level. In this case, laws rarely limit or specify local responsibilities but enumerate broad
functions instead, except if a particular responsibility is devolved by law to another government level.
However, the economies of scale in service production should also be taken into account here. For
example, in some cases, a higher-level government may be able to invest in technology that enables more
efficient service provision (OECD, 2019[40]).
In two-tier systems of subnational government, it is often the regional level that provides the services of
regional interest which benefit from economies of scale, generate spill-overs, involve redistribution and are
required to meet the same standards across the jurisdiction (Kitchen and Slack, 2006[41]; OECD, 2017[42]).
Public services with important redistributive features (e.g. specialised healthcare, secondary and higher
education) are often best suited for regional or national governments, mainly because redistribution at the
local level would be inefficient. Public services with considerable positive externalities or spill-overs, such
as major roads or main water pipelines, are also usually better provided by higher levels of government
(OECD, 2019[40]). The regional tier is also often called to facilitate co-operation and strategic planning
(OECD, 2017[42]).
Box 4.6. Breakdown of responsibilities and functions across subnational government levels
For each area, it is necessary to distinguish between different key functions: regulating, operating,
financing and reporting. Regarding the financing function, another distinction can be made between
current expenditure and investment. In the OECD, health, education and social protection or law
enforcement weigh heavily on subnational expenditure when subnational governments are in charge of
paying medical staff, teachers, social workers or police officers or providing social benefits on behalf of
the central government. Often, while subnational governments may simply act as “paying agents” to
carry out these delegated functions with little or no decision-making power or room for manoeuvre,
these spending responsibilities are a great burden on their budget.
Table 4.2. Breakdown of responsibilities across subnational levels: A general scheme
Municipal level
A wide range of responsibilities:
● General clause of competency
● Eventually, additional allocations by
the law
Community services:
● Education (nursery schools,
pre-elementary and primary education)
● Urban planning and management
● Local utility networks (water,
sewerage, waste, hygiene, etc.)
● Local roads and city public transport
● Social affairs (support for families
and children, elderly, disabled, poverty,
Intermediary level
Specialised and more limited
responsibilities of supra-municipal
interest
An important role of assistance
towards small municipalities
May exercise responsibilities
delegated by the regions and central
government
Responsibilities determined by the
functional level and the geographic
area:
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Regional level
Heterogeneous and more or less extensive
responsibilities depending
on countries (in particular, federal vs.
unitary)
Services of regional interest:
● Secondary/higher education and
professional training
● Spatial planning
● Regional economic development
and innovation
● Health (secondary care and
hospitals)
● Social affairs (e.g. employment
262
social benefits, etc.)
● Primary and preventative healthcare
● Recreation (sport) and culture
● Public order and safety (municipal
police, fire brigades)
● Local economic development,
tourism, trade fairs
● Environment (green areas)
● Social housing
● Administrative and permit services
● Secondary education or specialised
education
● Supra-municipal social and youth
welfare
● Secondary hospitals
● Waste collection and treatment
● Secondary roads and public
transport
● Environment
services, training, inclusion, support to
special groups, etc.)
● Regional roads and public transport
● Culture, heritage and tourism
● Environmental protection
● Social housing
● Public order and safety (e.g. regional
police, civil protection)
● Local government supervision (in
federal countries)
Source: OECD (2016[43]), OECD Regions at a Glance 2016, https://dx.doi.org/10.1787/reg_glance-2016-en; OECD (2017[42]), Making
Decentralisation Work in Chile: Towards Stronger Municipalities, https://doi.org/10.1787/9789264279049-en.
Different responsibilities for different types of subnational governments: Considering
their geography and capacities
Greek subnational governments are strongly diverse
The 325 Greek municipalities and 13 regions are very diverse in different dimensions (Chapter 2):
Geography and resources: Greece has important geographical fragmentation with around
6 000 islands2 that represent about 20% of the national territory, out of which only 227 are
inhabited, and sometimes with very low population levels. Most of the Greek territory is at the same
mountainous.
Size, density and population: Regions range from 206 000 inhabitants in the Ionian Islands to
3.765 million in the region of Attica. Greek predominantly urban regions contain 45% of the total
population, a share that is slightly lower than the OECD average of 48%. Predominantly rural
regions (3.4 million people) contain a larger percentage of people and a smaller percentage of
land; 3 million live in rural remote regions, making Greece the country with the third-largest share
of the rural population in remote regions across OECD countries.
Socio-economic characteristics: In 2016, GDP per capita in the top 20% of regions was
2.5 higher than in the bottom 20% of regions. Attica is the best-performing region concentrating
almost half (48%) of the country’s GDP which is twice as high as in East Macedonia, the region
with the lowest GDP per capita in the country (OECD/UCLG, 2019[24]). There are also important
disparities in terms of the capacity to administer, deliver services and manage their territory. Often,
more isolated island or mountainous municipalities have weaker administrative and financing
capacities.
Deepening differentiated assignment of responsibilities to better respond to territorial
specificities
The heterogeneity of Greek territories calls for a differentiated multi-level governance system. According
to their location and level of development, Greek subnational governments face challenges that could be
addressed individually and differently. Countries confronted with disparities in local capacities and/or
various territorial, political or international cultural contexts are increasingly developing differentiated or
asymmetric decentralisation structures (Box 4.7).
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Box 4.7. Defining differentiated competencies for different municipalities: The case of Colombia,
the Czech Republic and Denmark
Colombia
To address differences in capacities between subnational governments, the Colombian government
uses a certification system to identify subnational governments that are best capable of providing
important public services. The certifications are mostly operated by line ministries and they are sectorspecific (education, health, water and sewage) so that certification in one sector does not automatically
lead to certification in another sector. The certified municipalities have more autonomy to allocate the
central transfers and to organise service provision. The certified subnational governments are also in
an advanced position to apply for special central government funding for projects.
Czech Republic
In the Czech Republic and in the process of decentralisation, the responsibilities of the 76 abolished
state “districts” were largely passed on to 205 “municipalities with extended powers” (ORP) in 2003.
These municipalities perform central government delegated functions, such as child protection and
issuing passports, on behalf of smaller surrounding municipalities. These functions are associated with
additional funding. Smaller municipalities can also delegate to the ORP additional functions that they
do not want to provide or cannot provide because of their lack of capacities. They use contract
agreements to do this. In 2012, they concluded 5 784 contracts. Transferred responsibilities include
administration as well as services such as healthcare and education. While this is very flexible and has
increased efficiency, it also adds to the complexity and has proved difficult to monitor. The Ministry of
the Interior in 2012, therefore, proposed to move all delegated functions to the 205 ORP in order to
streamline the system and increase efficiency.
Denmark
Between 2012 and 2015, nine local municipalities in Denmark were granted exemptions from
government rules and documentation requirements in order to test new ways of carrying out their tasks,
in a policy experiment known as the “Free Municipality” initiative. The main focus has been on
simplification, innovation, quality and a more inclusive approach to the individual citizen, with many of
the experiments focusing on employment. The Free Municipality experiment is currently being
evaluated, in order to form the basis for potential future legislation on de-bureaucratisation for all
municipalities. The concept of Free Municipalities was extended to more municipalities in 2019
Source: OECD (2019[40]), Asymmetric Decentralisation: Policy Implications in Colombia,
http://www.oecd.org/countries/colombia/Asymmetric_decentralisation_Colombia.pdf (accessed on 11 July 2019).; OECD (2017[42]), Making
Decentralisation Work in Chile: Towards Stronger Municipalities, https://dx.doi.org/10.1787/9789264279049-en.
While most of the Greek legal framework is based on the principle of uniformity, the law considers some
differentiation in the assignment of responsibilities reflecting upon the municipalities’ diversity of
geographic conditions. To better serve the populations of insular municipalities, island municipalities have
a wider set of competencies in the areas of: agriculture; natural resources, energy and industry;
employment, trade and tourism; transport and communications; and public works, urban and spatial
planning and the environment. In the same logic, mountain municipalities have also a wider set of powers
in the areas of energy, water, forestry, agriculture and support to the local community and economy. Still,
despite their diversity, almost all Greek municipalities have the same political organisation, functions and
funding arrangements.
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At the regional level, Greek law also considers a slight differentiation in the assignment of responsibilities.
Insular regions, in addition to their regional responsibilities, exercise powers related to the planning,
approval and monitoring of intraregional transport plans (Council of Europe, 2012[37]). The metropolitan
regions of Attika and Thessaloniki have also some additional responsibilities in the areas of: the
environment and quality of life; spatial planning and urban regeneration; transport and communication; and
civil protection and security, beyond the municipal administrative boundaries (see below).
However, Greece still has some scope to introduce more differentiation in the allocation of competencies
to reflect not only the geographic conditions but also different local governments’ capacities. In particular,
it is important for Greece to move forward with the decree allowing for territorially specific policies and the
possibility for asymmetric decentralisation foreseen 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 the environment.
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.); simplifying reporting
mechanisms of weaker municipalities to alleviate the administrative burden.
To differentiate responsibilities according to capacities, Greece could follow an approach similar to the one
implemented by Colombia, for example. Colombia has developed a certification system to identify
subnational governments that are best capable of providing important public services (Box 4.7). In any
case, the criteria used to differentiate the powers of municipalities and/or regions needs to be transparent
and agreed upon with all interested stakeholders.
Differentiated governance approaches also entail some risks linked with institutional complexity and
inequalities. By definition, differentiated arrangements do not directly promote equal treatment of
subnational governments and citizens. These arrangements might also be perceived as a way to support
the wealthiest regions or subnational governments. To minimise those risks, it is crucial to ensure that
positive spill-over effects result from the differentiated arrangements between subnational governments,
for instance, conditions set to encourage subnational governments to assist their weaker neighbours, the
creation of co-operation frameworks between subnational governments and the promotion of good practice
dissemination (OECD, 2019[40]). This risk can also be attenuated if the differentiated assignment is made
on a voluntary basis while the central government ensures service provision for those regions or
municipalities that do not volunteer to take on more responsibilities.
Countries are increasingly adopting pilot experiences in the devolution of responsibilities to subnational
governments. In Sweden for example, two successful pilot experiences on asymmetric decentralisation
were established at the end of the 1990s (regions of Skåne and Västra Götaland) to transfer the
responsibility of regional growth from regional state agencies (County Administrative Boards) to regional
political bodies (elected regional councils). Since then, the responsibility has been gradually transferred
from regional state agencies to regional political bodies in other counties as well (to county councils and
county co-operation bodies). This policy might be rolled out to the entire country based on the pros – that
outweigh the cons – of its implementation (OECD, 2018[1]). These approaches might allow a better match
between policies and local needs without going through radical administrative or constitutional reforms.
Indeed, pilot experiences allow policymakers to experiment and learn while avoiding subnational
governments with low capacities becoming overwhelmed by new responsibilities (OECD, 2018[1]).
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Making the most of Greece’s metropolitan areas
While some progress has been made, the governance of Greek metropolises is still
fragmented
Greek urban areas are the main engines of the economy and, as such, face particular challenges. The
regions of Attica and Central Macedonia concentrate the majority of the population and are responsible for
almost two-thirds of the national GDP. Attica alone concentrates almost half of the country’s GDP (Greek
urban areas were also the most affected by the economic crisis, compared to intermediate or rural regions
in the country [Chapter 2]).
With the Kallikratis reform, Greece advanced in the management of its two major metropolitan areas. The
reform provided, for the first time, a metropolitan status to the metropolitan areas of Attika and Thessaloniki
(the Metropolitan Region of Attica, which comprises 66 municipalities, and the Metropolitan Unit of
Thessaloniki, which comprises 14 municipalities). This special status confers to these two areas additional
functions and responsibilities beyond the municipal administrative boundaries in the areas of the
environment and quality of life, spatial planning and urban regeneration, transport and networks, and civil
protection and security. In this framework, Athens does not have a special status as a capital city but is
included in the metropolitan region of Attica. This new status meant a significant change for Athens: since
the reform, the metropolitan regional authority is represented in the European Committee of the Regions
and the 66 municipalities now participate in European Groupings of Territorial Cooperation with other EU
subnational governments to promote common economic interests (Chorianopoulos and Pagonis, 2015[44]).
Together with the transfer of competencies, the law creates metropolitan committees to address
metropolitan issues that have, however, limited space for action. The metropolitan governance structure
includes four metropolitan committees in the region of Attica (spatial planning and urban reform, transport
and communications, civil protection, and the environment and quality of life) and one metropolitan
committee of Thessaloniki in the region of Central Macedonia. These committees, headed by a deputy
head of the region, are supposed to deal with relevant local government issues and submit suggestions to
the regional council. However, these committees have not taken full responsibility, they meet on an ad hoc
basis for deliberative purposes and do not hold any decision-making power. In addition, municipalities are
not systematically represented in the committees, although they are occasionally requested to provide data
on relevant topics under discussion (Council of Europe, 2018[45]; OECD, 2015[46]).
Despite the transfer of additional competencies, the management and governance of metropolitan areas
are still fragmented. Regarding metropolitan competencies, the three levels of government have
fragmented responsibilities over key issues such as the management of floods and natural disasters. The
fragmented administration has also had an impact, for example, in refuse collection and the location of
landfills (Council of Europe, 2018[45]). At the same time, even if there are some metropolitan-wide
co-ordination institutions to deal with urban policies such as transport or the environment, the lack of a
single metropolitan administration structure limits their impact (Council of Europe, 2018[45]). This is what
happens in Athens, for example, where different organisations are in charge of co-ordinating and
implementing environmental, waste management and transport policies at the metropolitan scale:
The Athens Urban Transport Organisation (OASA S.A.) is a public company responsible for the
planning, co-ordination and control of all public transport modes within the region of Attica. It
operates under the supervision of the Ministry of Infrastructure, Transport and Networks and its
managing director is appointed by the Minister of Finance and the Minister of Infrastructure.
Co-ordination between the OASA and municipalities on transport planning is undertaken on an
ad hoc basis, with no systematic procedure in place. The same happens with the co-ordination
between transport planning and overall metropolitan planning (OECD, 2015[46]).
The Organisation for Planning and Environmental Protection of Athens (ORSA) was created in
1985 as a special agency of the Ministry of the Environment, Energy and Climate Change, which
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serves as an advisory council to municipalities. One of its main responsibilities is the
implementation and revisions of the Regulatory Master Plan of Athens (1985) and its subsequent
update (Law 4277/2014). Despite its unique metropolitan-wide mandate, the ORSA has been
struggling with limited formal competencies, insufficient implementation powers and the structural
deficiencies of the Greek planning system (OECD, 2015[46]).
Besides the fragmentation, the central level plays a decisive role in metropolitan issues with little
involvement of the regional or municipal levels. The main responsibilities for spatial planning for example,
such as the approval of comprehensive urban plans as well as the implementation of the Regulatory Plan
and the Urbanisation Control Zones (ZOE), remain under the jurisdiction of the central government
(Chorianopoulos and Pagonis, 2015[44]). The lack of a metropolitan authority, as well as the financial crisis
context, has also meant an increasing role for private foundations in urban planning, interventions and
projects of metropolitan significance (e.g. Rethink Athens, Hellinikon S.A., among others). Most of these
institutions are controlled by the central government (Chorianopoulos and Pagonis, 2015[44]).
Towards a more effective metropolitan governance
Most OECD countries have trouble producing policies at the appropriate level, including in critical areas
such as transport and housing. Still, evidence shows that for a given population size, a metropolitan area
with twice the number of municipalities is associated with around 6% lower productivity, an effect that is
mitigated by almost half when a governance body at the metropolitan level exists (Ahrend et al., 2014[47]).
This is why an increasing number of countries are implementing differentiated governance structures for
metropolitan areas to make the most out of urbanisation and agglomeration economies. Currently, around
two-thirds of the metropolitan areas in the OECD have a metropolitan governance body.
The metropolitan governance models implemented by countries are not unique and must respond to
particular circumstances and institutional contexts. Regardless of the model, basic features, such as
political representation through direct election, clear assignment of expenditure responsibilities and
revenue sources, geographic boundaries that match boundaries of the economic region (functional area),
fiscal autonomy, adequate capacity and revenues that match expenditures, are essential elements for any
successful metropolitan area governance (Allain-Dupré, Chatry and Moisio, forthcoming[48]).
The United Kingdom has an interesting model where urban areas are governed through arrangements
between the national and subnational governments by allowing a degree of “tailored” devolution of
responsibility to English cities (Box 4.8). This model can be interesting for Greece, as it would only mean
an enlargement of the implementation of the current regulation on contracts across levels of government.
A recent example of metropolitan governance includes the 2013 French Law on Metropolitan Areas which
contemplated differentiated governance for Aix-Marseille, Lyon and Paris to include governance structures
with own-taxing powers and the shift of competencies from regions and departments (Box 4.8).
In Greece, the need to establish a metropolitan governance structure is widely acknowledged.
Programmatic contracts and inter-municipal co-operation have been available as tools in Greece since
Law 1622/1986 (updated by the Kallikratis reform) but they could be further used. Some useful tools exist
in spatial law and are hardly used today. There is a broad consensus on the necessity of reforming
governance in the metropolitan area, in particular for Athens. In the path towards a more integrated
metropolitan governance, a first step for Athens would be to integrate the multiple bodies dealing with
metropolitan issues (such as the OASA or ORSA) into the region of Attica’s metropolitan committees in
order to consolidate both inter-municipal and cross-sectoral co-ordination. This could also serve to
strengthen their role as an interface with the national and EU levels. The structure of the Urban Authority
for the Sustainable Urban Development Plan in Thessaloniki could be also expanded or specialised.
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Box 4.8. Different models for metropolitan governance: The cases of France and the UK
The 2013 French Law on Metropolitan Areas
The 2013 French Law on Metropolitan Areas contemplated differentiated governance for Aix-Marseille,
Lyon and Paris to include governance structures with own-taxing powers and the shift of competencies
from regions and departments. In France, efforts were made by the central government already during
the 2000s to encourage co-operation at an urban level.. However, apart from the creation of urban
communities in 1966, they had little success. The 2010 Law on the Creation of Metropolitan Areas has
led to the creation of only one metropolis (Nice Côte d’Azur), confirming once again that regulation is
not sufficient to induce reform. A new step was achieved in 2013 with the first discussions on the new
law on metropolitan areas. The government adopted a new approach, based on governance solutions
tailored to territorial specificities and local needs. The 2014 MAPTAM law on the modernisation of public
territorial action and metropolises introduced a degree of diversification across French territories.
Fourteen metropolises (more than 400 000 inhabitants) will be granted greater responsibilities than
“standard” municipalities or inter-municipalities, justified by their larger size and urban nature. Among
them, the three largest metropolitan areas (Aix-Marseille-Provence, Lyon and Paris, which already have
a specific status since the 1982 PLM law) received ad hoc different governance structures – i.e. different
organisation, responsibilities and resources.
The Métropole du Grand Lyon, operational since January 2015, has (unlike Aix-Marseille-Provence and
Paris) a particular metropolitan status: it merged responsibilities of the existing inter-municipal cooperation entity Grand Lyon and those of the département du Rhône, covering about 1.3 million people
– the only one of its kind in France. Political representatives for the metropolis will be elected through
direct suffrage from 2020 onwards. This innovative “asymmetrical” approach based on “recognising the
diversity of territories within the unity of the Republic” is relatively new in France, where past policies
were uniform across territories (except for overseas territories). It aims to adapt organisational
structures and policies to the distinctive characteristics of territories at an appropriate scale. Another
innovation is the setting up of two transitory inter-ministerial “prefiguration” task forces for Aix-MarseilleProvence and Grand Paris. These task forces, headed by the prefect and composed of national and
local civil servants and experts, prepared the reforms and then helped in the transition process. They
also work to gain support from citizens, local authorities, the private sector and civil society.
Finally, the French metropolitan reform is a good illustration (at least in the cases of Aix-Marseille and
Grand Paris) of resistance from local mayors and possibly from the regional level. The implementation
process is as crucial as the nature of the reform itself: adopting a law is not sufficient as it may not, or
only partly, be implemented in practice.
City Deals in the United Kingdom
Since 2010, the United Kingdom has developed a comprehensive policy on devolution and local
economic growth which is characterised by:
Agreeing on place-based approaches to driving economic growth, regeneration and housing
development – including pan-region models.
Devolving and decentralising powers and functions to local areas, e.g. through City Deals,
Growth Deals and Devolution Deals.
Empowering strong and accountable local decision-making and giving a voice to the private
sector, e.g. Local Enterprise Partnerships, mayors, combined authorities.
Creating the conditions for local growth through a competitive, deal-making approach which
offers incentives, e.g. Local Growth Fund, Enterprise Zones.
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In particular, City Deals are agreements between the government and a city that give cities control to:
i) take responsibility for decisions that affect their area; ii) design their own strategies to help businesses
grow; iii) create economic growth; and iv) decide how public money should be spent. The City Deals
are focused on institutional alignments and re-centring local governments as key agents of urban
planning. The deals are built following a bottom-up approach to agree on priorities and proposals with
local authorities.
Currently, the responsibilities of metropolitan areas comprise transport, spatial planning, regional
development, waste disposal, water provision and sanitation.
Source: OECD (2019[49]), “Greece”, https://doi.org/10.1787/tour-2018-19-en; Thorpe, K. (2019[50]), “Devolution and local economic growth
policy in the United Kingdom”, Presentation for a policy seminar in Kazakshtan, Unpublished; Allain-Dupré, D., I. Chatry and A. Moisio
(forthcoming[48]), (OECD, 2013[51]).
The existence of a wide-metropolitan governance structure may help Athens and Thessaloniki to deliver
integrated urban and spatial strategies and enhance metropolitan productivity. In Greece, space and
economy are still planned separately from each other, with little alignment between regional and municipal
objectives and few implementation tools (OECD, 2015[46]). Comprehensive urban and spatial planning for
metropolitan areas is necessary to connect spatial planning considerations with broader economic, social
and environmental goals and objectives. Such a strategy may help to align strategic investments in a wide
range of policy areas – health, education, transport and energy investments and infrastructure – with land
use considerations. They can also help co-ordinate the actions of functionally connected municipalities
around common policy objectives (Chapter 3). Together with this, a metropolitan governance structure
may help Greek urban areas to become more resilient to an economic crisis and better manage the
negative aspects of agglomeration such as growing congestion and sprawl.
In order to be successful, metropolitan institutional structures must enjoy a degree of decision-making
authority over resources and own revenues. Evidence shows that metropolitan authorities that can
generate own-source revenue and have control over their finance tend to flourish, while those that are held
in check by their funders face greater difficulties (OECD, 2013[51]). In general, when unitary countries
undertake metropolitan reforms, the central government plays a key role in financing the new metropolitan
body. If Greece wants to make progress in the area of metropolitan area governance, the central
government needs to provide municipal areas with adequate funding to ensure responsibilities have
adequate funding. Otherwise, any proposed institution with a metropolitan ambition would simply inherit
an unfunded mandate, which is likely to generate frustrations and eventually perpetuate costly inertia
(OECD, 2015[46]). For example, to start, specific tax regimes for inter-municipal groupings or metropolitan
areas could be promoted without taking resources away from the municipalities.
Strengthening the Greek multi-level governance framework for regional
development: Progress, challenges and ways forward
Introduction
While the decentralisation process that Greece is pursuing is a key step to deliver on place-based
approaches, this does not occur spontaneously with decentralisation. The impact of decentralisation
reforms on regional development policy depends, to a significant extent, on how governments ensure the
conditions to make it work. It is necessary to put in place multi-level governance arrangements that facilitate
co-ordination and integration of sectoral policies, as well as co-ordination arrangements that allow
delivering regional policies and investments at the relevant scale and bring together relevant public, private
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and civil society actors. Regions and municipalities also need to have sufficient capacities – administrative,
financial and professional – to deliver and be able to produce genuine place-based regional policies.
In addition, the central government needs to strengthen its place-based approach to regional development
policy and public investment. Greece’s regional policy is largely driven by the European Cohesion Policy.
In the absence of a specific regional development strategy, regional development is implicitly served
through the regional allocations and programmes of the European Structural and Investments Funds
(ESIF) and to some extent, Greece’s own Public Investment Programme (PIP). To improve the multi-level
governance for regional development in Greece, it is thus crucial to focus on the governance of EU funds
in the country. Indeed, the influence of European funding has played an important role in helping Greece
upgrade its institutions and governance models for regional development. Improving how Greece manages
EU-funded investments serves as a lever to improve the overall multi-level governance of regional policy
across the country.
While Greece has put new structures in place, an important challenge remains on how to further implement
and consolidate the new structure and, particularly, the role of the regions, given their recent institutional
change to local government organisations with elected leaders (governors), in regional development and
investment policies. Several studies have pointed out Greece’s weak institutional framework and
capabilities as a key explanation for the low efficiency of regional development policies and, in particular,
for investments financed by EU Structural Funds. Low planning capacity, cumbersome bureaucratic
procedures and lack of experienced staff are cited amongst the factors delaying decisions and forestalling
outcomes) (Huliaras and Petropoulos, 2016[52]). A more strategic and reinforced partnership between the
central, regional and municipal level is not only important for the management of EU funds but the public
investment system as a whole. This would also enhance the capability of regions to produce genuine
regional development strategies.
The OECD Recommendation on Effective Public Investment across Levels of Government (OECD,
2019[53]) provides a generic analytical framework as well as guidance on how countries can take out the
most of investments opportunities.
Box 4.9. The OECD Recommendation on Effective Public Investment across Levels of
Government
When done well, public investment can be a powerful tool to boost growth and provide a solid
infrastructure for economic and social development as well as to leverage private investment. In
contrast, poor investment choices or poor management of investments is a waste of resources. It erodes
public trust and may hamper growth opportunities.
OECD member countries have acknowledged the importance of better governance for public
investment by adopting the Recommendation of Effective Public Investment Across Levels of
Government in March 2014. The recommendation groups 12 principles into three pillars which represent
three systematic challenges for efficiently managing public investment: co-ordination challenges,
subnational capacity challenges and challenges in framework conditions.
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Figure 4.8. The 12 principles of the OECD Recommendation on Effective Public Investment
across Levels of Government
Pillar 1
Co-ordinate across levels of
governments and policies
• Invest using an integrated strategy tailored to different places
• Adopt effective co-ordination instruments across levels of government
• Co-ordinate across SNGs to invest at the relevant scale
Pillar 2
Strengthen capacities and
promote policy learning at all
levels of government
• Assess upfront long-term impacts and risks
• Encourage stakeholder involvement throughout investment cycle
• Mobilise private actors and financing institutions to diversify sources of
funding and strengthen capacities
• Reinforce the expertise of public officials and institutions
• Focus on results and promote learning from experience
Pillar 3
Ensure proper framework
conditions for public
investment at all levels of
government
• Develop a fiscal framework adapted to the objectives pursued
• Require sound and transparent financial management at all levels
• Promote transparency and strategic use of procurement
• Strive for quality and consistency in regulatory systems across levels of
government
Source: OECD (2019[53]), Effective Public Investment across Levels of Government: Implementing the OECD Principles,
https://www.oecd.org/effective-public-investment-toolkit/ (accessed on 16 August 2019).
The recommendation’s implementation toolkit, which provides basic guidance and helps policymakers
at all levels of government implement this principle in practice, provides concrete examples and best
practices for countries at any stage of decentralisation.
After five years of its adoption, the OECD has conducted a monitoring exercise to assess the
implementation of the recommendation by Member and non-Member countries that have adhered to
the recommendation. The monitoring exercise shows that the practices of many adherents align with
the recommendation, in particular by developing integrated investment strategies and implemented
mechanisms to co-ordinate public investments across levels of governments. However, there remains
room for improvement in key areas of public investment, notably in the implementation of mechanisms
to assess the long-term impact of public investment and in the mobilisation of private actors to finance
investments at the subnational level.
Source: OECD (2014[54]), Recommendation of the Council on Effective Public Investment across Levels of Government,
https://www.oecd.org/regional/regional-policy/Principles-Public-Investment.pdf; OECD (forthcoming[55]), Environmental Performance
Review: Greece 2020, OECD Publishing, Paris.
Multi-level governance of the 2014-2020 Greek Partnership Agreement: Roles and
interactions of its main actors
In Greece, between 2010 and 2018, public investment co-financed by the EU accounted for about 80% of
total public investment (OECD, 2018[5]). The large share of EU funds protected investment from more
severe cuts during the crisis. As a result, the share of public investment in total expenditure ranged
between 11%-12%, remaining broadly stable between 2013 and 2017 (OECD, 2018[5]). Structural funds
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have permitted Greece to invest in new infrastructure, modernise SMEs, among others. Cohesion policy
in Greece is also a key contributor to reducing territorial inequalities, in particular between island and
continent regions and municipalities.
Overview of the Greek 2014-2020 Partnership Agreement
The Partnership Agreement (PA) for the Development Framework 2014-2020 (Box 4.10), together with the
recently adopted National Growth Strategy (2018), constitute the two strategic documents that guide
Greece’s national development (Chapter 3). They benefit from the contribution of significant resources
originating from the European Structural and Investment Funds (ESIF) of the EU.
The PA specifies among its strategic goals the improvement of the public administration, enhancement of
competitiveness, tackling high unemployment, in particular of young people, reducing social exclusion and
poverty, upgrading infrastructure to promote growth and jobs, and efficient use of natural resources/climate
change and mitigation the impacts.
Box 4.10. Partnership Agreements on the European Structural and Investment Funds (ESIF)
For the programming period 2014-20, each EU member state signed a PA in co-operation with the EC.
This is a reference document for programming interventions from the ESIF and links them to the aims
of the Europe 2020 growth strategy. PAs are designed to achieve the 11 EU Thematic Objectives (TOs)
for 2014-20 via a series of national and regional Operational Programmes (OPs). The PA defines the
strategy and investment priorities chosen by the relevant member state operationalised through the OP,
as well as an indicative annual financial allocation for each OP. PAs lead to a series of investment
programmes channelling the funding to the different sectors, regions and projects in the policy areas
concerned. Across the EU, responsibility for managing and implementing OPs is assigned to institutions
designated as managing authorities (MAs).
Source: EC (n.d.[56]), Glossary, https://ec.europa.eu/regional_policy/en/policy/what/glossary.
For the 2014-20 programming period, Greece was allocated EUR 21.4 billion from ESIF, with the national
government being responsible for EUR 4.8 billion in national co-financing. Within the context of EU funding,
40% (EUR 8.6 billion) is from the European Regional Development Fund (ERDF), 22% (EUR 4.7 billion)
from the European Agricultural Fund for Rural Development (EAFRD), 18% (EUR 3.9 billion) from the
European Social Fund (ESF) and 15% (EUR 3.3 billion) from the Cohesion Fund (CF). The rest comes
from the European Maritime and Fisheries Fund (EMFF) and the Youth Employment Initiative (YEI).
Resources allocated to Greece and its regions from the EU Cohesion Policy envelope of the European
budget have been attributed to 5 national OPs and 13 Regional Operational Programmes (ROPs) (Table
4.3). The total OP envelope is formed by adding the corresponding national co-financing, typically of the
order of 25%. These allocations concern the ERDF, ESF and CF and include supplementary resources
allocated to Greece following the midterm review. This is also true for OPs financed through the ERDF
under the European Territorial Co-operation (ETC).
At the beginning of the negotiation process for the Partnership Agreement (PA) for the National Strategic
Reference Framework (NSRF) 2014-2020, Greece, under the leadership of the Ministry of Development
and Investments, submitted the PA to the EC. This PA included Operational and Regional Programmes
and a summary report of NSRF 2014-20 providing key information including objectives and performance
by OP. The final PA was approved by the EC in May 2014.
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Table 4.3. Resources allocated to Greece and its regions from the EU Cohesion Policy,
programming period 2014-2020
Distribution of funds in 5 national (sectoral) OPs and 13 ROPs
CF
EARDF/
EMMF
Total union
contribution
582
0
0
3.686
0
3.204
0
4.599
0
2.572
0
0
2.572
Public Sector Reform
239
223
0
0
462
Region of Eastern Macedonia and Thrace
355
63
0
0
418
Region of Central Macedonia
646
162
0
0
808
Region of Thessaly
266
73
0
0
339
Region of Epirus
228
42
0
0
270
Region of Western Greece
328
78
0
0
406
Region of Western Macedonia
247
25
0
0
272
Region of Continental Greece
76
32
0
0
108
Region of Peloponnese
163
65
0
0
228
Region of Ionian Islands
156
29
0
0
185
Region of North Aegean
215
33
0
0
248
Region of Crete
292
68
0
0
360
Region of Attica
680
260
0
0
940
Region of South Aegean
62
24
0
0
86
Technical Assistance
157
70
62
0
289
0
0
0
4.718
4.718
Operational programme
ERDF
ESF (+YEI)
Competitiveness, Entrepreneurship and Innovation
3.104
Transport Infrastructure and Environment
1.395
Human Resources Development, Education and Lifelong Learning
Rural Development (EARDF)
Fisheries and Maritime (EMFF)
Total
0
0
0
389
389
8.609
4.401
3.266
5.107
21.382
Source: (Psycharis, 2019[57]).
Table 4.4. Bilateral European Territorial Cooperation Programmes
Operational programme
ERDF EU contribution
(EUR)
National contribution
(EUR)
Public expenditure
(EUR)
Greece-Bulgaria
110.241.234
19.454.338
129.695.572
Greece-Italy
104.700.362
18.476.537
123.176.899
Greece-Cyprus
47.004.240
8.294.868
55.299.108
Greece-Republic of North Macedonia
38.649.552
6.820.507
45.470.059
Greece-Albania
35.965.222
6.346.807
42.312.029
Balkan-Mediterranean
TOTAL
33.456.246
6.271.408
39.727.654
370.016.856
65.664.465
435.681.321
Note: For the OPs financed under the ETC, the allocations are depicted on a different table due to the contribution of other member states in
the respective OPs.
Source: (Psycharis, 2019[57])
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Figure 4.9. Partnership agreement (PA) process preparation
The EC presents its
proposals for the
period up to 2020
long-term budget
and the next
generation of
programmes and
funds
Public consultation
via member states
completing a
questionnaire
National public
regional local
authorities,
Organisations
complete the
questionnaire
Replies to public
consultations feed
into the design of
comprehensive
proposals for
the 2014-20 EU
long-term budget
and for the next
generation of
financial
programmes
Note: The questionnaire refers to the questionnaire(s) sent by the Ministry of Development to all involved bodies, included mainly to the
1st Circular (April 2012) and the 2nd (March 2013) for the preparation and submission of the PA agreement.
Source: Psycharis, Y. (2019[57]), “The multi-level governance framework for ESPA: Presentation, assessment, and recommendations”,
Background paper for the OECD Review, Unpublished.
Figure 4.10. The implementation process of the PA 2014-20
Source: Psycharis, Y. (2019[57]), “The multi-level governance framework for ESPA: Presentation, assessment, and recommendations”,
Background paper for the OECD Review, Unpublished.
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While Greece had no official document to inform the negotiation of the 2014-20 PA, the National Growth
Strategy developed in 2018 set the basis for the upcoming 2020-27 programming period. The strategy
offers a prescient assessment of the central challenges facing Greek society and its economy and
proposes a range of measures to address them. Greece’s next agreement with the EU for Cohesion Policy
post-2020 shall be informed by these development objectives and the strategy needs to be used to
harmonise national and EC goals and national policy directions.
All funding programmes follow the same implementation and monitoring procedures which are defined by
the EC and Greece. The creation of a call for tender, as well as the project selection, is done by the relevant
MA. The monitoring committee is approves the selection criteria, the programme specification and the
evaluation methodology.
The 2014-20 architecture for the management of EU funds in Greece
For the 2014-20 programming period, Greece introduced a new architecture for the management of EU
funds in order to address some of the key challenges confronted during the 2007-13 period. One of the
main objectives of the new architecture is to strengthen the capacity of regional and local authorities to
implement a full range of actions according to the PA priorities. This is why the architecture of the
2014-20 PA includes:
Seven National Operational Programmes (including programmes for rural development and
fisheries) covering one or more sectors and whose geographic scope and implementation applies
across the country.
Thirteen Regional Operational Programmes (ROPs), one for each of the 13 administrative regions
of the country, including regional-scale activities.
Each programme includes strategic priorities and indicative actions that shape its contribution to the
achievement of the PA objectives and therefore the implementation of the EU strategy for smart,
sustainable and inclusive growth. Each and every one of the Greek regions is the subject of a regional
programme that includes projects and regional-scale actions and is funded by the ERDF and the ESF.
For this programming period, National Operational Programmes represent 71.5% of the total OP budget.
However, a significant part of these resources is invested in ROP projects: more than 90% of the total
budget of sectoral OPs are committed to regional projects.
For the ROPs, each region designs an OP for the ESI funds allocated by the Ministry of Development and
Investments and uses the funds to cover some of the region’s needs. Each region distributes the allocated
budget across its chosen target areas while maintaining compliance with European regulations and
covering local needs in the most appropriate way. In essence, however, in the planning and implementation
of the funds, a share of the budget dedicated to ROPs is planned and implemented by regional authorities,
while another share is planned and implemented by the central government. In most programming periods,
the share of EU Structural Funds allocated to regional authorities has been small and on average, it does
not exceed 30% of the funds over the period. The remaining 70% is managed at the central government
level, which in some cases is justified by the size of certain projects.
The Greek Management and Control System for Operations
When the EC entrusts a member state with implementing programmes at the national level, the country is
responsible for setting up a Management and Control System (MCS) which complies with the requirements
of EU regulations. The EC plays a supervisory role by ensuring that the arrangements governing the MCS
are compliant.
A country’s MCS is the “machinery” used to deliver effectively on the country’s development policies
(Box 4.11). The EU has issued extensive guidance on ESIF, including on the setup of MCS (EC, 2014[58]).
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The MCS sets the institutional and legal framework for ESIF investment and OP implementation, as well
as the common rules, procedures and monitoring mechanism in a country. At the same time, EU-level
regulations govern the allocation and use of ESIF (including control, verification, monitoring and audit
processes). The MCS includes all the ex ante financial controls (i.e. before the EU claims), while the audit
bodies carry out ex post controls (i.e. after EU claims). This “shared management” (by the EU and the
member state) model – the main principle for implementing cohesion policy agreed at EU political level –
creates a complex system of multiple checks where EU-, national- and programme-level bodies participate
in a range of internal and external management and control activities.
Countries have discretion on how MCS and MAs are organised. The OECD does not support a single “best
practice” in terms of organisational set-up of public administrations (nor of MAs) respecting the different
missions, activities and contexts of governments and cohesion strategies. At a minimum, administrations
should be organised in ways that avoid duplication and fragmentation of tasks; respect integrity (i.e. with
sufficient accountability mechanisms and “arms-length” institutions to provide objective, independent
oversight); and with adequate horizontal and vertical mechanisms for information sharing and
communication (OECD, 2019[59]).
Box 4.11. The Management and Control System in Greece
The Management and Control System 2014-2020 is common for all Greek OPs in the PA 2014-2020,
that are financed by the ERDF, ESF and Cohesion Fund, in the framework of the Investment for Growth
and Jobs goal. The MCS includes, determines and documents the following aspects:
Designation of the authorities/bodies, which undertake competencies for management,
certification, control and co-ordination, in accordance with Regulation (EC) 1303/2013.
The organisational structure and individual competencies of the said authorities/bodies.
The operational correlation of authorities/bodies and compliance with respect to the separation
of functions.
Written procedures to be implemented.
Regulatory acts required for the designation of authorities/bodies and the implementation of the
OPs.
The main principles that govern the Greek Management and Control System 2014-2020 focus on the
following:
Existence of common rules in the management and monitoring of the OPs in accordance with
the principle of sound financial management and with the aim of better controlling potential
divergences in their application and the timely adoption and application of corrective measures.
Mandatory electronic exchange of data between management authorities and the beneficiaries
of the operations, through the monitoring information system (MIS), with the aim of reducing the
administrative burden of the involved authorities and bodies.
Strengthening the electronic communication between the MIS and the information systems of
the beneficiaries and intermediate bodies, as well as other general government bodies with the
aim of reducing red tape and the more efficient operation of the authorities and bodies involved.
Timely financing of the operations through the PA Central Account in combination with the
electronic interconnection between the MIS, the Programme for Public Investments and the
Bank of Greece.
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Key actors in the PA implementation: Roles and interactions
The main actors involved in the implementation of the Partnership Agreement 2014-20 are the MAs, the
Audit Authority and the Certifying Authority. Their role and respective functions are provided in European
Regulation 1303/13. Other key actors and institutions involved are the National Co-ordination Authority
and the Executive Units (Figure 4.11).
Figure 4.11. Key actors of the Greek Management and Control system
Source: Description of the MCS 2014-2020/ Annex 1: Structure of MCS.
The National Co-ordination Authority
The National Co-ordination Authority (NCA) is housed in the Ministry of Development and Investments. Its
main objective is ensuring co-ordination and the effective management of co-financed assistance. It is the
main point of contact with the EC and operates under the Secretary-General for Public Investments and
Partnership Agreement. Through its six special services the NCA provides framework conditions, tools and
guidance to the MAs (see below) on issues concerning all aspects of OP implementation, ranging from
strategic planning to the single MIS.
The NCA is at the centre of the EU funds strategic planning process and comments and consults all OPs.
It has overall responsibility for co-ordinating the different levels of programme design. During the
preparation phase, three circulars were issued by the NCA, setting out the procedures to be followed in
the design of the 2014-20 Partnership Agreement, its OPs and the bodies authorised to undertake these
procedures. The NCA has a strategic role in programme implementation. All OP revisions over the 2014-20
period are directed by the NCA and carried out by the competent MAs, in line with the guidelines of the
NCA.
Specifically, the NCA through six special services is responsible for the strategic monitoring, programme
evaluation, institutional support, internal co-ordination among MAs as well as the co-ordination of state aid.
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The Special Service for the Implementation (EYSE) is responsible for the strategic monitoring of the
2014-20 PA OPs. For this purpose, the MAs are in continuous and close collaboration with the EYSE which
is responsible for co-ordinating and overseeing the management and implementation of OPs supported by
ESI funds. The EYSE performs monitoring of compliance with the N+3 rule, monitoring of the thematic
concentration and the allocation of resources by category of region. It also ensures and monitors the proper
funding from the Public Investments Programme. The EYSE has developed: analytical forecasting
techniques to identify and respond to emerging N+3 issues; a special alarm procedure when specific
absorption problems are forecast; and close-monitoring and follow-up measures on the basis of particular
operations. In order to improve the financial progress of all of the OPs, it draws up action plans whose
implementation is monitored on a quarterly basis in constant co-operation with the MAs.
The Special Service for Strategy, Planning and Evaluation (EYSSA) holds the key responsibility for
programme evaluation. During the OP’s design, the circular on the implementation of the ex ante evaluation
and strategic environmental assessment of the OPs for the period 2014-20 set out the main guidelines for
organising and carrying out the ex ante evaluations for OPs, which were completed and submitted to the
EC together with the OPs. In the implementation phase, the EYSSA provided guidelines to the MAs in
order to draw up and submit an evaluation plan; another circular provided guidelines for organising and
carrying out the ongoing evaluations of the OPs. Finally, the NCA provided guidance to the Mas in issues
of quantitative targets and indicators contained therein, contributing thus to the development of a single
system of indicators for the PA 2014-20.
The Special Service for Institutional Support (EYTHY) is responsible for the drafting and monitoring of the
MCS. It provides legal support to all special services and staff structures of the NSRF 2014-2020 to ensure
the compatibility of the interventions with EU and national law. It plays a key role in defining MCS
architecture as it is responsible for formulating and presenting proposals for the continued simplification of
the system for the implementation of co-financed operations. This service is also in charge of developing
the strategy for the prevention and fight against fraud in structural actions and ensures the establishment
and operation of an effective complaints’ mechanism.
The Special Service for the Co-ordination and Monitoring of ESF Actions (EYSEKT) co-ordinates the
design and evaluation of ESF interventions implemented in the NSRF and OPs.
The Special Service for State Aid (EYKE) is the central administrator of the State Aid Information System
(PSC), the use of which is mandatory for all entrepreneurship support actions funded by the NSRF 20142020, as well as for the other actions of the Ministry of Development and Competitiveness. It also supports
all MAs on state aid rules.
The Special Service for the Monitoring Information System (MIS) plans, develops and adapts the integrated
information system (IIS) to the implementation requirements of NSRF 2014-2020 and other development
programmes. It provides training and supports users in the operation of the MIS and parallel auxiliary
information systems. The service is also in charge of processing and exploiting the data entered in the MIS
in order to satisfy system user requirements and provide statistical data for assessing the performance
and adoption of measures or establishing the need for new ones.
Managing authorities
Greek MAs – responsible for the efficient management and implementation of an OP – have common rules
for their organisation, staffing and functioning. All MAs have the same competencies as specified in the
regulatory provisions. They are responsible for a range of activities, including programming and evaluation,
monitoring, technical assistance, which require technical knowledge and a broad array of professional
competencies. As is the case across the EU, Greek MAs operate in a tightly controlled legislative and
regulatory environment where processes and procedures are clearly delineated in order to minimise the
potential for error or fraud.
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The MAs organisational structure is uniform across the Greek system and reflects the distribution of
competencies set by the regulations. Countries have discretion over the internal organisation of MAs. All
Greek MAs have three types of units (Figure 4.12) but the number of each type of units can differ by MA.
This configuration ensures the separation between the functions of: i) issuing calls for proposals and project
selection; and ii) monitoring projects and verifications needed. Public procurement and payment processes
related to project implementation do not fall under the responsibility of MAs unless the MA itself is a
beneficiary of the OP. Each MA has an annual action plan with specific targets, as well as a website for
publishing calls for proposals and approval decisions of operations.
Figure 4.12. Organisation structure of Greek managing authorities
Source: Description of the MCS 2014-2020/ Annex 2.
For the 2014-20 programming period, MAs responsible for national OPs moved out of the relevant line
ministries into the Ministry of Development and Investments, under the responsibility of two special
secretariats (which after July 2019 have been merged to only one special secretariat) established for this
purpose. This choice of centralising the management of OPs within the Ministry of Development and
Investments reflects an attempt to separate: (i) the managerial responsibility which lies with the political
leadership supervising the MA; from (ii) policy planning responsibility which lies with the political leadership
of the line ministries, by supervising beneficiaries implementing the sectoral policies. With this
demarcation, the strategic policy planning role falls within each line ministry.
In addition, Greece has also limited the number of MAs managing a fewer number of national OPs. In the
2014-20 period, Greece has only five national OPs, in contrast with nine in the previous programming
period. To manage these five national OPs, some MAs merged (e.g. the MA for Infrastructure with the MA
for the Environment, the MA for Education with the MA for Employment, etc.) The MA for the OP for
Transport Infrastructure, the Environment and Sustainable Development, for example, results from the
merger of three MAs, each responsible for their own OPs in the 2000-06 and 2007-13 programming periods
and situated within the relevant line ministries. At the regional level, there are 13 MAs as each of the
13 regions is responsible for its own regional OP. This is also an important change as in the previous
programming period, Greece had a complex scheme of three regions merged into one single OP that was
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managed directly by the NCA; in this scheme, regions were acting as intermediary MAs. For the 2014-20
programming period, the head of each regional MA is the relevant regional governor, who has the same
responsibilities as the administrative head (the Special Secretary at the Ministry of Development and
Investment) of the national OPs. The regional MA’s services belong to the regional administration special
organisational units designated as MAs. They are not, however, included in the chart of the respective
institutional structure as is the case for all special services linked to PA 2014-20. The regional governor is
the political supervisor of a regional MA and, thus, the regional MA’s staff reports to the regional governor,
and all MA documents and decisions are signed by the regional governor, whereas the decisions of the
national OP MAs are signed by the special secretary. Administratively speaking, the heads of both types
of OPs (national and regional) have exactly the same responsibilities.
Executive Units
Executive Units were created through Law 4314/2014 for the 2014-20 programming period within different
line ministries. These units were introduced to help line ministries in policy planning and delivery, mainly
by enhancing ministries’ capacity to transform sector policies into a solid and coherent set of specific
projects/actions able to deliver the policies with funding by the relevant OPs of PA 2014-20 or other
financing instruments. In this regard, the mandate of these executive units is twofold: i) to ensure effective
policy design as well as funding for sector policies mainly through ESIF co-financed programmes; and ii) to
support and strengthen the administrative capacity of line ministries or other government entities in the
sector to develop and implement their co-financed activities. They are also actively involved in the OP’s
specialisation process and in monitoring the overall progress of the operations falling within the relevant
sector of the ministry, in co-operation with the MA, for the adoption of troubleshooting measures.
They are responsible for designing policies of the relevant ministry, and planning, preparing and
implementing projects or actions that are funded by ESIF. They are entitled to translate sector strategy
stemming from all ministry services and bodies into concrete operational plans with corresponding
resources, as well as to collaborate with relevant MAs in drafting calls for proposals once they have agreed
upon a budget. Being officially part of the corresponding line ministry, the Executive Units have a broker
role between the line ministry and the MA. This requires co-operation at three levels: i) with the line ministry
services and entities to form a consolidated operational plan, comprising funding priorities for each sectoral
policy; ii) with the MA to further detail the actions to be included in the call for proposals; and iii) with
ministry services/entities to support project implementation.
In addition, they monitor the overall programming and implementation progress for their sector. They also
support ministries/entities in developing (up until they are sufficiently “mature” to be financed) and
implementing their co-financed actions and, in certain cases, they can act as beneficiaries for the ministry.
Before issuing a call, both the Executive Unit and the MA have to co-ordinate and decide on the call, the
resources, the content, the beneficiaries, the indicators and the targets, as well as the criteria of evaluation.
The creation of these units separates the strategic planning process and the management and
implementation of OPs. This demarcation maintains line ministries’ responsibility for sectoral planning and
avoids conflict of interest in the management and implementation of OPs as they are in charge of
monitoring and supporting beneficiaries but not of selecting their projects. It is important to note that the
services established as the new Executive Units for the 2014-20 programming period had a different role
previously, either as MAs of sectoral OPs, as intermediary bodies (IBs) or main beneficiaries for actions in
the respective policy sector. However, as the official creation of these units is somewhat recent – and their
responsibilities have been broadened – they have encountered significant challenges in clearly identifying
and realising their role and responsibilities in the new programme architecture.
Other key actors of the Greek Management and Control System are the intermediate bodies to which an
MA has entrusted part or all of its competencies, the beneficiaries which are the ones that execute the
different projects and the Certifying and Auditing Authority (Box 4.12).
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Box 4.12. Other actors in the PA implementation
Intermediate bodies
Intermediate bodies (IBs) are entities to which an MA has entrusted part or all of its competencies under
its own final responsibility towards the EC. MAs can delegate some of their activities to IBs while still
remaining responsible for overall governance. The content of this delegation is included in a ministerial
decision detailing mutual obligations. Considering the 2014-20 programming period, 74 bodies have to
date been designated as IBs, 40 of which are municipalities or other urban authorities.
Beneficiaries
Beneficiaries are the legal entities, usually businesses, government authorities (e.g. line ministries,
agencies, city and municipal governments, etc.), non-governmental organisations (NGOs) and
universities that apply for ESIF financing for a project designed to align with one or more thematic
objectives referred to in the PA.
The Certifying Authority
The Certifying Authority (CA) is responsible for drawing up and submitting payment applications to the
EC, certifying the fulfilment of all reliability regulatory requirements. Other functions include monitoring
of the procedure for the transfer of appropriations to the beneficiaries as well as inspection of MAs, IBs
and beneficiaries. The CA is under the responsibility of the General Secretariat for NSRF (not part of
the NCA) in the Ministry of Development and Investments.
The Audit Authority
The Audit Authority (AA) has overall responsibility for the audit of the functioning of the MCS for OPs
co-financed by the ERDF, ESF, CF and EMFF as provided for in the ESIF regulations. It is under the
responsibility of the Ministry of Finance and, as of its neutral role, is external to the NSRF system.
The Management Organisation Unit of Development Programmes
The Management Organisation Unit of Development Programmes (MOU), founded in 1996 following a
joint decision of the Greek government and the EC, is a non-profit institution reporting to the Ministry of
Economy and Development. it was created to safeguard community interventions in terms of sound
management, quality assurance and project monitoring, against a background of an underperforming
Greek public administration. Its mission is to support and strengthen the Greek public administration in the
effective management and implementation of EU co-funded OPs, covering needs in specialised human
resources, management systems, tools, procedures and expertise.
One of the main responsibilities of the MOU is the staffing of the special services (MAs, Executive Units,
IBs) for all OPs. For this, the MOU hired expert staff with experience in the managing and monitoring of
EU programmes and public works. The MOU also supports the daily operation of special services,
addressing their operating needs (payroll and personnel administration, housing, provision of necessary
infrastructure and office equipment), ensuring high operating standards and quality work conditions. To
accomplish this task, the MOU conducts training (e-learning) and implements practices for knowledge
transfer. They are also key in capacity building for beneficiaries by establishing expert teams, which provide
advisory, managerial and technical support to the weakest beneficiaries. The MOU is also engaged in
other projects related to the management and implementation of ESIF, e.g. production of guidelines for
beneficiaries regarding project maturity, operational reviews of various services, development of tools, etc.
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In accordance with the provisions of the PA 2014-20 for Greece, a major restructuring and streamlining of
all management structures, including the MOU, took place in 2014, taking into consideration the new OPs’
architecture. A uniform system of HR management (under MOU responsibility) was established for all ESIF
structures, governed by eight principles, including: independence, transparent and merit-based recruitment
system, strict operating rules and clear definition of job profiles and responsibilities, staff mobility,
performance appraisal, continuous training, modern and efficient operating environment, and
accountability.
The establishment of the MOU was an experiment aiming to support and reinforce the Greek public
administration and facilitate its closer co-operation with the private sector. Today, the MOU is an innovative
unit within the Greek administration playing an important role in the effective management and
implementation of EU co-funded programmes.
Enhancing the strength and efficiency of EU funds management
Focus on improving the efficiency of the current management system
For the 2014-20 programming period, Greece made significant changes in its management system in order
to better manage EU funds, including changes and adjustments to the OP Management and Control
System (MCS).
The main adjustment introduced by Greece to its MCS was the delimitation and separation of the strategic
planning functions from the management and implementation of the OPs. Several reasons explain this
change, which, all together, make this separation – the Executive Units on one side and the MA on the
other – an efficient way of managing and implementing the PA. Among these reasons are: i) the reduction
of national sectoral OPs from nine to five, involving the merger of different sectors into a unique OP;
ii) moving all MAs from the line ministries to the Ministry of Development and Investments. This contributes
to the alignment between strategic documents that support the MA and its OP and national and sector
strategies.
At the regional level, while all regions have their own OP for this programming period, this separation
between planning (Executive Units) and management and implementation (MAs) is not in place. 3 Some
MAs have the view that the Directorates of Development Planning of the regions could undertake this role,
as, according to the Kallikratis reform, the regions are mainly responsible for regional planning and
development, including the management of EU OPs. However, there is also a common understanding that
with the staff shortcomings faced by regions, this division between MAs and Executive Units is difficult to
implement in regions. However, some MAs consider that if those directorates had the appropriate human
resources in terms of quantity and expertise, they could be more actively involved in the regional planning
and set the regional priorities related to the environment, transport and other sectors. For example, they
could identify and prepare the regional transport projects that should be included under the Strategic
Transport Investment Framework 2014-2025, or the sewage treatment projects, among others. They could
also work in close collaboration with the Executive Units of the line ministries in the fields of tourism, culture,
poverty and social inclusion, employment, etc. in order to identify and prioritise relevant regional
interventions and ensure synergies and complementarities between the sectoral and regional OPs; this
task is now executed by the MAs.
The co-existence of the Executive Units and the MAs at the national level may allow the system to work
more efficiently. On the one hand, the line ministries are the “policy owners” and remain the main strategic
planners while the MAs can focus on the implementation, management, monitoring and evaluation of the
OPs – which require particular expertise. On the other, it reduces conflict of interest as the Executive Units
are now the ones responsible for supporting and building capacities of beneficiaries; i.e. beneficiaries
receive support from a different entity than the one that finally assigns the projects and evaluates. At the
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same time, having all MAs under the same ministry may facilitate economies of scale as well as
co-ordination among them. If well managed, it also may facilitate peer learning across the different MAs.
In general, the collaboration between MAs and the Executive Units seems to be positive. Some Executive
Units, such as those linked to health, culture or energy, or the Executive Units of the Ministry of Labour,
undertook a co-ordination role in programme implementation during the programming period. For those
Executive Units that did not to play such a co-ordination role, the experience with collaboration is also
generally positive. The positive collaboration between MAs and the Executive Units will persist and might
be reinforced if the Executive Units accomplish their role as described by the legislation (policy design,
preparation of projects, specialisation process), avoiding entering other stages of implementation, which
comes under the responsibilities of the MAs. For example, MAs are responsible for consultations with the
beneficiaries, as well as the day-to-day activities regarding project implementation. The involvement of the
Executive Units in monitoring and management stages could result in overlapping, which would multiply
the burden and is a crucial factor of implementation, especially under the light of staff shortages reported
by the MAs and the Executive Units.
The reduction of the number of MAs at the national level (as a result of the reduction of the number of
national OPs) as well as the regrouping of all MAs under the Ministry of Development and Investments
also allows for some more flexibility in management and implementation. First, the more priorities and
resources are set under the same programme, the more they support programme management, as internal
transfers within the programme are easier whenever required, or imposed by the need to avoid loss of
funding due to the N+3 rule. Second, the NCA can directly ask MAs (instead of a great number of different
ministers) to make the relevant modifications or amendments to programme documents and financial
resource transfers.
At the same time, the changes introduced in the 2014-20 programming period were burdensome and costly
for a majority of actors and parties within the MCS. Any organisational change, whether in the private or
public sector, puts pressure on the parties involved and may generate, at least at the beginning, some
resistance. In the public sector, organisational change is an exercise of negotiation and compromise and
not simply an exercise in convincing the various stakeholders to get on side (Cunningham and Kempling,
2009[60]). In the new structure, public employees and policymakers needed to re-learn how to navigate
within the MCS. With the merger of the Environment and Transport MAs, for example, officials worked to
create a single MA entity, trying to harmonise different sectors (transport and the environment), blend
differences in working cultures and manage programme and project portfolios that vary in size and scope
(OECD, n.d.[61]).
For the next programming period, Greece may focus on strengthening the existing scheme instead of
introducing new changes, which would bring further administrative costs and uncertainty. To effectively
implement organisational changes in the public sector, it is important to implement a programme of
continuous improvement, focusing on the actions, initiatives and measures that are in place (Cunningham
and Kempling, 2009[60]). To make the most out of changes, all actors need to incorporate the new policies
and structures into their daily routines; this is a learning-by-doing process (Fernandez and Rainey,
2006[62]). For this, it may now be necessary to make the system mature, investing in its optimisation, without
subjecting it to the stress of structural and profound changes.
Indeed, while the overall architecture has been set, the framework condition and tools to make it function
well are not always there and the capacity needed is often underdeveloped. Law 4314/2014 that regulates
the management, control and implementation of the interventions for the 2014-20 programming period,
that introduces mandatory measures such as the specialisation process or the creation of the Executive
Units, has not yet been fully implemented. This is the case, for example, of the selection of managers
through a new process or of the anti-fraud measures regarding personnel rotation. Similarly, the Regional
Development Planning Committees foreseen by this law are not yet operational (see below). For the next
programming period, it will be necessary to ensure the full operationalisation of the management, control
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and implementation law by, for example, introducing concrete mechanisms to monitor the whole process
and the respect of the relevant deadlines throughout the programming period.
There are four key conditions and areas that need to be strengthened in order to make the system function
better. These are; i) better delineating the responsibilities of the different actors at the national and
subnational levels; ii) strengthening and deepening co-ordination mechanisms, especially between the
national and subnational levels; (iii) reinforcing the administrative capacities of the different parties with a
special focus on beneficiaries; and (iv) continuing efforts in streamlining the rules and procedures to
navigate within the MCS and to increase efficiency and accountability. All of this whilst ensuring that tools
to make the MCS more efficient need to better suit regional and local realities and capacities.
Finetuning the responsibilities of key actors
A majority of national stakeholders see the distinction between management (MAs) and planning
(Executive Units) as a positive experience. The Executive Units, for example, have helped in the maturity
of projects, by supporting beneficiaries and filtering the projects submitted to the final calls by the different
agencies of the ministries.
However, the role and effectiveness of the Executive Units vary, depending on the circumstances and
conditions in different line ministries. In some cases, Executive Units lack the capacity to act as brokers
between the line ministry and the MAs. While all Executive Units should be able to translate strategic
priorities of line ministries into concrete programming, not all of them are able to deliver on this task. For
example, the Executive Unit of the health sector played an important role in the implementation of all
regional programmes, as all of them included specific priorities regarding the sector. In practice, this
executive unit played a much wider co-ordinating role in the OP implementation than other units within the
system. This Executive Unit not only decided the policy but also prepared the relevant projects, monitored
their implementation as well as the indicators and co-ordinated the OPs’ revision whenever required. In
other words, the Executive Unit divided the national policy into specific projects per region, to be financed
by the regional programmes, after a consultation process with the regions. This was also the case for other
Executive Units such as the Executive Unit of Energy, the Executive Unit of Culture or Executive Units of
the Ministry of Labour (LKN Analysis, 2020[63])
With the move of all MAs to the Ministry of Development and Investments, and the creation of Executive
Units in line ministries, the officials previously responsible for planning within the MCS moved to the
Ministry of Development and Investments together with the whole MA structure. Therefore, for this
programming period, some Executive Units lack sufficient planning expertise. For the next programming
period, Executive Units will benefit from the learning-by-doing process and should be able to better
accomplish their tasks.
Moreover, this has meant that, while officially MAs are no longer responsible for strategic planning, in
practice, some MAs still have a hand in planning processes. This is why some stakeholders also point out
the need to further clarify, in practice, the responsibilities of the MAs and the Executive Units. This is
particularly true when the Executive Unit lacks sufficient capacity to undertake its role.
To further reinforce the alignment between OPs and national and sectoral strategic priorities in the 2021-27
programme, the broker role of the Executive Units needs to be strengthened. To do so, it is necessary to
better clarify and communicate the role and responsibilities of the Executive Units and MAs to all the parties
involved in the planning and management of EU funds as well as to those that are not part of the MCS. A
system works better when all the parties involved have clarity on the roles they accomplish and their main
objectives and targets. It would also help to improve accountability frameworks and co-ordination (instead
of competition) between actors. For the Executive Units to accomplish their role effectively, it is important
to ensure that they all have adequate personnel and internal capacities to fulfil their responsibilities. For
the 2014-20 programming period, some executive units had less than 10 employees while others had more
than 40.
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Strengthening co-ordination across sectors and levels of government
To increase the efficiency in the use of EU funds for investments, ensuring sufficient co-ordination in the
OP design and implementation processes is key. This includes actively establishing partnerships among
actors at different levels of government, which could help reduce information asymmetries and ensuring
the alignment of strategic priorities for the OP.
Moreover, as analysed in Chapter 3, a key challenge for Greece for the next programming period is
embedding its regional policies and investments – which are now de facto the different OPs – in a territorial
perspective. Moving towards a place-based regional policy in Greece that frames the Partnership
Agreement for the next period requires strengthening co-ordination at the national level across sectors and
key actors of the MCS, as well as with subnational stakeholders. Horizontal co-ordination across sectors
and vertically with regions and municipalities is necessary to avoid overlaps in the different OPs and ensure
that the regional OPs include targeted actions for each region.
Greece has made important progress to enhance cross-sectoral co-ordination but further
steps need to be taken
Greece has made progress in encouraging and facilitating co-ordination between actors within the MCS,
including with beneficiaries. In order to facilitate OP project management and streamline efforts and
approaches, the NCA has set up a number of “thematic networks”, including the participation of regional
MAs, to discuss specific issues such as public procurement, evaluation, integrated territorial investments,
anti-fraud policies, risk management, among others. These networks meet two to three times per year and
act as information exchange fora. They are entitled to formulate specific proposals for the effective
implementation of their policy field. These networks have proven to be useful for different Geek
stakeholders to be up to date on the main issues and requirements on specific topics. They are also a tool
to exchange experiences and seek advice from peers. Some MAs have the view that the thematic networks
that have been set up by the National Co-ordination Authority have an added value and provide
opportunities for information and exchange of experience but, although they are entitled to formulate
specific proposals for the effective implementation of their policy field, this is not happening in practice.
To complement the work done by the thematic networks, Greece has also set up a number of technical
inter-ministerial bodies to accelerate the implementation of co-financed projects. The Major Projects Interministerial Committee, for example, is in charge of simplifying the legal framework that directly affects the
implementation of major investment projects. Other inter-ministerial committees set up at the technical
level and co-ordinated by the NCA are responsible, for example, for the improvement of roads and ports
construction legislation, the review of the legislative framework for expropriations and the simplification of
the procedures related to archaeological works. Some specific proposals of the above bodies have already
been incorporated in the respective legal framework.
Still, systematic co-ordination of policy priorities and collaboration on policy design and implementation
among the different actors of the MCS can further improve the effectiveness and impact of EU-funded
investments in Greece. Co-ordination among MAs/IBs, both national and regional, on the content of the
OPs, the call for projects, their management and evaluation occur mostly on an ad hoc basis. This is why
in some cases it is possible, for example, to find similar and overlapping calls for projects stemming from
different MAs. The lack of co-ordination among sectoral and territorial approaches, policies and
programmes is a longstanding problem in many countries and affects ESIF management across the EU.
A more systematic approach to the design of tenders, and a posteriori a co-ordinated approach to the
management and evaluation of projects would result in more efficient public investments. For example,
Greece would benefit from a co-ordinated approach for the call processes by defining a clear centralised
plan agreed by all relevant parties (e.g. different MAs/IBs, including the Monitoring Committee) and
developing a centralised calendar for the calls. To complement this work, Greece would also benefit from
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integrated outcome indicators for the projects’ monitoring defined by all parties, beyond the sectoral output
and impact indicators. Such co-ordination could also reinforce MA/IB collaboration on identifying and
discussing programming and technical project problems and finding realistic solutions.
To address this challenge, Portugal, for example, has set up a network of MAs, which articulates the
content and timing of the calls and elaborates a yearly plan for all calls. Beneficiaries then apply in the
same portal to a common call. The network also agrees on the evaluation criteria. The Balcão 2020 is the
portal where all potential beneficiaries of the EU Cohesion Policy funds must apply, whether they are
companies, public institutions or other private entities. For Portugal, this has created operational
articulation on calls, procedures and deadlines coming from the thematic networks of MAs and has allowed
having coherent monitoring and evaluation results for all OPs at the national, regional and local levels.
In Spain, the Economic and Regional Policy Forum brings together national and regional MA and IB
authorities to discuss ESIF management. As an expert network, it provides space for knowledge sharing
on challenges, issues and new requirements or regulations, while also offering participants an opportunity
to seek advice and exchange experiences (OECD, forthcoming[64]).
Box 4.13. Articulation of MCS actors in Portugal
Portugal has deployed a series of networks to articulate the interventions of the various range of key
MCS stakeholders , from the entities most directly involved in the management and monitoring of the
OPs (National Co-ordination Entity, MAs, IBs, etc.) to the beneficiaries. The main purpose of these
networks is defining and harmonising procedures. They integrate entities in charge of managing the
ESIF and public administration actors (both central and regional/local levels), which are the main bodies
responsible for policies. They might also include other organisations or experts according to the issue.
The members met periodically without prejudice to the use of other informal means of communication
(e.g. electronic information sharing, parallel meetings, etc.). In addition to their contribution to the
definition and harmonisation of procedures, they provide a privileged forum for discussion and training
of stakeholders in the management of ESI funds and the sharing of experiences and good practices.
Among the most important networks in Portugal are:
Communication network: Ensures articulated, efficient and effective communication between
all OPs, through a common communication strategy that actively contributes to the success of
Portugal 2020 objectives. It also helps in spreading knowledge of funding opportunities by
potential beneficiaries and other stakeholders. The network communicates the role played by
the funds and the EU and disseminates the results achieved and the projects funded. The main
outputs of this network are: Common Communication Strategy Portugal 2020; Information and
communication guide for Portugal 2020 beneficiaries; Portugal 2020 information and
communication campaign with written, audio and video media and covering the media (paper,
radio and television); amongst others.
Monitoring and evaluation network: This network promotes the development of monitoring
and evaluation activities to ensure excellence in the Monitoring and Evaluation System of
Portugal 2020. It also promotes the exchange of experiences and good practices among
network members in order to strengthen public policy monitoring and evaluation capacity in
Portugal. The network has discussed issues such as the Global Evaluation Plan, including the
definition of common guidelines for design and follow up of the evaluations, new methodologies
and evaluation approaches, operation of the monitoring system, including indicators and
performance framework, and strategic environmental monitoring, amongst others.
Regional dynamics network: It promotes multi-level articulation, capacity building and deeper
knowledge of the territories and their dynamics, as well as the development
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of territorial monitoring tools. This structured forum tracks, monitors, evaluates and reflects on
the progress and development processes in the regions and territories in their different settings
and contexts. Examples of thematic meetings include: Resilience and Innovation of the Territory
and Regions; Post 2020; RIS3; Regional Economic Convergence and Divergence; Territorial
Monitoring; Multi-level Governance; and European Territorial Co-operation.
Thematic networks: Networks of managing authorities (national and regional), intermediate
bodies and co-ordination entity for the following Portugal 2020 themes: incentive schemes to
firms; research, development and innovation support; education and qualification; employability
and social economy; and environmental network. These networks are crucial for a coherent and
co-ordinated implementation of ESIF funds in each thematic domain.
Besides these formal networks, Portugal has in place several working groups co-ordinated by the
National Co-ordination Entity with the active participation of all MAs in other specific topics, such as
information systems and simplified cost options.
All the networks are privileged fora, together with other devoted actions for institutional capacity building
(e.g. seminars, conferences and workshops, including with beneficiaries, and guidance documents for
MAs and beneficiaries) and contribute to the effectiveness of Portugal 2020.
Source: Agência para o Desenvolvimento e Coesão (2016[65]), Relatório Anual Dos Fundos Da União Europeia; Agência para o
Desenvolvimento e Coesão (2017[66]), Relatório Intercalar Do Acordo De Parceria.
Better co-ordination between the MAs implementing state aid actions and the State Aid Special Service is
also necessary. This co-ordination could be improved by setting up a platform and/or a state aid database
with direct access by the 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 in order to save time on the controls implemented by the State Aid Special
Service to the calls issued by the MAs. The State Aid Information System (PSKE) could also create
standard templates as regards the different levels of reporting produced by the system (the kind of data
that each involved stakeholder [applicant, MA] can access). In parallel, to improve co-ordinated measures,
it is necessary to provide continuous training/seminars for MA staff on state aid issues.
Beyond fine-tuning co-ordination and collaboration within the MCS, Greece needs to develop a stronger
cross-sectoral and whole-of-government perspective for regional development policies and investments to
step out from a project-by-project design logic. Greece would benefit from an active co-ordination platform
to define its regional and territorial development policy priorities. 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. This
is, indeed, at the core of the EU Cohesion Policy which aims at promoting more balanced and sustainable
territorial development.
To this end, several EU countries have set up inter-ministerial committees for regional policies. The Polish
permanent inter-ministerial Co-ordinating Committee for Development Policy (CCDP), for example, carries
out analysis and drafts documents to facilitate the implementation of the country’s Strategy for Responsible
Development with a strong territorial dimension. Portugal has also set the Council for Territorial Dialogue,
which is a political body that promotes consultation and concertation between the government and the
different political institutions, at regional and local levels.
Enhancing the role of the NCA
The role of the National Co-ordination Authority (NCA) is vital for the efficient functioning of the MCS. The
NCA (see above) provides directions, regulations and guidelines, and assists the different parties when
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necessary. They lead and ensure the co-ordination between the different actors involved in public
investments. For this purpose, they have set the thematic networks and the inter-ministerial committees
that have proven to be successful in co-ordinating specific key issues for a better-functioning MCS.
The NCA is the actor better placed within the MCS to ensure a better alignment between state aid and EUfunded projects, as well as projects financed through national and regional OPs. The NCA could further
ensure that co-financed and nationally funded public investment are co-ordinated, by promoting
complementarities and avoiding overlapping.
The NCA could further expand their guidance to deal with specific issues regarding the programmes’
design and implementation. For the current programming period, the fulfilment of the ex ante
conditionalities, for example, at the beginning of the programming period was a factor delaying programme
activation in most cases. The need for the formulation of regional smart specialisation strategies, the
implementation of projects in the fields of innovation, social inclusion, the new legislation on public
procurement, the development of national policies in main sectors and the frequent changes of legislation
are some other reasons causing delays. The MAs (especially the regional ones) frequently express the
need for more guidance on those issues and the provision of specific solutions, a task that could be
undertaken by the NCA. The elaboration of specific issues by the NCA – in collaboration with the Executive
Unit in charge – and its dissemination to the MAs would be a helpful tool for them, solving problems and
accelerating the implementation.
In parallel, the knowledge-sharing networks and task forces could also be expanded, in particular, bringing
together the NCA services, the MAs and the Executive Units. For the current 2014-20 programming period,
the regional MAs had to deal with a variety of issues as specific policy priorities were implemented
horizontally in the ROPs for the first time (smart specialisation strategies, innovation and entrepreneurship,
poverty and social inclusion, sustainable urban development, integrated territorial investments, etc.). Task
forces or thematic networks dealing with this horizontal issue could be effective, in particular if they
consider the participation of thematic experts to provide solutions. For this, it is important that these
networks, beyond being a forum for information and experience exchange, are able to formulate specific
proposals for the effective implementation of their policy field, which has not been the case so far with the
existing networks (MOU, 2020[67]).
Improving the role and impact of the Monitoring Committee
For all countries receiving ESIF, the EC requires the creation of a Monitoring Committee (MC) in charge
of checking the implementation of all of the country’s OPs. The MC is in charge of: assessing the
effectiveness and quality of OPs; approving criteria for financing under each OP; making periodical reviews
of OPs and their progress towards specific targets; examining the results of implementation to assess
whether those targets have been met; and, where necessary, proposing revisions to OPs, including
changes related to their financial management. As such, the MC complements the programme-level
monitoring by overseeing the quality, efficiency and effectiveness of OP implementation. In practice, the
MC is required to meet at least once a year and be comprised of various stakeholders from public, private
and non-profit institutions (Batory and Cartwright, 2011[68]).
The regulation also considers the creation of OP Monitoring Committees, supposed to be the steering body
providing guidance to the MA for the effective implementation of the OP’s strategy. In order to ensure the
participation of a wide range of stakeholders, the MCs comprise a large number of participants, exceeding
80 members in the case of large sectoral OPs. Normally, the MCs gather socio-economic partners,
representatives of the line ministries (via the Executive Units) of sectors related to the OP strategy, as well
as representatives from the NCA. In the case of regional OPs, there are also representatives of
municipalities. The EC also has a seat, without voting rights.
In Greece, the MC overseeing the whole PA implementation, as well as the OP MCs could better support
efficient implementation of the different OPs. In Greece, as is the case in a majority of EU countries, the
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MCs are in place mostly to accomplish a formal requirement and their strategic role remains limited
(Bachtler, Mendez and Oraže, 2013[69]; OECD, forthcoming[64]). Different Greek stakeholders pointed out
that the MCs do not fulfil a role as a steering committee and members lack ownership of policy results.
This is partly the result of heavy information and burdensome procedures. Documents to inform OP MC
members are of a significant volume and include an important amount of information using ESIF jargon,
which is not necessarily easily accessible to “outsiders” of the system. In some cases, this limits the
possibility of real engagement of the different stakeholders, limiting the discussions of MCs as well as the
impact of their work. The MC, thus, ends up being a formal rather than a participatory process aimed at
monitoring the OP.
To improve the functioning of the MCs and transform them into effective steering groups that ensure better
use of funds, a key step would be to improve the communication among members as well as clearer
communication of what is expected from this body. To facilitate engagement beyond formalities, the
information shared with MC members could be reduced and synthesised, avoiding the use of EU jargon
as much as possible. Indeed, presenting information in a simple way helps all sides engage in fruitful
dialogue and keeping instructions as clear, succinct, and convenient as possible might help to improve
participation and reduce errors (OECD, 2018[1]). Making the MCs more accessible could also facilitate its
role in improving programme monitoring, including by discussing evaluation results at their meetings and
providing feedback to the MA. Given the composition of MCs (including socio-economic partners, NGOs
and regional and local authorities), they could also play a role in influencing resource allocation (OECD,
forthcoming[64]). If MCs are able to conduct strategic discussions and decisions, they can effectively help
the MAs in better informing investment needs and priorities as well as the impact of programmes and
projects. To facilitate their task, a smaller but potentially more targeted MC in terms of representation could
be more functionally operational and efficient. Therefore, the possibility of reducing the number of members
while keeping the representation of all relevant stakeholders should be examined.
Better exploiting the synergies and complementarities within the Managing Authorities
The reduction of the number of MAs is a way of facilitating co-ordination and coherence between the
different sectoral policies. Indeed, it is a way of moving from planning based on sectors towards planning
based on objectives. If well implemented, this can be the first step towards place-based regional
development planning.
The merger of different MAs into a single one has facilitated the adoption of good practices by sharing the
experiences of officials that were previously located in different line ministries. For example, in the MA for
Transport and the Environment, a single system for the administration and management of document
workflow has been established, and although it is early days, there is scope for greater professionalisation
of key business operations such as performance evaluation, outreach and recruitment, and mobility
(OECD, n.d.[61]).
While progress has been made towards an effective merging of functions and expertise, there is still space
to improve the synergies that these mergers can create. The consolidation of OPs in fewer and bigger
budget programmes created important difficulties in managing them. The mergers lack sufficient planning
and preparation and the MAs merged were not involved in the process from the beginning. Therefore, the
parties have dedicated important resources and time to overcome administrative, technical and cultural
issues arising from these mergers. For the MA on Transport and the Environment, for example, officials
have proven difficulties in creating a single MA entity due to differences in working culture and differences
in the management of projects of different size and scope, among others. This lack of organisational
harmonisation might risk duplication of efforts, miscommunication and, in some cases, frustration as
different teams allegedly approach key reporting requirements with differing degrees of urgency and
method. As a result, there is room for the MA to further harness the synergies and strategic
complementarities between an OP’s two thematic sectors (OECD, n.d.[61]). It is thus important that the
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merged MA capitalise on the synergies and complementarities that can exist between the different sectors
in order to move effectively from sector-based planning towards objective-based planning.
Building stronger partnerships with subnational governments within the MCs
Greece has benefitted from the EU Cohesion Policy partnership principle by improving the degree to which
the national and subnational governments collaborate. The dialogue and collaboration with subnational
governments are at the core of EU Cohesion Policy and, for this, it has developed its own, unique system
of multi-level governance. Through programming, it aims at reconciling and integrating the perspectives of
different development partners, ranging from the EC, national governments, and regional and local
institutions to private companies and civil society. In this context, Greece has implemented some vertical
co-ordination tools mostly in the framework of EU policies and access to EU funding (Hlepas, 2015[8]). For
example, in each region, the Regional Development Planning Committee should have an advisory
character for the compilation of ROPs and may elaborate some recommendations to the MAs of the
sectoral OPs on the priority axes or specific objectives or categories of action they have as beneficiaries
of municipalities. There were also several rounds of consultation with relevant stakeholders in the
development of the PA and OPs.
Greece has made efforts to improve co-ordination and collaboration among the national, regional and local
levels. Greek law foresees a range of contracting and networking possibilities to co-ordinate policies between
the two tiers of subnational governments. The various co-ordination networks within Greece’s overall system of OP
management – the network for smart specialisation, the thematic networks to promote exchange on public
procurement, evaluation, integrated territorial investments (ITI), anti-fraud, risk management and publicity; the interministerial bodies focused on accelerating project implementation; and the networks formed by the MA and its IBs –
all contribute to the knowledge base for more effective ERDF and Cohesion Fund investment.
For the 2014-20 programming period, Greece has also promoted co-ordination with regional actors and among the
different parties of the MCS. Within the system, co-ordination between the different levels of government
occurs mostly in three concrete instances with formal channels in which the NCA, the MAs (national and
regional) and sometimes the beneficiaries sit together:
Preparation and planning of the PA: The architecture of OP budget allocation among ROPs and
policy sectors was decided at the political level, following consultation with regional governments
(conferences, workshops, among others) and line ministries, on the basis of a proposal from the
Ministry of Development and Investments. The priorities and budget allocation were proposed by
the NCA to the Ministry of Development and Investments taking into account relevant EC
documents, such as the position paper, as well as stakeholders’ proposals, during a gradual
strategic planning process. The proportion of budget allocated to ROPs is one of the key decisions
taken during this process and represents a source of tension between the Ministry of Development
and Investments and the regional governors. It is crucial that, in this process, all parties agree on
the demarcation of actions to be implemented through the two categories (national and regional)
of OPs, in a way to avoid overlaps and exploit synergies. For the 2021-27 period, line ministries
should set up “strategic planning teams”, under the responsibility of the respective Executive Unit
and the participation of the current MAs.
Preparation and planning of OPs: For the 2014-20 period, further consultation among
stakeholders and line ministries took place, with the active participation of the MAs under the
co-ordination of Ministry of Development and Investments. During this process, all the parties agree
on priorities, policy objectives and specific objectives for each OP. Line ministries and regions set
up “strategic planning teams” in charge of the OP design and drafting. As regards the regional
strategic planning teams they comprised representatives of the relevant MA, of the Directorate for
Development Planning and other directorates within the region. The strategic planning teams were
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supported in their work by external consultants. In some regions, thematic working groups were
also set up to provide expertise in specific issues.
Prioritisation of projects within the OP: For the first time in the 2014-20 programming period,
the specialisation process (Box 4.14) details budget allocations and specifies the different actions,
investment priorities, potential beneficiaries, expected results and time schedule. The
specialisation process is completed by the call for proposals, defining the project selection criteria,
led by the MAs (in consultation with the Executive Unit for the national OPs). The specialisation
process involves the NCA, OP MAs, Executive Units of the line ministries or, in the absence of
such, the relevant departments of the ministries, the OP Monitoring Committees and the governors
(for regional OPs) or the Special Secretary of the Ministry of Development and Investments (for
the sectoral OPs).
Box 4.14. The specialisation process in Greece
The OPs are strategic documents which do not specify the necessary information required for their
proper management and monitoring (e.g. linking actions to output indicators, areas of intervention (i.e.
the budget) with actions and investment priorities, clear timetable of activation due to unfulfilled thematic
ex ante conditionalities or self-commitments, etc.). The specialisation is thus a complementary process
conceived as a management tool that can ensure the smooth implementation of the approved strategies
in the context of multi-fund, multi-sectoral and multi-thematic OPs.
The specialisation process is a strategic tool for planning purposes. It is considered a supportive
management tool for issuing calls for proposals, and also for the monitoring, activation and
implementation of the OP. It includes a mapping of the actions to be funded and clear timetable of the
necessary steps to be followed. It identifies the bodies that will manage the OP actions and contributes
to identifying, at the implementation stage, the constraints and conditions that (may) exist and hamper
the activation of the actions.
The OP specialisation documents are mandatory national documents and are not subject to approval
or consultation with the EC.
Specialisation is a dynamic process, the degree of which is determined according to the implementation
data that the MA has at its disposal. The specialisation of each OP is gradually made, taking into
account the maturity of each call for project selection in the priority axes and the implementation needs
of each OP. Consequently, each MA should specify at the initial stages of the OP activation those
actions for which it has the necessary analysis in order to issue calls for proposals.
The main features of the specialisation process are that the analysis is broken down by priority axis and
action and includes, inter alia: indicative beneficiaries, method of implementation, action planning,
output indicators and indicative budget. Furthermore, the specialisation includes a more specific
reference to the actions to be undertaken for projects that have started prior to the adoption of the OP,
major projects and phasing projects, part of which were funded by the NSRF OP 2007-13 and another
part foreseen to be implemented under the 2014-20 OP. It also includes a reference to the actions to
be taken to achieve the intermediate objectives set for the allocation of the performance reserve at the
priority axis level.
Greece has also had good experiences with setting working groups to discuss and address specific issues.
In 2018, for wastewater treatment projects for example, the MA on Transport and the Environment set up
a working group across levels of government to foster co-operation among the Ministry of the Environment
and Energy, the municipalities, the municipal water supply and sewage companies and the project owners
(Psycharis, 2019[57]). Another example is the Special Management Service for the Rural Development
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Program (MA) which is responsible for co-ordinating all stakeholders, ensuring the development of their
monitoring capabilities, guiding and facilitating co-operation between the stakeholders.
However, as it is the case for the planning of regional development policies (see Chapter 3), some of the
co-ordination channels established in the context of the PA respond to formalities and their concrete impact
remains limited. Law 4314/2014 for the management, control and implementation of development
interventions for the 2014-20 programming period, for example, foresees the creation of a Regional
Development Planning Committee in each region as an advisory body. These committees may elaborate
some recommendations to OP MAs on priority axes or specific objectives or categories of action they have
as beneficiaries of municipalities. However, despite their provision by law, none of these committees are
operational. The lack of targeted measures in ROPs reflects a limited involvement of regional actors when
defining the objectives and priorities that the OPs should meet. Policy priorities and guidelines do not
always match local priorities, needs and capacity.
The OECD has also observed that subnational actors have difficulties in grasping the consequences and
seeing the impacts of co-ordination and collaboration. Subnational stakeholders from across the country
point the lack of co-ordination and bottom-up approach to policymaking, in particular when it comes to
funding allocation. The existence of formal co-ordination tools does not in themselves ensure proper
co-ordination. The parties involved must perceive an impact and be able to see a concrete output,
otherwise, the benefits are limited and future participation of subnational actors is at risk. Indeed, trust in
the process and among the parties is essential for any co-ordination tool to work properly. Trust is both a
condition for an effective dialogue and a long-term outcome of collaboration (OECD, 2018[1]).
Another example of the limited participation of local actors in policy planning and implementation is the
impact of ROP MCs. While municipalities should directly participate in these bodies, their participation has
been reported as fragmented (Council of Europe, 2017[12]). There is scope for improving the co-ordination
between regions and municipalities, for instance by strengthening the institutions that facilitate consultation
as well as the role of regional associations of municipalities in formulating common positions and issuing
eligible programmes to be considered for incorporation into the ROPs (Council of Europe, 2017[12]).
Greece needs to take a more systematic approach to co-ordination and collaboration, especially with
regards to beneficiaries. Collaboration among the different levels of government, including with civil society
and citizens, is crucial to embed national and regional OPs with a territorial approach (Chapter 3). Effective
exchanges between national government, MAs, regional MAs and beneficiary local authorities, help to
ensure that national OPs make room for regional MAs to tailor regional-level interventions and investments.
At the same time, it is a way of avoiding overlaps and creating synergies between national and regional
OPs as well as ensuring that regional OPs are tailored to the different regional and local realities. They
also help to ensure the alignment of objectives and expectations of all parties, as well as flagging where
subnational governments may lack capacities to design or implement projects. This is also a way of building
ownership over OP projects among regional and local authorities. Ownership over sectoral OP projects is
particularly important as many Greek regions act not only in the interest of their own OP but also as
intermediary bodies (IBs) for sectoral national OPs. For effective implementation, regions must “own” the
objectives of the national OP and agree with the implementation process.
At the same time, regular opportunities for two-way communication between MAs, IBs and beneficiaries
regarding changes in regulations, processes or programmes might be helpful and contribute to reducing
project delays. Regular co-ordination and communication among these parties are also helpful to gain
insight into how to better support its beneficiaries throughout the project cycle. This could help an MA better
tap into “on the ground” knowledge of beneficiaries, thereby supporting more effective OP design,
monitoring and implementation, while also building subnational capacity. Indeed, ESIF investment relies
on effective information flows and knowledge sharing among multiple stakeholders at all levels of
government, and beyond. Without good and timely communication among those responsible for OP
implementation, large biases and information asymmetries may arise.
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To ensure the alignment of priorities and co-ordination among levels of government, OECD countries have
developed different strategies. In Poland, for example, local authority investment projects may be financed
using EU funds on the condition that they contribute to the implementation of a multi-annual development
strategy. A recent OECD study shows that this approach has a positive impact on regional programme
effectiveness and the sustainability of project financing when there is room for subnational governments
to negotiate and influence conditions set by the national level. This experience suggests that conditions
around which the two levels agree may work better than those imposed by one side or the other (OECD,
2013[70]). To deliver EU Cohesion Policy in a co-ordinated way, Portugal has used contracts among levels
of governments known as Pacts for Territorial Development Cohesion (see Box 4.15).
Box 4.15. Using contracts to enhance co-ordination across levels of government in Portugal
Portugal has been using contracts to deliver EU Cohesion Policy since 1989, but the scope and scale
of these contracts have greatly expanded in the subsequent years. As indicated above, for the current
programming period, a total of 22 Pacts for Territorial Development and Cohesion have been signed,
covering all of the mainland regions of Portugal (except the Algarve) and involving EUR 1.15 billion.
Cohesion policy has played an important role in consolidating a third level of management in mainland
Portugal, including consolidating the financial and strategic capacities of inter-municipal entities. After
multiple cycles of contracting, there has been particular progress in relation to:
Extension of strategic planning to the regional, sub-regional and local levels.
Strengthening a sub-regional level of inter-municipal co-operation.
Enhanced capacity at the sub-regional level.
Evolution in the type of interventions, such as the increasing relevance of interventions beyond
physical infrastructure.
Indications of a transition from intra- or inter-municipal (e.g. municipal networks of collective
services) to supra-municipal projects (e.g. anchor projects or e-governance at NUTS 3 level)
(OECD, 2018[1]).
Source: OECD (2019[49]), “Greece”, https://doi.org/10.1787/tour-2018-19-en.
Reinforcing the capacities of all actors and institutions
Administrative capacity is recognised as one of the key factors contributing to the success of EU Cohesion
Policy (Boijmans, 2013[71]; Rodriguez-Pose and Garcilazo, 2013[72]). Successfully managing and
administering ESIF rests on the effective governance of the investment process, on the administrative
capacity of MAs, and on the capacities of a diverse range of stakeholders – from multiple levels of
government to private firms and not-for-profit entities that intervene in the process.
Capacity building is a priority for the EU
The EC has made administrative capacity building central to EU Cohesion Policy and the Europe 2020
strategy. Since the beginning of the current programme period, the EC and specifically DG REGIO, offers
EU member state administrations diverse mechanisms to strengthen their institutional capacity and
professionalise those managing ESIF. These include institutional capacity building and reforms under
Thematic Objective (TO) 11, technical assistance (TA) for authorities that administer and use ESIF as well
as specific programmes, such as the S3 Platform, the Urban Development Network, guidance for
practitioners on how to avoid public procurement errors; training seminars; and the EU Competency
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Framework for managing and implementing the ERDF/CF together with its self-assessment tool, which
identifies and addresses competency gaps (OECD, forthcoming[64]).
A key challenge for the next programming period is linked to the financing of technical assistance. While
TA will still exist, there will no longer be a separate thematic objective (currently TO 11) dedicated to
capacity building. In practice, this means that countries will no longer receive a lump sum for administrative
capacity. In its place, as stipulated by Article 25 of the Regulation of the European Parliament and the
Council, additional technical assistance financing will be secured by developing roadmaps for specific
administrative capacity building actions (EC, 2019[73]). To support European member states and their MAs
adapting to this shift, DG REGIO launched a pilot project, with the support of the OECD, to give an initial
shape and test an approach to designing MA roadmaps that could eventually be used for obtaining
technical assistance in the post-2020 ESIF system.
Box 4.16. OECD-EC project: Strengthening the Governance of EU Funds under Cohesion Policy:
Roadmaps for Administrative Capacity Building
In anticipation of the 2021-27 programming period, the EC launched a pilot project to support MAs in
the development of roadmaps aimed at strengthening their administrative capacities to effectively
oversee, administer and evaluate the use of ESIF. Five MAs, including the MA for the Transport
Infrastructure, the Environment and Sustainable Development Operational Programme in Greece,
participated in the pilot project. Throughout the pilot, the OECD provided technical support to MAs and
relevant stakeholders to develop their respective roadmaps. The design of the roadmap is based on
the analytical framework developed by the OECD, which captures various dimensions that MAs must
work with – people and organisational management, strategic planning and co-ordination, as well as
framework conditions. Throughout the project, the OECD gathered information and documentation from
the MAs and a wide range of stakeholders through a questionnaire, interviews, as well as interactive
workshops. The challenges, potential solutions and prioritised actions were developed and validated by
the MAs and relevant stakeholders, with assistance from the OECD.
In addition to the tailored roadmaps, a synthesis report is prepared by the OECD, which captures the
main findings of this project and offers recommendations to MAs, national authorities and the EC
regarding the management and implementation of EU funds under Cohesion Policy. The second phase
of this pilot project is planned to start in 2020, to help the MAs implement selected actions of their
roadmaps.
This pilot project also tests the new approach proposed by the EC for the 2021-27 programming period,
which would allow EU member states to develop roadmaps for administrative capacity building
measures. The experiences will be disseminated to other MAs, feeding into preparatory work for the
upcoming programming period.
Source: OECD (forthcoming[74]), Strengthening the Governance of EU Funds under Cohesion Policy: Roadmaps for Administrative
Capacity Building, OECD Publishing, Paris; EC (2019[75]), “Frontloading administrative capacity building for post-2020”,
https://ec.europa.eu/regional_policy/en/policy/how/improving-investment/frontload/.
The capacity of Greek MAs is an asset for the management of EU structural funds
Greek employees within the MCS have a long experience in the structural funds’ area, which is an
advantage for the efficiency of the system itself. Given the freeze on recruitment introduced in the wake of
the economic crisis, the staff have been working together for several years and have built up deep expertise
and institutional knowledge in ESIF management. This accumulated experience has helped to respond to
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different challenges during the implementation in a timely and effective way. Several stakeholders
recognised the rich experience of certain national MAs in managing the OPs, especially their knowledge
in understanding funding procedures and project implementation. For example, Greek stakeholders, as
well as EC authorities, identify the MA for Transport and the Environment as one of the best-performing
MAs thanks to the professionalism and knowledge of the MA staff. Both the MOU personnel and the
personnel that comes from the public sector are both highly qualified, with very high standards of
knowledge and experience. For example, more than 96% of the current staff holds a university degree,
while 56% are postgraduates (MOU, 2020[67]).
Greece has to be aware that, while the stability of employees has brought important advantages for the
functioning of the system, the lack of new personnel can be also prejudicial as the system does not benefit
from new perspectives that new and younger employees might bring. It might also affect motivation as
employees have limited opportunities for career progression and there are few tools to recognise and
reward performance (OECD, n.d.[61]).
At the regional level, there is also some cumulated experience. While the newly created regions are
officially MAs for the first time during the current programming period, in the previous period, the regional
level was also managing EU funds, either as an MA or an IB. Still, planning for the current programming
period was done, to a large extent, by external consultants. While this may support regions to reinforce
planning capacities, it also limits the ability for regions to create capacities internally on this matter. For the
next programming period, Greece will have to make a special effort in reinforcing the planning capacities
within the regions themselves by gradually internalising tasks that have been so far conducted mainly by
external consultants
Addressing staff shortcomings through the optimisation of human resources
The compliance with MoUs4 signed between the EC, the ECB and the International Monetary Fund (IMF),
limited the capacity of regions and municipalities to hire new and qualified professionals. Memorandum II
sets rigid goals for personnel reduction and a hiring cap on new personnel. The rule of one recruitment for
five exits that applies to national and subnational governments has meant that many posts have gone
unfulfilled and that the types of skills that are needed to implement reforms have been filled externally.
Moreover, given the hiring freeze, managers are often reluctant to support secondments of high-quality
staff to the MA, limiting the possibilities for MAs to fulfil their needs (OECD, n.d.[61]). Special consideration
must be given to the fact that high workload, long working hours and insufficient incentives inevitably drive
staff away from MAs towards other less-demanding government departments or the private sector. As a
result, a disquieting phenomenon of erratic mobility and high staff turnover is increasingly being observed
(MOU, 2020[67]).
To illustrate the staff shortages, the Joint Ministerial Decrees foresaw 2 055 jobs in the special services
but only 1 471 of these have been filled (MOU, n.d.[76]). Besides the shortage of staff, some MAs struggle
to find people with the right qualifications and knowledge, especially at the subnational level. According to
mapping exercise conducted by the MOU in December 2017, the special services have urgent specific
shortages in law (particularly in the field of public procurement), IT and software engineering, financial
instruments, auditing, accounting, construction engineering and regional development (MOU, 2020[67]).
The shortage of staff and lack of capacities also affects the Executive Units. The Executive Units should
have expertise in the sector they operate and on the management and implementation processes in order
to be able to prepare mature projects for their sector. As they operate within line ministries, the first
requirement is covered by definition. The second is in many cases undermined by the availability of
appropriate human resources in some Executive Units, as among them, there are units with less than
10 employees and others with more than 40. The specific needs of the Executive Units need to be
assessed through an in-depth analysis of the potential gaps in their operation, considering their different
degree of involvement in programme implementation, in view of strengthening their role in the next
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programming period. In this regard, the assessment of the Executive Units that will be prepared by the
NCA will be crucial to identify the main capacity gap of these entities. This exercise will indicate the specific
actions that should be undertaken at the level of each specific Executive Units considering that their role
and responsibilities would remain the same for the next programming period.
At the regional level, the capacity gap also represents an important challenge, especially with regards to
planning capacities. In general, the Directorates of Development Planning within each region lack the
appropriate human resources in terms of quantity and expertise in order to fulfil effectively their role in
regional planning. Of course, there are variations between regions in this field; some perform better than
others. It is worth mentioning that representatives of the Directorates of Development Planning participate
in the “strategic planning teams” which were set up for the design of the OPs in the current and previous
programming periods. They also participate along with the other region directorates in the design of the
four-year regional programme,5 according to the Kleisthenis programme, which includes the strategic plan,
accompanied by the operational plan and indicators for monitoring and evaluation. This means that they
have acquired on the ground a level of knowledge as regards the ESIF OPs’ design. However, a major
challenge remains matching and adapting the regional priorities to the specific priorities and guidelines
included in the ESIF programming as applies in each programming period.
Human resources planning and recruitment are particularly challenging in Greece as MAs do not hire their
personnel directly. All their staff is seconded from different parts of the public sector, or the Management
and Organisation Unit (MOU). The ESIF Special Services (46 distinct structures in ministries and regions)
constitute, from a human resources point of view, hybrid teams which are staffed with both tenured civil
servants and seconded MOU personnel. The MOU seconds to ESIF Special Services more than 70.6% of
its workforce and only 13.4% is employed in the MOU headquarters (providing to ESIF services human
resources management, training, know-how and tools, information systems, infrastructure and ongoing
support to beneficiaries) and 16% is seconded to other public entities (MOU, 2020[67]). Candidates from
outside the public administration apply to the MOU to work on EU funds, and, if successful, enter the
Partnership Agreement pool. They are immediately seconded to an MA or other body for 5 years,
renewable. Candidates from inside the public administration also need to be seconded to the MA, which
requires selection procedures (written examination, interview and knowledge) and experience criteria, as
well as agreement from their home department.
While MOU staff is known for its high-qualification, the last open call for personnel took place in 2005. This
has translated into an ageing staff – the mean average of MOU’s staff is currently over 50 years – which
cannot cover specific needs, namely in the fields of law, IT, finance or local development. Thanks to the
flexibilisation of the attrition rule to 1:1, in 2018, there was an agreement to conduct a new open call to hire
300 new employees through the MOU, specialised in fields such as finance, IT, local development and
law. Nevertheless, this agreement has not yet received final approval and the hiring process has not yet
started. Ad portas of the new programming period, the hiring of the new personnel is a top priority; new
staff needs to be involved from the planning stage of the new PA.
The MOU has played a key role in the optimisation of human resources within the ESIF management
system. The MOU regularly carries out a mapping of human resources in special services. It has a
comprehensive view on the status of the human resources of the entire MCS by recording data such as
the number of staff (both civil servants and MOU officials), job positions, qualifications and professional
experience, tasks and employee status as well as staffing priorities of the ESIF special services. This data
reflects that, despite important staff shortages, there is an overall satisfactory distribution of specialisations
within the various MCS areas (e.g. a high number of engineers in services managing ERDF actions) (MOU,
n.d.[76]).
Without the possibility of hiring new staff, Greece needs to continue its efforts in building capacities within
the MCS, in particular at the regional and local levels. For this purpose, the MOU offers a wide range of
capacity building activities. They organise seminars as well as e-learning platforms for MAs and
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beneficiaries focused primarily on EU technical knowledge issues, managerial competencies and project
management (Box 4.17). The Hellenic Agency for Local Development and Local Government (EETAA) is
also a key actor for capacity building of local government authorities. They offer, for example, technical
support of small and remote municipalities in order to carry out technical projects, and they issue guides
and tools to promote local development.
Box 4.17. The MOU’s capacity building activities
The MOU has put particular emphasis on the continuous training of staff in the special services. One of
the tasks of MOU is to provide systematic training designed on demand according to specific needs (a
training needs’ analysis takes place at regular intervals). The delivery of training takes place in two
forms: i) traditional face-to-face seminars; and ii) distance learning (asynchronous and synchronous elearning platform). MOU seminars focus primarily on EU technical knowledge issues, managerial
competencies and project management.
Since 2007, MOU has organised more than 550 formal training events with the participation of 20 000
trainees from MAs and beneficiaries. Regarding the e-learning system, about 3 000 users (MA staff and
beneficiaries) had the opportunity to access more than 200 training courses (web-based training,
screencasts, video recordings, etc.). The total number of enrolments since the introduction of MOU’s elearning system is more than 16 000. Furthermore, 140 virtual classrooms gave MOU the possibility to
ensure faster delivery, flexibility and efficient deployment of training for more than 1 600 participants,
covering different training needs. An MOU platform (e-classroom) has also been deployed for the
organisation of 80 multiple teleconferencing events with the EC.
In order to enhance the beneficiaries’ administrative capacity in the maturing and preparation of project
proposals under the specific OP and regional OPs, the MOU has also developed a series of guides,
namely:
Guide on Procedures for the Preparation of Port and Harbour Projects (June 2014).
Guide on Procedures for the Preparation of Highway and Road Projects (November 2013).
Guide on Procedures for the Preparation of Sewage Treatment Plant Projects (November
2013).
Guide on Procedures for the Preparation of Solid Waste Projects (November 2013).
Guide on Procedures for Projects Producing Electricity from Renewable Energy Sources
(2011).
Source: MOU (n.d.[76]), “Memo: Highlights of the MOU proposals on the management and controls system for the Operational Programs in
Greece”, Unpublished.
While there has been an increasing offer of capacity building practices, MAs – in particular regional ones
– emphasise the need for benefitting from more targeted and dedicated training that effectively address
their needs. For this purpose, Greece could develop a more systematic approach to reviewing training
needs of operational staff and managers. In parallel, a flexibilisation of the attrition rule for the MOU would
allow them to hire new qualified personnel through open competition, in order to cover urgent and
longstanding needs in the management and implementation of ESIF OPs. This new staff would need to be
distributed in all regions, according to the specific priorities of each special service and the priorities set by
the coming programming period.
In most OECD countries, competency frameworks are used to align training and development to
organisational and individual development needs, and link training to career progression. The lack of a
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competency framework in most MAs and Executive Units means training does not address the long-term
needs of the organisation, nor of individuals. Instead, training is sometimes seen as a burden rather than
as core staff and organisational development activity. To develop such a strategy, an important preliminary
step is the need for an evidence-based gap analysis, to understand which skills and competencies are
available in the MA, and which ones should be developed in order to properly manage ESIF-financed
projects (OECD, forthcoming[64]). The EC’s Competency Framework and Self-Assessment Tool is
designed to provide this kind of analysis. In this line, the Campania region in Italy carries out a gap analysis
on skills for senior management of the regional council of Campania. The results of this analysis are shared
with the National School of Administration, which then plans training accordingly.
Box 4.18. EU Competency Framework for the management and implementation of the ERDF and
Cohesion Fund
The implementation of the ERDF and Cohesion Fund programmes requires strong administrative
capacity. Therefore, the EU developed a tool that addresses the competencies of employees involved
in the management of the funds. These include the following practical tools that support human
resources development:
The Competency Framework covering all institutions involved in the management of the funds.
The Competency Self-Assessment Tool based on the Competency Framework.
A recommended training blueprint.
The Competency Framework and Self-Assessment Tool is a job-aid to help institutions managing the
funds in strengthening their human resources capacity. The tool is flexible and customisable so that it
applies to the different organisational structures in the member states. The self-assessment tool allows
for a competency assessment on an individual and institutional level. The outcomes of the assessment
provide an important base for individual development plans, overarching human resources strategies
and training plans. The recommended blueprint for ERDF and Cohesion Fund training provides
guidance on the structure of a learning offer, which is functional to strengthening the competencies
defined in the Competency Framework.
Source: OECD (forthcoming[64]), OECD Tourism Trends and Policies 2020, OECD Publishing, Paris.
In parallel, Greece could focus on finding innovative solutions to recruitment challenges. This is what has
been done by 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 the
management and control of programmes co-financed by ESIF. Its purpose is to facilitate MA access to
candidates with sought-after skills but who can prove difficult to attract. The registry will be piloted until the
end of 2019 and will be evaluated by independent evaluations occurring as part of the Italian Plans for
Administrative Reinforcement (OECD, forthcoming[64]). Partnerships with local universities can also be a
way for regional MAs to leverage possible expertise among students and faculty for specific projects that
could add value to the MA. This type of partnership needs the direct involvement of MA staff to avoid overrelying on “externals” and build, together with experts, the internal capacity to carry out their different
functions.
A special focus on building capacities of beneficiaries
The low level of capacities of beneficiaries is a longstanding problem in Greece that concerns micro and
small beneficiaries – which represented over 96% of the beneficiaries in 2017 – as well as larger ones. It
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has been largely documented that smaller Greek municipalities are especially affected by the lack of
qualified personnel. Some Greek municipalities face shortage not only of expert administrators carrying
out specific technical duties but also of personnel to perform even basic tasks (Council of Europe, 2017[12]).
In the same line, several evaluations have noted that beneficiaries, in particular municipalities, have
insufficient expertise and that this has led to delays or even projects being cancelled (Huliaras and
Petropoulos, 2016[52]). Indeed, beneficiaries frequently re-submit technical bulletins up to the selection of
the project proposal due to the low degree of maturity of the proposals and the failure to complete the
standard forms of the MCS 2014-20. This translates at the end in low rates of payment progress that
contrast with the budget activation rates. While the activation rates are high (even exceeding the budget
allocated) for all types of regions, payments rates are low: in less developed regions, verified payments
represent only 25% of their total budget (Psycharis, 2019[57]). Although the discussion frequently focuses
on the small beneficiaries (municipalities are the most frequently referred example), the problem also
concerns the larger ones. The delays regarding project implementation with a very high share of the budget
in the sectors of transport or the environment leads to the conclusion that specific actions must be
undertaken regarding all levels of beneficiaries.
In the case of municipalities, a lack of the right technical expertise on staff is well acknowledged and they
have been struggling under rules limiting the hiring of permanent public service staff that have been
imposed since 2010. The lack of capacities particularly affects smaller and remote (mountainous and
islands) municipalities. For example, as per MOU numbers, approximately 35 small island municipalities
and 10 mountainous municipalities do not possess in house technical services for tendering their projects
and have to seek other public services to assist them. This process is complicated and time-consuming
(MOU, n.d.[76]). Most of the small island municipalities are understaffed and do not have an engineering
department (islands without such a department constitute 75% of all island municipalities) (LKN Analysis,
2020[63]).
The most frequently identified problems that beneficiaries face during project implementation relate to:
Failure by the beneficiary to comply with the institutional framework of public procurement, which
may lead to non-eligible expenditure.
Improper project management by the beneficiary, which may lead to non-eligible expenditure.
Non-compliance with deadlines by the beneficiary and failure to take appropriate measures to
resolve the problems that arise, which has a negative impact on the OP’s indicators.
Implementing a project without taking into account the current legal and regulatory framework
which leads to unlawful actions.
Weak capacities of beneficiaries are a common issue across many EU states and efforts are made to
address it through initiatives under the Technical Assistance Plan. However, while in principle these funds
would be used in Greece to upgrade the system’s capacity to manage and absorb earmarked funding, in
practice, they have been used for hiring consultancy firms to do the job (Huliaras and Petropoulos,
2016[52]). This has limited the creation of internal capacity.
While Greece has made efforts to strengthen the support to beneficiaries, the tools used do not necessarily
respond adequately to specific needs. In order to assist beneficiaries that lack technical staff
(i.e. engineers) to supervise public works, a provision was included in the NSRF 2014-2020
Law 4314/2014, article 28. The idea was the creation (by MOU or the Technical Chamber of Greece) of a
register of freelance engineers willing to undertake project supervision to support weak beneficiaries. A
ministerial decree was published to stipulate the details of the register (eligible engineers, their
compensation and the criteria for their selection in each project). Unfortunately, the register itself has not
been made available yet. For the next programming period, it will be necessary to activate the register. In
addition, a ministerial decree (issued in May 2016 by the Deputy Minister of Economy and Development)
regulates the support of beneficiaries in the current programming period. The decree aims to provide
guidelines on how support weak beneficiaries focusing on strengthening their managerial, operational and
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financial capacity within the frame of NSRF projects. The advantage of this ministerial decree is that it sets
a framework and describes the role of the stakeholders involved. However, in practice, this decree does
not necessarily provide the required flexibility needed for support activities. Its main disadvantage is that it
introduces heavy and time-consuming bureaucratic procedures which, in practice, are fulfilled after the
actual beginning of the support (MOU, n.d.[76]). To further develop the support for weak beneficiaries in the
next programming period, it is important to simplify the procedures specified in the decree.
In parallel, the MOU leads the training activities for beneficiaries. For the 2014-20 programming period,
the MOU led, for example, the technical assistance model for the wastewater sector. Wastewater has been
for several years a very complex and challenging issue for Greece and a significant amount of structural
funds have been approved in Greece to equip the country with modern sewerage facilities. In this context,
the MOU was responsible for implementing a technical assistance project to draw up 13 regional plans
with a new methodology for identifying priorities between small agglomerations, updating the national
wastewater database for reporting and monitoring. To date, Greece has achieved important progress
resulting for the technical assistance project, most of them linked to the governance of the wastewater
management system. Among this progress is the creation of a steering committee and technical
secretariat, the development of the 13 master plans with a timetable for their implementation, the creation
of a reporting system and methodology to identify projects at risk and how to resolve them, among others.
Based on this experience, the MOU can further develop targeted actions to help small municipalities and
their institutions to improve their technical, managerial and organisational skills for the implementation of
their projects.
Still, several stakeholders agree that training activities are often insufficient to keep them abreast of the
latest developments with legislation, regulations, procedures and processes. Indeed, the lack of capacities
is strongly related to changing and burdensome rules. There is little engagement with beneficiaries to
identify their training needs and this is why some stakeholders perceive that training does not necessarily
add significant value to day-to-day work and longer-term career and personal development. As a result, in
the context of important workload pressure – municipalities often do not have sufficient staff to deal with
daily tasks – training is rarely prioritised or incentivised. This is particularly true when learning is not well
aligned to the needs of individuals and their organisations.
Capacity building activities need to be appropriately tailored to local reality to encourage the involvement
of beneficiaries. Capacity building can be done at different levels, with different short- and long-term
objectives and using different mechanisms. Beneficiaries need, at least in the short term, stronger targeted
support to prepare specific studies required to implement a proposal for evaluation and financing. This
support can come from the MOU, the NCA, the national or regional MAs, or through inter-municipal
structures. The MOU should pursue, for example, the creation of a technical service to carry out all the
necessary public tendering procedures up until the signing of the contract phase. To better target the
support, the MOU could also expand the geographical coverage of their tasks forces which are currently
present in some areas of Greece making it easier to address quickly any local requests. All types of support
provided by the different actors must be strongly co-ordinated to avoid overlaps and better target it to the
specific needs. This is why the role of the NCA (as co-ordinator) and regional MAs (to help target the
needs) is crucial.
In parallel, the NCA should co-ordinate closely the MAs regarding the support and monitoring of the
beneficiaries, through binding action plans, with strict timetables and milestones and appointment of
specific persons in charge for its implementation (from the tendering process to the contracting phase and
the supervision).
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Box 4.19. The Sustainable Islands Network
The Sustainable Islands Network – DAFNI – is a non-profit company of island local authorities. It was
set up in 2006, to empower the island’s local authorities and activate a sustainable model for island
development based on sustainable and intelligent management of natural resources and infrastructure,
sustainable tourism utilising the natural and cultural resources of the islands, and the functional interface
of the primary to the secondary and tertiary domains.
The DAFNI network currently counts 48 members, including 44 island municipalities in the Aegean and
Ionian Islands, the North Aegean and South Aegean, as well as the Regional Union of Ionian Islands.
Thanks to its systematic and multifaceted action and the range of partnerships it has developed, the
network is recognised as a true ally of the islands, both at national and European level. This is because
it has scientific and technical training, deep knowledge of the local needs and development dynamics
of the islands, as well as dedication, over time, to the implementation of integrated solutions that meet
the identified needs of each island individually.
The network implements a range of projects with particular added value for its members as a whole, as
well as for individual islands, drawing on different sources of funding. A key project is, for example, the
development of a Geospatial Data Portal for all Greek islands except Crete and Evia. The project is
essentially about creating an organised database network (platform) with common standards and
protocols, which will ensure compatibility and interoperability between data and services.
The network also co-ordinates and actively participates in initiatives to strengthen local government and
island society, seeking to develop policies tailored to the particular challenges and development
opportunities of the islands. It co-ordinates, for example, the Smart Islands Initiative which is supported
by over 200 municipalities and regions, networks and energy bureaus of islands across Europe.
Source: DAFNI (n.d.[77]), Homepage, https://dafninetwork.gr/.
Beyond the specific and targeted support for project design, beneficiaries would benefit from regular
knowledge-sharing activities. Communication, information and knowledge-sharing practices between the
beneficiaries, the MAs and other actors in the OP management system, could help to jointly identify
solutions to specific problems. This could also help better tap into “on the ground” knowledge of
beneficiaries. Ensuring regular and well-structured exchanges between the MAs and beneficiaries could
offer additional insight into regional needs and the true capacity of local beneficiaries, thereby supporting
more effective OP design, monitoring and implementation. Periodic “knowledge workshops” could be
developed under the leadership of the MAs (or a group of MAs, or NCA, or Thematic Working Group) and
target specific topics. Optimally, themes should cover topics that the beneficiaries themselves highlight as
important or of interest, but could include regulatory issues, state aid, etc. These workshops could also
involve other relevant stakeholders and representatives from other knowledgeable bodies. These
instances would help to actively exchange experiences and identify potential solutions to common
challenges (OECD, n.d.[61]).
Streamlining the rules and procedures for the management of EU Structural funds
Improving the regulatory environment is a precondition for Greece to use EU funding more efficiently and
with that, stimulate economic activity, create jobs and raise productivity among all regions. In addition to
economic effects, improving the regulatory environment should also lead to reduced opportunities for
corruption and maladministration in public service and therefore increase trust in state institutions and the
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government (OECD, 2014[78]). Regulatory burdens, combined with administrative capacity weaknesses
leads to inefficient use of resources, affecting to a greater extent the less prepared regions and localities.
Greece, as well as all EU countries, needs to deal with administrative and regulatory burden arising from
EU legislation as well as the one stemming from its own national legislation. While the EU has made
administrative simplification a key priority for the next programming period, these efforts need to be echoed
by the Greek national government.
Efforts to simplify the regulatory environment at the EU level
Aware of the burden of the regulatory environment, the EC has made regulatory simplification a top priority.
For example, in the 2014-20 period, there is a single set of rules covering the EU’s five ESI funds. Countries
draft just one document to apply for funding (previously it was one per fund) and can use predefined
accounting methods to simplify cost options (OECD, 2018[79]). Still, for the current programming period,
the volume of rules for EU Cohesion Policy alone runs to over 600 pages of legislation and 5 000 pages
of guidance (EC, 2017[80]). The EC High-Level Expert Group that monitors simplification for ESIF
beneficiaries for the next programming period acknowledged that excessive and overlapping guidance at
the EU level “has long passed the point of being able to be grasped either by beneficiaries or by the
authorities involved” (EC, 2017[80]).
This is why, for the 2021-27 programming period, the EC aims to strike the right balance between
accountability, simplification and performance, while still maintaining strict rules for the sound management
of EU funds. The EC has proposed a number of changes to the Cohesion Policy framework 6 for the
2021-27 programming period including simplification and fewer policy objectives.
Further simplifying the administrative procedures in Greece
Since the crisis, a priority for Greece has been the improvement of the regulatory environment. OECD
indicators, for example, point to the sharpest reduction in the rigidity of product market regulation between
the end of 2007 and the end of 2012 among OECD countries (OECD, 2014[78]). Indeed, it has been widely
acknowledged that reducing the administrative burden is necessary to make EU Cohesion Policy more
effective. Too much legislation and guidance and/or the proliferation of multiple conditions coupled with
weak capacities may lead to low or inefficient use of cohesion funds by subnational governments. If the
administrative burden exceeds the expected benefits of regional policy outcomes, project beneficiaries
might not even bother applying for European grants to fund their initiatives. Administrative burden affects
particularly small beneficiaries (e.g. small or weak subnational governments, SMEs, start-ups) and could
potentially increase regional disparities instead of sustaining convergence. Moreover, while one of the main
objectives of regulatory procedures might be setting controls, checks and balances to avoid corruption,
they can, on the contrary, have the opposite effect, potentially incentivising illegal construction and
corruptive behaviour (OECD, 2011[81]). It is thus crucial to compare the administrative burden with the
expected policy benefits to avoid an excessive amount of guidance and legislation (OECD, 2018[1]).
Despite the progress, stakeholders across the country identify regulatory practices and the associated
administrative burden, as one of the top challenges for the efficient use of EU funds. They point to the
excessive number of time-consuming procedures delaying or/and blocking decision-making and
implementation of programmes and operations (e.g. joint inter-ministerial decisions, issuance of permits,
such as archaeological permits, tendering procedures and contracting, etc.). A survey conducted among
the Local Action Groups (LAGs) shows that 71% of them consider that the LAG’s ability to implement
LEADER is constrained by bureaucracy and administrative burden and the same proportion consider that
time taken to approve selected projects has a negative effect (ENRD, 2018[82]).
The excessive administrative burden partly stems from the need to align priorities and compliance
requirements in an environment with low levels of trust and confidence (Eurocities, 2017[83]). This is
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particularly challenging when diverse actors from different levels of government need to co-ordinate and
collaborate or when regional policies are operating in areas with low governance capacity or risks of
corruption. Simplifying administrative procedures requires, among other things, trust among the various
actors involved (OECD, 2018[1]).
In addition to aligning with EU requirements for the management and control of European funds, Greece’s
national regulatory framework has incorporated additional provisions. This results in gold-plating and can
create an unjustified administrative burden. The reasoning behind the additional requirements rests on a
series of operational factors, including the longstanding weaknesses in the Greek public procurement
system, in project selection and monitoring, and in striving for compatibility with guidance notices issued
by the EC. While EU regulations do not call for or lead to gold-plating in and of themselves, in its effort to
implement the EC’s regulatory guidance, the Greek government has adopted a stricter system (often
applied to public infrastructure projects and to some degree state-aid projects). In the day-to-day, this
results in a significant administrative burden. Contracting authorities are known to require that technical
offers include not only the necessary documentation per European directives but also documentation
requested in previous national legislative framework(s) (OECD, n.d.[61]). Beneficiaries, in particular, are the
ones that face the largest hurdles in accessing and applying regulations.
The frequent changes to regulatory frameworks – in particular the public procurement law – affects the
ability of the MAs, IBs and beneficiaries to cope with the procedures required by law. As a result, MAs put
important resources in keeping up with the changes, understanding their implications and how to apply
them. Communicating the changes to the IBs and the beneficiaries and actively helping ensure compliance
is also a very resource-intensive task for MAs. The Thematic Network on Public Procurement is a strong
step toward managing some of these procurement-related difficulties.
For example, some of the main institutional and regulatory factors that have led to delays in the
implementation of the 2014-20 OPs so far – that deserve further assessment to identify sources of
simplification – include:
The adoption of Law 4412/2016 (Government Gazette A’147) for the award and execution of public
works, supplies and service contracts (adoption of Directives 2014/24/EU and 2014/25/EU) and
Law 4413/2016 (Government Gazette A’148) for the award and execution of concession projects
(adoption of Directive 2014/23/ EU).
Delays in the update of the Regulation for Buildings’ Energy Performance (KENAK) which was
finalised by the Joint Ministerial Decision on 12 September 2017 and further specified by the
technical instructions of the Technical Chamber of Greece for the Energy Performance of Buildings
(Decree 182365/17.11.2017, Government Gazette 4003/17.11.2017 and Government Gazette
B‘4108/23.11.2017).
The adoption of the National Climate Change Adaptation Strategy (April 2016), as well as of the
regional strategies for adaptation to climate change that contribute to the optimal implementation
of the national policy with the further specialisation at the regional level.
The updates of the National Plan for Waste Management and of the National Strategic Plan for
Waste Prevention, ratified by the Joint Ministerial Decision 51373/4684/25-11-2015 of the Ministers
of Interior and Administrative Reconstruction and of the Environment, and the update and approval
of the Regional Plans for Waste Management (PECA), being a prerequisite for the financing of the
related projects.
The implementation of EU directives and regulations on state aid, in projects with technical
specificities in terms of their physical scope, requiring adaptation to ensure the agreement of the
EU on a number of projects.
Moreover, there is consensus – in Greece and across EU countries – on the uncertainty generated by
differing interpretations of the regulatory framework by the MAs, the Audit Authority (AA), EC services and
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the European Court of Auditors. Three different authorities audit the MAs (the Certifying Authority [CA], the
AA and the relevant services of the EC) and they all might have different interpretations on how to apply
the regulations. Thus, audit approaches (and sometimes findings) can differ by auditor or by on-the-spot
verification teams. To address this, the NCA needs to ensure a consistent and agreed interpretation of
rules by national auditors and evaluators. Moreover, co-operation with audit authorities and the EU
services is needed in order to define simpler rules and avoid national gold-plating of EU regulations.
The regulatory changes combined with the lack of clarity of regulatory procedures generate excessive
administrative burden, instability and uncertainty in the investment process, which in turn causes delays in
implementation and affects absorption capacity. This might be one of the reasons – not the only one –
behind the low rates of payments observed, in particular, in the less developed regions. As of May 2019,
the proportion of verified payments represented less than 30% of the total cost for all ROPs. This contrasts
with the high rates of activation – which includes drawing up and publishing calls, call specialisation,
evaluation of Executive Structures requests, approval by the Monitoring Committee and issue of the
Inclusion Decision.Beyond the implementation delays, regulatory burden might also generate mistrust in
the system and, at an extreme, a disincentive to use ESIF among beneficiaries.
Administrative simplification has remained high on the agenda in most OECD member countries over the
last decade. All EU member states have adopted elements of administrative simplification and burden
reduction strategies and most of them have a body responsible for the legal quality, administrative
simplification/burden reduction, stakeholder engagement and overall legal quality (OECD, 2019[84]). The
Danish Inter-Ministerial EU Implementation Committee, for example, oversee the transposition of EU law
to avoid additional burdens for businesses through the transposition of EU directives (Box 4.20).
Box 4.20. Oversight of the implementation of EU law in Denmark
In 2015, the Danish government set up a new oversight arrangement with the aim to ensure a
systematic and uniform approach towards the implementation of EU legislation across government and
to avoid additional burdens for businesses through the transposition of EU directives.
The Inter-Ministerial EU Implementation Committee examines all national legislative proposals deriving
from business-oriented EU legislation to ensure that the new legislation follows five principles for
implementation. These principles include, inter alia, provisions to avoid burdens for businesses
stemming from the transposition of EU directives and implementation going beyond the minimum
requirements set in EU legislation. The committee is comprised of eight ministers and situated in the
Ministry of Employment.
As part of the development of legislation implementing business-oriented EU legislation, all ministries
need to submit an implementation schedule to the secretariat of the committee, explaining whether the
five principles have been followed. If a draft law is not in compliance with the five principles, the matter
is put before the inter-ministerial committee, which can approve or reject measures going beyond what
is required as part of implementing EU legislation.
The external EU Implementation Council advises the committee in its efforts to prevent unnecessary
costs for business in implementing new EU legislation. The council is comprised of 11 members from
business, consumer, employer and employee organisations. It is supported by a secretariat situated in
the Danish Agency for Labour Market and Recruitment, which is an agency under the Ministry of
Employment. The council exercises three tasks:
1. In the event the council identifies burdensome future EU legislation, it can advise the
government through the Inter-Ministerial EU Implementation Committee to lobby proactively
right from the development stage of EU legislation.
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2. The council advises ministries on the transposition of new EU legislation. As part of this task,
all ministries are required to submit an implementation plan to the council within 4 weeks of the
adoption of the directive in Brussels, indicating the planned process and method of
implementation. The council sends recommendations to the ministries on this basis, which are
subsequently discussed in the implementation committee.
3. It can suggest to the Inter-Ministerial EU Implementation Committee to conduct a “neighbour
check”, i.e. the ministry examines best practices in other member states and checks the existing
implementation against methods used in other member states in order to identify simplification
opportunities for businesses. As a result of such a “neighbour check”, the Danish Maritime
Authority decided in 2016 to phase out 33 shipping rules to reduce economic burden to Danish
businesses.
Source: OECD (2019[84]), Better Regulation Practices across the European Union, https://dx.doi.org/10.1787/9789264311732-en.
EU governments are also increasingly trying to limit the flow of regulatory costs stemming from new
regulations and reduce the existing regulatory stock. Countries are increasingly resorting to offsetting new
regulations by reducing the existing ones (Trnka and Thuerer, 2019[85]). Still, the use of stock-flow linkage
rules, i.e. requirements to remove or rationalise existing regulation when introducing new regulations
(e.g. one-in one-out rule), is not yet widespread among EU member states. Currently, only a few member
states have formalised stock-flow linkage rules in place, requiring removal of existing regulations when
introducing new ones or to reduce “red tape burdens” by certain amounts annually (OECD, 2019[84]).
France, for example, has engaged in important simplification efforts. Following waves of simplification
measures, the 2017 programme Action publique 2022 identifies administrative simplification as one of the
five priority actions and ministers are tasked to develop simplification plans. France also introduced a “onein, two-out” regulatory offsetting approach in 2017. When transposing EU legislation, the adoption of
requirements going beyond those set by the EU measure is prohibited (OECD, 2019[84]) (Box 4.21).
Box 4.21. Approaches to regulatory offsetting in selected EU member states
While the core idea of regulatory policy as promoted by the OECD has always been based on
juxtaposing costs and benefits stemming from regulations in order to reach a conclusion as to the
desirability of regulation, many OECD countries have added other regulatory management tools and
techniques focusing on measuring and reducing regulatory costs in isolation.
The offsetting approach has its roots in setting net quantitative targets for reducing administrative (or
later compliance/regulatory) costs, pioneered in the Netherlands in the 1990s with introducing a method
to quantify administrative burdens in monetary terms – the Standard Cost Model – accompanied with a
government commitment to reduce administrative burdens by 25% within 5 years.
The United Kingdom was the first OECD and EU country introducing “one-in, one-out” as an official
government policy in 2011. The programme was deemed so successful that the government decided
to go further and double the offsetting by introducing the “one-in, two-out” approach. In 2015, the
approach was even strengthened so every pound of newly created regulatory costs must be offset by
a reduction of 3 pounds (“one-in, three-out”).
France established a regulatory offsetting policy in 2013. The “gel de la réglementation” requires
departments to both offset the increase in costs to businesses and to remove (or, if not possible,
simplify) an existing regulation when a new one is enacted. Costs to local governments and citizens are
also considered. The policy was replaced by a two-for-one policy (“maîtrise du flux des textes
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réglementaires”) in 2017. The offsetting obligation was doubled with the intent to impose greater control
of the flow and reduce the stock of regulatory texts.
In Germany, the “one-in, one-out” rule was introduced by the government in 2015 as part of its
Bureaucracy Reduction and Better Regulation agenda. At the start of the programme in 2006, the
German government set a goal “to cut measurably the costs of bureaucracy … and to avoid new
information obligations”. While the concept of measuring compliance costs was adopted in 2011, the
Council of Ministers stated in June 2014 that the government’s “aim is to reduce the existing compliance
costs”.
More recently, Spain introduced their version of regulatory offsetting and Finland has completed a pilot
project, testing a one-in, one-out policy.
While the scope of these approaches differs between all countries, Germany, Spain and the United
Kingdom excluded regulations implementing EU legislation from the offsetting obligation.
Source: OECD (2019[84]), Better Regulation Practices across the European Union, https://dx.doi.org/10.1787/9789264311732-en; (OECD,
2010).
Introducing flexibility to the Management and Control System
A key element to reduce the administrative burden is introducing some space for flexibility in the regulatory
framework. Simplicity comes with the need for greater flexibility that allows adapting programmes to
different contexts. 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 (OECD, n.d.[61]). While a one-size-fits-all framework might
help to address accountability issues and facilitate higher-level management, control and co-ordination, it
can also create unnecessary delays and increased project costs – in particular for small projects with
limited expenses. 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
(OECD, 2018[1]).
The issue of flexibility in management and implementation is particularly relevant for MAs that manage
projects of different sizes and from different sectors. In the MA for Transport and the Environment, for
example, transport projects are large, costly, lengthy to design and implement, and tend to attract large
beneficiaries with strong experience. In contrast, environment projects are often small, do not demand high
levels of funding, are less time-consuming, and beneficiaries are often smaller and have less capacity or
experience with applying for and managing EU funds.
To manage the trade-off between accountability and flexibility, the leading institution (the NCA could lead
this process) must work closely with all relevant stakeholders from all levels of government. In preparation
for the next programming period, a simpler and flexible MCS should result from a diagnosis of the
regulatory issues that cut across levels of government (including the EU level) to identify where
simplification and flexibility are needed. As recognised by the OECD Recommendation on Regulatory
Policy and Governance, governments should co-operate with stakeholders on reviewing existing and
developing new regulations by actively engaging all relevant stakeholders during the regulation-making
process (OECD, 2012[86]). For this, the 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, etc.
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Building a strong and coherent multi-level institutional framework for place-based
policies
Fine-tuning the governance framework for the implementation of EU funds in the country is a lever to
improve the multi-level governance system as a whole, also encompassing policies and investments
funded through the national investment programme. This is even more important considering the
implementation of the National Development Programme scheduled to start on 1 January 2021.
Improved co-ordination for effective place-based policies
Co-ordinating across sectors facilitates a place-based approach to regional development
The processes of designing and implementing the Cohesion Policy, the Development Law and the Public
Investment Programme – the three main regional development instruments – involve multiple institutional
actors:
1. The Ministry of Development and Investments, which is the leading institution.
2. The Ministry of Finance, which controls and regulates public spending.
3. The Ministry of the Interior and Public Administration that provides funding for municipal budgets.
4. The Ministry of the Environment that is responsible for spatial planning at the national, regional and
urban levels and controls environmental legislation (including permits for projects).
5. The Ministry of Agriculture, which controls the funds of the EU Common Agricultural Policy (CAP).
However, co-ordination across these institutions occurs mostly on an ad hoc basis with no active
institutionalised platform to co-ordinate policies. In general, co-ordination between ministries is seen as
problematic and each ministry focuses on its own policy area in order to keep decision power (Greek
Government, 2019[28]). Moreover, the budget elaboration process and the policy planning process do not
appear to be systematically co-ordinated (Council of Europe, 2017[13]). This fragmentation in the
policymaking process is not exclusive to Greece. In most OECD countries, policymakers from different
sectors and levels of governments tend to work in silos. It is not surprising that, for example, among the
15 dimensions of institutional quality for efficient public investment management by the IMF, central-local
co-ordination is the one where advanced economies tend to fare the worst (IMF, 2015[87]). In the same line,
a lack of co-ordination across sectors is identified as a top challenge by three-quarters of subnational
governments across the EU (OECD-CoR, 2015[88]).
Collaboration among the different sectors and levels of governments to develop a coherent approach is
particularly relevant in the Greek context of fragmented, overlapped and also sometimes fuzzy assignment
of responsibilities. For example, most of the competencies over island policy are shared among several
ministries (Ministry of Maritime Affairs and Insular Policy, Ministry of the Interior and the Ministry of
Development and Investments, among others). While the Ministry of Maritime Affairs and Insular Policy is
actively promoting horizontal co-ordination for island policies, there is a great margin for further
strengthening structures and practices: if a national Committee for Island Policy is supposed to be in place,
it has not yet been activated (Council of Europe, 2017[13]). This committee, which should be led by the
office of the prime minister, is supposed to gather the main ministers with competencies over island policy,
mayors, head of the island regions and representative of the social partners (Council of Europe, 2017[13]).
A stronger cross-sectoral and whole-of-government perspective for regional development will help Greece
in stepping out from a project-by-project design logic, shifting away from an overreliance on EU funds. In
the context of austerity, Greece has strongly relied on EU funds for regional policy. However, looking
forward, effective cross-sectoral co-ordination needs to be in place in order to contribute to the pursuit of
common development goals, limiting the scope of overlapped projects, promoting synergies between
policies and investments, and ensuring that projects and local investments are mutually reinforcing.
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In order to minimise administrative barriers for collaboration, dialogue across different sectors has been
institutionalised in several OECD countries. Out of a sample of 27 OECD countries, 20 have put in place
a permanent inter-ministerial committee on territorial development issues. Poland, for example, has
established the Co-ordinating Committee for Development Policy (CCDP) as a permanent inter-ministerial
committee linked to regional development issues through sub-committees (e.g. sub-committee for rural
areas development, sub-committee for territorial dimension). The CCDP carries out analysis and drafts
documents to facilitate the implementation of the country’s Strategy for Responsible Development with a
strong territorial dimension (see Box 4.22). Some countries have also established joint investment funds
that pool monies across public agencies/ministries to encourage consideration of a broader set of priorities
across different sectors.
Box 4.22. Place-based development strategies and cross-sectoral co-ordination in OECD
countries
Italy
Italy’s Strategy for Inner Areas is an integrated strategy tailored to different places with the aim of
reducing demographic decline and land abandonment in many rural areas, by improving the quality of
essential services – education, health and mobility – and promoting the opportunities for economic
activity and jobs. The strategy has been pursued by the national government through the following main
actions:
Identifying in each project area an alliance of municipalities willing and capable of working
together towards a long-term strategy, also by unifying the management of functions relevant
to the common strategy.
Promoting in each project area a result-oriented strategy concerning both essential services
and economic activity, through a participatory approach based on an informed and open debate
among citizens and relevant competent actors, and the production of data and indicators.
Defining a set of integrated projects and their expected outcomes, through enhanced coordination across sectoral administrations (inter-ministerial committee with representatives from
the Ministry of Education, Health, Agriculture and the Department for Cohesion Policy) and
subnational levels of government, so as to align objectives, adapt sectoral policies to territorial
specific needs and match different sources of financing.
Portugal
In 2015, Portugal established the Council for Territorial Dialogue chaired by the prime minister, and with
the representation of central and local governments, in order to facilitate continuing dialogue on
important policy and programme issues. Beyond permanent fora of intergovernmental consultation, ad
hoc committees and commissions also serve to facilitate intergovernmental and civil society dialogue
on some intractable issues.
Building effective partnerships across levels of government
Legal frameworks to promote co-ordination and collaboration between the three levels of government has
been established in the country mostly in the framework of EU policies and access to EU funding (Hlepas,
2015[8]). The Europeanisation of Greece – as some authors have called this process – has come together
with the creation of co-ordination networks and institutions. In general, for the definition of ROPs, local
actors can have an advisory role in the consultation phase for the formulation and designing of EU-based
policies.
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Beyond the management of EU funds, Greek law also foresees a range of contracting and networking
possibilities to co-ordinate policies between the two tiers of subnational governments. Chapter G of the
Kallikratis reform refers to all the different legal statuses that regions and municipalities can establish to
cooperate:
Regions and municipalities may establish contracts of inter-municipal or cross-level co-operation
where one part can offer support to the other or/and exercise the responsibility on behalf of one or
more of the contracting parties (Art. 99).
Subnational governments can also enter into programmatic contracts (Art. 100) for the study and
execution of specific projects and programmes (e.g. development projects, constructions, etc.).
These contracts establish the scope of the study and the workings, their budget, rights and
obligations of the parties involved as well as clear timeline and financial commitments. Local
authorities as well as other public authorities (such as universities) or public sector entities (public
enterprises, etc.) can become parts of these contracts.
Two or more municipalities or regions with common characteristics may also constitute networks
to exercise and support policies that are linked to the specific characteristics of network members
(Art. 101).
The law (Art. 105) also foresees the voluntary establishment of networks between several
municipalities and the region to carry out public works, for service provision, for the fulfilment of
concrete tasks or the design and development of programmes. These networks – which are legal
entities governed by public law – are established by decision of the municipal and regional councils
concerned. They also need to be approved by the Secretary-General of the Deconcentrated
Administration.
At the regional level, the regional council is the main platform where several actors, such as the chambers
of commerce, union of municipalities and trade unions, hold a seat. They are responsible for the design
and implementation of designated policies at the regional level. Local governments, though, participate in
these councils mostly as observers, limiting the impact of their involvement and their influence on final
decisions.
However, co-ordination and collaboration between levels of government seem to be restrained to
formalities for the planning and implementation of projects financed by the EU. The different co-ordination
tools foreseen by the Kallikratis reforms are not widely used and do not have a comprehensive approach
for regional development policies; they are set for specific and narrowed projects or purposes. There are
also few active co-ordination instances in which municipalities and regions can participate together. At the
same time, dialogue between regional authorities and the state representatives in regions is rather
sporadic and depends heavily on personal initiatives and contacts, not least because of insufficient legal
bases and lacking organisational and procedural arrangements (Council of Europe, 2017[12]).
While regional development policies are now more decentralised, the role of the central government is
increasingly important for providing an overarching framework and guidelines and ensuring proper
co-ordination. The central level needs to ensure overseeing co-ordination mechanisms within which
regional policy can be formulated and implemented (OECD, 2019[22]). This is particularly crucial if Greece
wants to develop place-based regional development policies that go beyond EU policies (Chapter 3).
OECD countries have developed a broad set of mechanisms to promote collaboration and bridge
information, capacity, fiscal, administrative or policy gaps across national and subnational governments.
These mechanisms can range from “binding” to “soft” instruments. They include, for example, financial
incentives to support co-operation among levels of governments, co-financing mechanisms, joint
investment strategies, the use of conditionalities when assigning funds, platforms of dialogue, or specific
instruments such as contractual arrangements (Box 4.23). Some OECD countries have addressed these
concerns early on in their decentralisation processes, improving governance structures between levels of
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government as well as across sectors. In Denmark, for example, the Regional Growth Forum integrates
local, regional, national and EU development activities within a single, programme-based policy structure.
Box 4.23. Different instruments and platforms to build partnerships across levels of
governments
Chile
In 2015, Chile created the Inter-ministerial Committee for City, Housing and Territory (COMICIVYT).
The COMICIVYT is responsible for formulating policies relating to land use planning and developing
integrated investment plans in each of the 15 regions. Five ministries participate in the infrastructure
planning dimension: the Ministry of Housing and Urbanisation, the Ministry of Public Works, the Ministry
of Transport and Telecommunications, the Ministry of State Properties, and the Sub-secretary for
Regional Development of the Ministry of the Interior and Public Security. The COMICIVYT thereby
provides a cross-sectoral and multi-level platform for prioritising infrastructure investments within
regions based on a long-term vision for the region’s development. Regional integrated infrastructure
plans developed through the COMICIVYT have a five-year timeframe and inform the annual budget
discussions held between spending ministries and the Ministry of Finance budget department. They,
therefore, have the potential to greatly improve the overall coherence of infrastructure planning within
regions, thus maximising the efficiency and impact of both public and private investment.
Italy
The main institutional mechanisms to promote dialogue across the different levels of government in
Italy are the so-called "conferences"; i) the Conference of State-Regions; ii) the Conference of StateMunicipalities and other Local Authorities; and iii) the Unified Conference of State-RegionsMunicipalities and Local Authorities. The three conferences are held in the prime minister’s office and
constitute the most important co-operation instrument to co-ordinate between the different levels of
government:
The Conference of State-Regions was instituted in 1988 by Law No. 400. It brings together the
prime minister (or the Minister of Regional Affairs) to chair the conference, the presidents of the
regions and other ministers whenever matters related to areas of their competency are
discussed. The central government consults the conference regarding all legislative initiatives
related to areas of regional interest. Regional governments play a key role in this platform and
the process of institutional innovation, especially relating to the transfer of functions from the
centre to the regions and local authorities.
The Conference of State-Municipalities and other Local Authorities, which was created by
decree of the President of the Council of Ministers in July 1996, sits together with the prime
minister, as president of the conference, the Minister of the Interior, the Minister of Regional
Affairs, the Minister of Treasury, the Minister of Finance, the Minister of Public Works, the
Minister of Health, the President of the Association of Italian Municipalities (ANCI), the President
of the Association of the Italian Provinces (UPI) and the President of the Association of Italian
Mountain Communities (UNCEM), 14 mayors and 6 presidents of provinces. The conference
carries out the following functions: i) co-ordination of the relations between state and local
authorities; and ii) study, information and discussion on issues pertaining to local authorities.
The Unified Conference of State-Regions-Municipalities and Local Authorities, set up in 1997,
is the institution where relations among the central government, regions and local authorities
occur. It includes all members of the two conferences (state-regions and state-regionsmunicipalities and other local authorities). It must be consulted on any act related to shared
competency. In particular, the Unified Conference is consulted by the central government on
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financial law and decrees concerning the allocation of personnel and financial resources to
regions and local authorities.
Source: OECD (2017[42]), Making Decentralisation Work in Chile: Towards Stronger Municipalities, https://dx.doi.org/10.1787/9789264279049-en.
In the COVID-19 global crisis context, co-ordination across levels of government is crucial as a
co-ordinated response by all levels of government can minimise crisis-management failures. The main risk
of non-co-ordinated action in a crisis is to “pass the buck” to other levels of government, resulting in a
disjointed response. What matters is the effectiveness of the co-ordination mechanisms in place, and the
ability of government actors to align priorities, implement joint responses, support one another and foster
day-to-day information sharing, including with citizens. Effective crisis response highlights that robust
vertical and horizontal co-ordination mechanisms are more important than ever (OECD, 2020[4]).
Greece could establish, for example, a body dedicated to co-ordinating regional development planning
which could help to inform the partnerships agreement or other sectoral strategies of the line ministries.
For this purpose, Italy has three levels of “conferences” between central and subnational governments
(Box 4.23), serving as fora for intergovernmental co-ordination: 1) the Conference of State-Regions; 2) the
Conference of State-Municipalities and other Local Authorities; and 3) the Unified Conference of StateRegions-Municipalities and Local Authorities, which includes all members of the two other conferences.
Portugal has also recently developed a permanent Council for Territorial Dialogue chaired by the prime
minister to favour and institutionalise a continuous dialogue between the central government and
subnational governments.
Greece could also strengthen and expand the scope of 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 (Box 4.24). The
design of these type of contracts needs to be as flexible as possible so they can adapt to different
circumstances and local characteristics – urban and rural regions, mountainous and islands municipalities,
etc. They can also target specific areas (island regions and municipalities, for example) providing a multiannual strategy. The key point is to specify the regional development priorities supported by contracts,
possibly through a careful assessment of needs and opportunities.
Box 4.24. State-region planning contracts in France
State-region planning contracts (Contrat de plan État-région, CPER) have been in operation since 1982
and are important tools in regional policy in terms of planning, governance and co-ordination. They are
characterised by their broad thematic coverage and cross-sectoral nature, with a territorial approach
being applied across diverse policy fields including industrial, environmental and rural issues. The
DATAR functions as the main national partner of the regions in developing and implementing such
planning documents. The President of the Regional Council and the Prefect, as the representative of
the central government’s different ministries, draw up the contract. The co-financing of interventions is
seen as an important co-ordination mechanism.
2007-13 planning contracts: A new generation of state-region contracts was introduced in 2007
alongside the 2007-13 Structural Funds programmes, in order to increase links between French
and EU regional policies. The new contracts have the same timeframe as the EU OPs, are
based on a joint territorial analysis and have integrated monitoring systems. Similar to the
structural funds, regions can decide that funding be de-committed 18 months after approval for
projects if no commitment has been made. Contracts increased their focus on the Gothenburg
and Lisbon agendas. They reflect three priority areas: the promotion of territorial
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competitiveness and attractiveness, the environmental dimension of sustainable development,
and social and territorial cohesion. The emphasis on sustainable development has grown, with
a consultation process launched in 2007 (Grenelle de l’environnement). Priority is given to soft
functions (e.g. education, research and development) as well as infrastructures other than
roads.
2014-20 planning contracts: A new generation of 2014-20 state-region planning contracts has
been launched. Five topics have been selected: higher education, research and innovation;
national very high-speed broadband coverage and the development of digital technologies
usages; innovation, promising niches and the factory of the future; multimodal mobility; the
environmental and energy transition. Employment – a priority for the government – will be
treated as a cross-cutting issue in the contracts.
In order to ensure equality between territories within the regions, contracts will mobilise specific
resources for priority areas: urban priority neighbourhoods, vulnerable areas undergoing major
economic restructuring, areas facing a deficit of public services (rural areas), metropolitan areas and
the Seine Valley. Inter-regional contracts for mountainous and fluvial basins will be reconducted. The
preparation of this new generation of contracts was conducted in two phases: the first for strategic
thinking and joint preparation between the central government and the regions; a second for financial
negotiation.
Source: OECD (2019[53]), Effective Public Investment across Levels of Government: Implementing the OECD Principles,
https://www.oecd.org/effective-public-investment-toolkit/ (accessed on 16 August 2019).
Making collaboration across municipalities more efficient
Strengthening co-operation across Greek regions and municipalities is necessary to invest and deliver
services at the relevant scale and enhance synergies among policies of neighbouring (or otherwise linked)
subnational governments. This is particularly relevant at the metropolitan scale where less fragmented
governance structure can favour growth and productivity.
Inter-municipal co-operation in Greece has proven to be necessary in order for municipalities to cope with
the increasing transfer of powers and responsibilities. Co-operation structures are also critical economic
and development tools to tackle the cuts in local government resources that have resulted from the
challenging economic situation of the country during the past decade.
Inter-municipal Greek structures with single or multiple tasks do exist but many of them are inactive. The
Greek legal framework foresees the compulsory or voluntary creation of associations of local government
authorities for public investment, service delivery or to exercise competencies belonging to local
governments:
Article 245 of Law 3463/2006 allows for the establishment of municipal associations in the form of
legal entities governed by public law and financed through municipal contributions and user
charges. Most of these horizontal co-ordination structures are currently inactive (OECD/UCLG,
2019[24]).
The Kallikratis reform (Art. 95) also provides for a form of obligatory inter-municipal co-operation
known as “administrative support” in order to help temporarily smaller municipalities carry out some
responsibilities transferred to them under the Kallikratis programme (e.g. town planning, technical
and welfare benefits services). Municipalities administratively support other municipalities receive
an additional amount from the state for their operating expenses.
As mentioned in the previous section, the Kallikratis Law also foresees the establishment of
contracts or networks for inter-municipal co-operation (see above).
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Waste management has been a long-lasting challenge in Greece and its municipalities, through
co-operation has found ways to address it successfully. In 2012, Greece launched the New National Waste
Management Plan (NWMP) in compliance with Law 4042/2012, which sets out the policy, strategy,
principles and targets for the management of waste in Greece. This plan reallocated waste management
at the municipal level. Within this framework, for example, the municipalities of Agias Paraskevis, PapagouHolargos and Zografou launched an inter-municipal local plan for waste transportation and deposit.
Through this plan, the three municipalities pool resources to achieve economies of scale for transport and
waste differentiation. This specific inter-municipal collaboration enjoyed significant support from both
regional and central government authorities (Koutalakis and Allio, 2016[36]).
However, Greek law does not foresee concrete incentives to encourage municipalities to co-operate on a
voluntary basis. It has been documented that inter-municipal co-operation has been underexploited
because political leaders do not have incentives to intervene in affairs that do not necessarily pertain to
their strict administrative or competency boundaries (Council of Europe, 2017[12]; Koutalakis and Allio,
2016[36]). Due to a lack of incentives to enter into a contract or form a network between different
municipalities, their formation depends largely on the political will and personal contacts of local authorities.
The lack of trust between different local authorities is another factor that is undermining co-operation
(Council of Europe, 2017[12]). Thus, the lack of concrete incentives coupled with bureaucratic procedures
results in weak co-operation between municipalities, even when the law formally allows it.
Organising co-operation between subnational governments has also been a relatively common method
used by OECD countries to solve capacity issues, especially at the municipal level. These arrangements
have been popular in particular among the Nordic countries (Denmark, Finland, Norway and Sweden) but
they have also been practised for example in France, Italy, Poland and Spain (OECD, 2017[10]; OECD,
2019[40]). In Chile, for example, municipal associations have had a positive impact on investments and
capacity building. Municipalities that are part of an association in Chile: present better investment projects
in view of obtaining financing; positively affect smaller municipalities’ local capacities; and have more
bargaining power than municipalities looking to obtain financing from regional and central levels on their
own. All this results in more and better investments (OECD, 2017[42]).
The Greek central and regional governments can use specific incentives, whether financial or not, to
encourage voluntary co-operation among municipalities. Some OECD countries have opted to encourage
collaboration by providing consulting and technical assistance, promoting information sharing or providing
specific guidelines on how to manage such collaborations. A way for Greece to encourage municipal
co-operations is to take advantage of peer learning. Municipalities with successful stories can share their
experience and encourage other municipalities to enter into such arrangements by showing that, through
partnerships, municipalities can achieve more efficient and better results. Regions need to take a proactive
role in supporting critical 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. Financial incentives can help to overcome the
administrative costs that can be associated with the creation of networks or contracts. The central
government can, for example, define specific National Investment Programme budget lines to finance
exclusively municipal association projects or joint investments. Many OECD countries have recently
passed regulations to encourage inter-municipal co-operation on a voluntary basis (Box 4.25). For
instance, France offers special grants and a special tax regime in some cases and other countries like
Estonia and Norway provide additional funds for joint public investments. Slovenia introduced a financial
incentive in 2005 to encourage inter-municipal co-operation by reimbursing 50% of joint management body
staff costs – leading to a notable rise in the number of such entities. In Switzerland, one-third of funds for
regional development policy are reserved for projects involving inter-cantonal co-operation (Mizell and
Allain-Dupré, 2013[89]).
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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 multi-level
contracts for this purpose. Japan, where inter-municipal co-operation was not particularly encouraged
(amalgamations being the preferred option to consolidate municipalities and increase their efficiency), is
now developing a new type of contract encouraging inter-municipal co-operation (OECD, 2017[10]).
Box 4.25. Incentives for cross-jurisdictional co-operation
Most of the time, inter-municipal co-operation is promoted on a voluntary basis. Incentives are created
to enhance inter-municipal dialogue and networking, information sharing and sometimes to help in the
creation of these entities. These incentives can be financial or can also have a more practical nature
(consulting and technical assistance, production of guidelines, measures promoting information sharing
such as in Canada, Norway and the United States). Several countries also implemented new types of
contracts and Partnership Agreements to encourage inter-municipal co-operation: Poland (with the
introduction of territorial contracts), Portugal (with multi-level contracts), among others.
In Slovenia, inter-municipal co-operation has risen in recent years, in particular with projects that
require a large number of users. In 2005, amendments to the Financing of Municipalities Act provided
financial incentives for joint municipal administration by offering national co-financing arrangements:
50% of the joint management bodies’ staff costs are reimbursed by the central government to the
municipality during the next fiscal period. The result has been an increase in municipal participation in
such entities from 9 joint management bodies in 2005 to 42, rising sharply to 177 municipalities today.
The most frequently performed tasks are inspection (waste management, roads, space, etc.), municipal
warden service, physical planning and internal audit.
At the sub-regional level in Italy, there is a long tradition of horizontal co-operation among
municipalities, which takes the form of Unione di Comuni, intermediary institutions grouping adjoining
municipalities to reach critical mass, reduce expenditure and improve the provision of public services.
A recent law from April 2014 established new financial incentives for municipal mergers and unions of
municipalities. All of the basic functions of municipalities are to be carried out in co-operation..
The region of Galicia in Spain has many small municipalities. Many have limited institutional capacity
and are spread out geographically, which increases the cost of providing public services. The regional
government has taken steps to encourage economies of scale. First, it has improved the flexibility of
and provided financial incentives for voluntary (“soft”) inter-municipal co-ordination arrangements.
Investment projects that involve several municipalities get priority for regional funds. “Soft” intermunicipal agreements tend to be popular in the water sector. Local co-operation is also being
encouraged in the urban mobility plan for public transport, involving the seven largest cities in the region.
The regional government also imposed a “hard” co-ordination arrangement. Specifically, it created the
Metropolitan Area of Vigo, an association of 14 municipalities. Although the metropolitan area was
defined by the regional government, it was based on a history of “light co-operation” among 12
municipalities (out of 14). Voluntary municipal mergers may be encouraged in the future.
Source: OECD (2017[10]), Multi-level Governance Reforms: Overview of OECD Country Experiences,
https://dx.doi.org/10.1787/9789264272866-en; OECD (2019[53]), Effective Public Investment across Levels of Government: Implementing
the OECD Principles, https://www.oecd.org/effective-public-investment-toolkit/ (accessed on 16 August 2019).
Building trust among parties
Trust in government is both a driver of government effectiveness and economic development, and an
outcome measure for government action (OECD, 2017[90]). Social trust underpins the effectiveness of
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place-based policies. In Greece, social trust significantly eroded over the crisis period, with declining levels
of trust in both political and impartial institutions (Ervasti, Kouvo and Venetoklis, 2019[91]).
Corruption impacts trust in national and subnational authorities
Greek authorities have acknowledged that high levels of political clientelism have impacted the country’s
development. During the last 30 years, the levels of corruption have been increasing in the country (Hlepas,
2015[8]). In 2018, the Transparency International Corruption Perceptions Index for Greece was the worse
(45) after Bulgaria, three points less than its score in 2017. The 2018 Greek National Growth Strategy
explicitly recognises that clientelist practices and corruption have undermined opportunities for growth
(Hellenic Republic, 2018[92]) – a finding echoed by others. Regulations that limit competition and the
imposition of levies on transactions that have benefitted third parties are typical examples of a system that
has encouraged rent-seeking and undermined growth (Huliaras and Petropoulos, 2016[52]).
As a result, citizens’ trust in Greek public institutions, including regional and local authorities, has been
constantly shrinking (Hlepas, 2015[8]; Ervasti, Kouvo and Venetoklis, 2019[91]). Since 2007, trust in national
governments have decreased by 25% and, in 2016, Greece ranked last among OECD countries in this
indicator (Figure 4.13). Mistrust regarding the EU is also very high in Greece: it went up by 48 percentage
points between 2004 and 2018. As of today, two-thirds of the Greek population tend not to trust the EU,
the highest share among the EU member states. This opinion is also reflected in the high share of votes
for parties against EU integration (Dijkstra, Poelman and Rodríguez-Pose, 2018[21]).
These low levels of trust impact policy outcomes. While trust is clearly a multifaceted concept – depending
as much on subjective perception as on facts – its influence on the outcomes of public policy is significant
and sufficiently tangible to make building trust an objective worth pursuing by public institutions (OECD,
2017[93]). Part of the answer to reinforcing trust lies in good economic management – trust will increase
when incomes rise and jobs are easier to find. Experience shows, however, that good economic policies
cannot do the job alone. Trust in institutions is driven not only by the substance and outcomes of policies
but also by the process of policymaking. The way policies are designed and implemented, and the
compliance that policymakers show with broader principles and standards of behaviour, matters in building
trust (Baena et al., 2013[94]).
Decentralising decision-making may be a way to improve trust. There is evidence showing that trust is
positively correlated with decentralisation. A study considering 42 countries over the period 1994-2007, for
example, shows that fiscal decentralisation is positively related to citizen’s trust (Ligthart and van
Oudheusden, 2015[95]). In the same line, preliminary analysis suggests that the Local Authority Index is
positively related to trust in local and regional government, even when other variables are controlled
(Keuffer and Ladner, 2018[96]). More decentralised systems may help to build trust as they respond more
efficiently to citizen’s preferences. Furthermore, innovations in local public governance build trust by
engaging citizens in all aspects and phases of local government operations from ideas to policy to
implementation (OECD, 2019[22]).
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Figure 4.13. Confidence in national government in 2016 and its change since 2007
%Percentage
in 2016 in 2016
Percentage points change since 2007
%
90
70
50
30
10
-10
-30
Note: Data on the confidence in national government for Canada, Iceland and the United States in 2016 are based on a sample of around
500 citizens. Data refer to the percentage who answered “yes” to the question “Do you have confidence in national government?” (data arranged
in descending order according to percentage point change between 2007 and 2016). Data for Austria, Finland, Ireland, Norway, Portugal,
the Slovak Republic, Slovenia and Switzerland are for 2006 rather than 2007. Data for Iceland and Luxembourg are for 2008 rather than 2007.
Information on data for Israel: http://dx.doi.org/10.1787/888932315602.
Source: OECD (2017[90]), Government at a Glance 2017, https://dx.doi.org/10.1787/gov_glance-2017-en.
Greece has taken large steps to improve transparency
Aware of the negative impacts of clientelism and corruption, Greece has made important efforts to
strengthen transparency. In 2010, the Greek government enacted the Transparency Law (Law 3861/2010)
that obliges all government entities to make public and accessible on an Internet platform all public
expenses, regulatory acts, and public procurement and tendering. Some studies have shown that the
publication of this information has led to self-restraint concerning some practices of maladministration and
mismanagement (Hlepas, 2015[8]).
To reduce corruption and clientelist practices, Greece has also strengthened monitoring processes at all
levels of government. The government has created such posts as auditors of public administration, general
inspector of public administration, municipal and regional Ombudsmen, among others. This complex set
of controls is completed by state supervision, which is provided in the constitution itself (Article 102,
paragraph 4). Moreover, in each one of the 7 “deconcentrated administrations”, the Secretary-General is
responsible for state supervision of the 13 regions. Decisions over tendering, loans, expropriation,
imposing of taxes and fees, among others, are monitored and checked by the Secretary-General (Hlepas,
2015[8]).
In 2014, the Greek government enacted Law 4305/2014 on open disposal and reuse of documents,
information and data in the public sector. The Greek government has also developed legal requirements
whereby awards are provided to public sector institutions that set up effective and innovative processes in
opening up their datasets as well as in promoting its reuse (OECD, 2018[97]).
In 2012, Greece also became part of the international co-operative initiative of Open Government
Partnership (OGP) to show its commitment to openness, participation and accountability. Since then,
Greece has adopted three National Action Plans for Open Governance. For the preparation of the third
plan, covering the period 2016-18, Greece consulted citizens and private sector representatives, as well
as civil society organisations. Another important initiative was the agreement signed in 2016 with the Open
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Technologies. The purpose of the agreement is to promote the implementation of open digital technologies
that can support the reuse of open government data (OGD) in the field of education and research. In
addition, the agreement aims to also encourage greater awareness of OGD, through workshops,
conferences, etc. (OECD, 2018[97]).
This plan includes explicit commitments from regional and local governments. For example, one of the
commitments of the region of Western Macedonia is to present data on their website in a user-friendly way
by using tables, diagrams, comparisons to previous month/year etc. They have also committed to
developing a Regional Council Platform. There are also commitments from the region of Central Crete and
the municipality of Thessaloniki (Ministry of Interior and Administrative Reconstruction, 2016[98]).
Subnational governments across the OECD are increasingly developing open government and OGD. In
the OGP framework, besides Greece, a number of countries have developed pilot programmes to reach
regions, provinces and cities. Barcelona, London, Madrid, Melbourne and Montevideo, for example, have
open government data portals where people can find data in a variety of categories (e.g. environment,
population, jobs and economy, health, transport, community safety, infrastructure). There are also different
datasets by categories ranging from housing (Barcelona) and household waste (London) to the number of
traffic accidents (Madrid) and services for women (Melbourne). Greek local authorities could follow the
example of the city of London, which is using open government data not only to improve transparency but
as a tool for building accountability and promoting citizen participation in key policy issues (Box 4.26).
Box 4.26. The London DataStore to promote transparency, accountability and participation
The London Datastore is a free, open data-sharing portal facilitating access to data relating to the
capital. The site provides citizens, businesses, researchers and developers over 600 datasets to help
understand the city and identify solutions to London’s problems. In addition to being able to access a
wide variety of datasets in numerous formats (XLS, CSV, PDF, XML, etc.) for open use, the Datastore’s
portal provides up-to-date statistical information on the city’s performance in nine areas: jobs and
economy, transport, environment, community safety, housing, communities, health, London as a world
city, and performance by the Greater London Authority. This function is structured to build transparency
as well as accountability. First, each category provides information on the city’s priorities (e.g. in
transport, to upgrade most parts of the Underground and Overground, encourage cycling and walking)
and then offers easy-to-understand graphs that use available data to highlight performance. For
example, in the jobs and employment category, it highlights, among other things, growth in the number
of apprenticeships in London versus the rest of England since 2008/09. In view of being objective and
transparent, the Datastore does not hide negative results – for example in the environment category, it
shows that recycling in London is down, while it is still a growing trend in the rest of England. Finally,
the website also supports greater citizen participation by offering “data challenges” – encouraging
citizens to use open data and smart technologies to help solve some of London’s key challenges, for
example crowd-sourced data to manage population health, the Future of Generation Y, and how to
better deliver adult social care services in London.
Source: OECD (2017[42]), Making Decentralisation Work in Chile: Towards Stronger Municipalities,
https://dx.doi.org/10.1787/9789264279049-en.
While the efforts made by the Greek government go in the right direction, there is still a lots of room for
improvement in engagement, transparency and access to data, in particular at the local level. Indeed,
many regional and local governments produce and publish data; however, these data are often not easily
read and processed and are not produced by open licenses. The requirement over transparency after the
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crisis – and especially in the context of the MoUs, led municipalities to develop policies concerning open
data. Most subnational governments comply with this requirement but publish data in a PDF form making
it impossible to effectively use these data. As per the Open Knowledge Foundation, in 2016, only 11% of
city data was open (Open Knowledge Foundation, 2016[99]).
Beyond the transparency of regulatory acts and the access to data, sound and transparent financial
management is at the core of effective public investments for regional development. As the 2014, the
OECD Recommendation on Effective Public Investment across Levels of Governments recognises that
budgeting transparency throughout the investment cycle provides visibility to investments, clarifies
recurrent budgetary implications and strengthens public accountability. Governments should make
budgetary information regarding public investments publicly available to citizens and other stakeholders in
a timely and user-friendly format (OECD, 2019[53]).
Box 4.27. Transparent financial management
Italy
The Open Coesione web portal provides analysis and monitoring on the use of regional policy
resources, offering information, accessible to anyone, on what is funded, who is involved and where.
The web portal contains information about every single project carried out to implement EU Cohesion
Policy and more specifically: funds used, places and categories, subjects involved and implementation
timeframes. It concerns more than 700 000 investment projects (around EUR 17 billion, funded by
national and local governments). Users can either download raw data or surf through interactive
diagrams itemised by expenditure categories, places and type of intervention, as well as have access
to files on single projects and subjects involved. Data on the local economy and social context are
provided as well.
Switzerland
Switzerland has developed a database that provides an overview of the projects of the New Regional
Policy (NPR) as well as the projects of the previous programme Regio Plus. The database contains the
projects of the cantonal and supracantonal implementation programmes as well as projects launched
under the Interreg cross-border programme with Swiss participation. This database also contains the
projects of the pilot programme Territory of Economic Action (PHR Economy), a common measure of
the agglomeration policy (AggloPol) and the projects of the policy for rural areas and mountain regions
(P-LRB). Since 2016, all NPR projects are gradually put online; a large selection of projects dating from
previous periods is also available.
Source: (OECD, 2019[53])
Strengthening public engagement
Effective regional development policies are not just a government activity but require the action of a wide
range of private, public and third sector actors. By involving stakeholders in the decision-making process,
governments at all levels can generate ownership, trust and a sense of fairness. Broader public
engagement in the decision-making process is also important for holding the government to account and
maintaining confidence in public institutions. Well-managed consultation may help governments to limit
corruption, capture and mismanagement, in particular for big and complex infrastructure projects (OECD,
2017[100]).
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Public consultation in Greece is today much better developed than it was ten years ago. Today, almost
every piece of draft legislation or even policy initiative by the government is publicly posted online prior to
its submission to parliament (Box 4.28). Citizens and organisations can submit comments, suggestions
and criticisms article-by-article, through this platform. For example, there were several rounds of
consultation with relevant stakeholders in the development of the Partnership Agreement and all sectoral
and regional Operational Programmes for the Implementation of Cohesion Policy (for which the Ministry of
Development and Investments is responsible).
Box 4.28. The public online consultation process in Greece
Through the web portal opengov.gr, the Greek government ensures public consultation of legislative
and regulatory acts.
Public e-consultation has four consecutive phases.
1. Preparation: The Department of Informatics Applications of EKDDA, in co-operation with the
relevant partners of the respective ministry, prepares the website and the materials of the
consultation and ensures the overall approval of the content by the prime minister’s office.
2. Public comments: Once approved, the consultation is published and open to comment. The
relevant partners of each ministry read and approve the publication of incoming comments
(moderation). It is important for the successful conduct of the consultation that the relevant
ministry partners, in co-operation with the EIDHR IT applications department, actively
participate by responding to any comments they may receive and by publishing opinions and
material for the creative feedback of the consultation.
3. Editing conclusions: When the deadline for consultation has expired, the ministry sends a
message thanking participants and including the first conclusions. At the same time, it
processes citizen comments by drafting a report on the public consultation provided by article
85, paragraph 3 of the Parliament’s Rules of Procedure.
4. Completion: When the adopted law and the report on the results of the consultation are
published, the consultation is considered complete.
Greece has also developed the website labs.opengov.gr to collect ideas and suggestions for the
improvement of public e-services, service communication and email subscription services.
Source: Ministry of Administrative Reform and E-Governance (n.d.[101]), OpenGov.gr - The Greek Open Government Initiative,
http://www.opengov.gr/.
Many municipalities and regions also have similar processes for public consultation but they are not always
well developed and utilised. Consultations often consist of posting the planning document for written
comment and this process is not often successful. While every programme is open to public consultation,
the main characteristics (structure, topics etc.) of OPs, their topics and themes are predetermined and
therefore calls for proposals are predefined by governmental authorities, limiting impact and meaningful
engagement (Crowther, Quinn and Hillen-Moore, 2017[102]). The engagement of private and third sector
actors at regional and local levels differs across the country, depending on the strength of local networks
and levels of social trust.
Greece needs to shift from consultation formalities towards real public engagement at all levels of
government. The formal process for public engagement in developing laws and regulations is one way to
measure the extent to which people can become involved in government decisions on key issues that
affect their lives. In Greece, the level of stakeholder engagement in developing regulations is 1.8 (on a
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scale of 0 to 4); lower than the OECD average of 2.47 (OECD, 2015[103]). However, consultation is not a
true engagement. Engagement can be built through participatory governance, in which local public
governance facilitates the participation and engagement of private citizens and other stakeholders in
deliberations on public policy choices and the delivery of local public services (OECD, 2019[22]).
OECD countries have put in place different ways of building participatory governance. Some countries
have opted to focus on transparency, for example, using open government methods such as open and
competitive procurement, performance budgeting, maximum disclosure, citizens right to know and citizencentric or participatory governance. Others have chosen to develop participatory planning and budgeting,
civil society performance monitoring, social audits or direct democracy provisions (e.g. referenda on major
initiatives/projects, recall of officials for dereliction of duty) (OECD, 2019[22]). Australian local governments,
for example, collaborate on using common smart forms for local applications, common information and
communication technology (ICT) platforms for tracking enquiries/transactions, measuring service delivery
response times and surveying customers, set benchmarks for performance and measuring and reporting
results. Australia’s Value Creation Workshops are valuable resources for strengthening local government
officials’ capacity to engage citizens through training and access to relevant expertise (OECD, 2019[22]).
Better data for effective decision-making
Greece has made some efforts to improve data accessibility for citizens and policymakers. For example,
the national government’s “public spending” initiative provides data and visualisations on Greek public
expenditure based on ideas from the UK’s “Where does my money go?” (Alexopoulos et al., 2018[104]). The
national government’s website to track the implementation of the NSRF 2014-2020 (anaptyxi.gov.gr/el-gr)
provides information on the number of projects that have been approved per region and municipality to
date and their budgeted amounts, as well as its implementation stage and the problems faced during the
process. It also includes helpful summary data visualisations on the thematic areas and beneficiaries by
region and detailed information on specific projects in the different stages of the investment process with
the respective subprojects, indicators and responsible bodies. An important feature of this database is that
the source data is downloadable. Recently, the governments have also laid the groundwork for creating
different “observatories” at the subnational level in order to collect information in different areas. The
Regional Observatory of Social Inclusion, for example, will gather data on social inclusion issues involving
a different and wide range of stakeholders. It aims to provide a geography of poverty and social inclusion
in the country. The different observatories are still in their early stages of development and it remains
unclear how the data collected will be finally used and co-ordinated with other sources of information.
Still, evidence-based decision-making remains undeveloped in the country. Authorities sometimes take
decisions with insufficient external input, overlooking impacts on other levels of governments and
underestimating opportunity costs of targeted budgetary expenditures (Council of Europe, 2017[12]). While
it is true that the initiatives highlighted above go in the right direction, the available data often does not
allow a clear and useful understanding of local issues to support decision-making (Alexopoulos et al.,
2018[104]). The tracking of the NSRF 2014-2020 for example, does not show that “regional” data and
thematic summary data is not readily available through its interface. Publicly available data also mostly
focus on economic/financial datasets and, to a lesser extent, social, natural resources and legal datasets.
More data is also needed on government spending, economic activity and firms and on agriculture, tourism
and the environment (Alexopoulos et al., 2018[104]).
While the Hellenic Statistical Authority has made important progress in data collection and availability, the
usefulness of the data for policymakers remains limited. Indeed, data available do not necessarily follow a
common structure, as the hierarchy used to present data is not the same across the different datasets
(some in statistics and series format, others only as cross-sections for individual years). The consistency
of the data sets over time needs to be improved so that, for example, the name of regional units does not
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change over time and should be ready to be statistically processed (ready to be uploaded to a statistical
software), especially for disaggregated data (Chapter 3).
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 user feedback.
More emphasis should be placed on the use of structured and machine-processable file formats in
publishing datasets and metadata (adopting existing metadata standards) (Alexopoulos et al., 2018[104]).
Doing so would enable more effective browsing and discovery of datasets, and also linking and combining
open government data from multiple sources.
Improving data quality and availability to inform investment and regional development strategies will help
Greece to better tackle key issues for the country’s development. For example, local governments need
better knowledge of the conditions in surrounding communities in order to identify functional linkages and
prioritise areas of joint action. Better data would also help in improving the definition of urban areas for
policy purposes, particularly in the capital city of Athens for which the spatial analysis unit is much smaller
than its Functional Urban Region (Chapter 3).
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) – a move
which benefits residents and investors as well. France’s urban planning agencies provide advice and
expert assessment on planning and land management issues and develop planning documents. They are
a centre of expertise on spatial planning and are linked to a national federation which shares best practices,
tracks major trends and provides opinions on major national and European debates related to spatial
planning. This type of expertise is particularly important for smaller municipalities that have more limited
capacity. The KOSTRA system in Norway has facilitated “bench-learning” and, by this means, informs
policymaking. Portugal’s Regional Development Composite Index (ISDR) monitors regional development
and informs in a simple manner both citizens and policymakers (Box 4.29).
Box 4.29. Using data for policymaking
Norway
Norway’s KOSTRA system is an electronic reporting system for municipalities and counties. It can
publish input and output indicators on local public services and finances and provide online publication
of municipal priorities, productivity and needs. KOSTRA integrates information from local government
accounts, service statistics and population statistics. It includes indicators of production, service
coverage, needs, quality and efficiency. The information is easily accessible via the Internet and
facilitates a detailed comparison of the performance of local governments. KOSTRA data is frequently
used by the local government themselves and by the media and researchers. Although individual local
governments could use KOSTRA more efficiently (e.g. by systematic benchmarking), the system has
helped facilitate comparisons of municipalities thereby promoting “bench-learning”.
Portugal
Portugal has developed the Regional Development Composite Index (ISDR) to monitor regional
development and inform in a simple manner both citizens and policymakers about the progress
achieved with regard to development. The ISDR relies on a conceptual framework that benefits from a
broad view of development that encompasses competitiveness, cohesion and environmental quality.
The ISDR is calculated annually for the Portuguese NUTS 3 sub-regions. Data collection is indirect and
the variables used to compute the composite index result from administrative procedures and statistical
operations within the National Statistical System. The ISDR has been issued on an annual basis since
2010 by the Portuguese National Statistical System. The local finance law establishes that central
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government grants to associations of municipalities depend on the regional performance as captured
by ISDR.
For Portugal, the greatest achievement has been having an overall composite index for regional
development with general acceptance (by national, regional and sub-regional institutions), once it is
produced by the National Statistics Institute, within the scope of the Portuguese National Statistical
System. It also allows for an outlook of each region in one of the three components: competitiveness,
cohesion and environmental quality.
Source: OECD (2019[53]), Effective Public Investment across Levels of Government: Implementing the OECD Principles,
https://www.oecd.org/effective-public-investment-toolkit/ (accessed on 16 August 2019).
Reinforcing the administrative capacity of regions and municipalities
As in many OECD countries, capacities in Greece vary largely across subnational governments. The low
level of capacities in certain regions or municipalities is probably one of the most important bottlenecks to
undertaking transformative and needed investments. Strengthening capacities at the subnational level is
crucial, not only to improve the capabilities to design and implement regional development policies but also
to move forward in the decentralisation agenda. The government’s decentralisation reform needs to be
accompanied by appropriate initiatives to ensure that the greater autonomy given to regions and
municipalities does not raise spatial inequalities.
Greek regions and municipalities are confronted with a double straitjacket in terms of quantity and quality
of staff. On the one hand, many subnational governments are understaffed and often do not have sufficient
personnel to deal with basic daily tasks. They also frequently lack the specialised staff to undertake specific
responsibilities such as land use planning. On the other hand, regions and municipalities confront a
qualitative challenge, as their staff sometimes lack specific skills, in particular in the use of new
technologies.
Overcoming staff shortcomings and lack of qualified civil servants
Territorial and decentralisation reforms in Greece have outpaced improvements in an administrative
capacity and professional skills. Since the crisis, the number of civil servants has been significantly reduced
– public employment was reduced by almost 10% between 2006 and 2015 in regions (OECD, 2019[105]).
The shortage of staff does not only affect EU funding-related tasks but the functioning of subnational
governments as a whole. The rule of one recruitment for five exits strongly affected local government as a
great number of the working force of the local entities was working under the status of temporary and
seasonal employment (Dimitropoulos, 2012[16]). It limited the capacity of regions and municipalities to hire
new and qualified professionals to undertake the new responsibilities devolved to them. Subnational
governments have difficulties, for example, in dealing with regulations that oblige them to publish on the
web local government decisions or managing the centralised system for public procurement (Torres
Pereira and Mosler-Törnström, 2015[26]). This is not a challenge exclusive to Greece; in the EU, for
example, two-thirds of subnational governments (65%) report that capacity to design adequate
infrastructure strategies is lacking in their city/region. More than half of subnational governments (56%)
report a lack of adequate own expertise on infrastructure (OECD-CoR, 2015[88]).
Greek smaller municipalities are especially affected by the lack of qualified personnel. Some Greek
municipalities face shortage not only of expert administrators carrying out specific technical duties but also
of personnel to perform even basic tasks (Torres Pereira and Mosler-Törnström, 2015[26]). For example,
some islands municipalities have only one or less than five employees that are practically unable to take
over the tasks provided by the Kallikratis reform. In those municipalities, the provision of public services is
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often based on voluntary contributions and engagement of individual citizens, third sector organisations
and elected officials (Council of Europe, 2017[13]).
If there is a lack of personnel to deal with basic tasks, the challenge due to the lack of specially qualified
staff such as civil engineers, lawyers and economists is even more acute. This is translated into poorer
service provision and, in island municipalities, this means that citizens sometimes need to travel long
distances to carry out simple transactions such as paying their water bills or local fees (Council of Europe,
2017[13]). 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 to island
municipalities.
Small municipalities depend to some extent on external assistance from larger municipalities. The
Kallikratis reform introduced some provisions to deal with the shortages of administrative capacities in
island municipalities. Article 204 of the Kallikratis Law, for example, specifies that the largest municipalities
in the island regions are obliged to provide full administrative support to other municipalities in the regional
unit that do not have the staff necessary to exercise the competencies transferred to them by the law.
Island municipalities may also sign inter-municipal co-operation contracts to implement public works
services and procurement and programmatic contracts (see above) with their respective region – a practice
that is often employed for the implementation of technical infrastructure projects (Council of Europe,
2017[13]).
The new 1:1 attrition rule offers an important opportunity for Greece to overcome administrative capacity
challenges. To make the most out of this opportunity, Greek authorities at all levels can engage in strategic
workforce planning in order to fill the positions in a smart way. Strategic workforce planning would assist
governments in anticipating possible future developments and maintaining a well-structured workforce of
an appropriate size, which is able to meet the changing needs of the public service in general in a costefficient manner. For this, it is important to conduct an adequate and rigorous competency assessment of
the capacity gap of municipalities and/or regions. In this task, the short-term operational dimension should
be distinguished from the longer-term strategic dimension. In the short term, Greek subnational
governments should ensure that the workforce is there for operational decisions. In the longer term,
planning should ensure that the workforce responds to the long-term perspective of where government
entities will be in a few years (OECD, 2017[42]).
For this, Greece might consider examples of OECD countries that are implementing competency
management. In addition to performance management, some countries like Korea are increasingly
considering competency management to identify the capabilities that senior managers should bring to their
jobs, set consistent standards and reinforce the desired values and culture of the public service (Box 4.30).
Typically, the required profile includes leadership capabilities, management skills, ability to achieve results
and personal integrity. Competencies are commonly used in recruitment and selection, succession
planning, identification of potential future leaders among middle management ranks, performance
management, training and leadership development.
Box 4.30. Competency assessment in Korea and Mexico
In 2006, the Korean government introduced a competency evaluation framework for senior civil service.
This framework has been used to appoint senior officials, regardless of seniority. Based on the
successful operation among senior officials, the competency evaluation framework was expanded to
division director-level officials in the second half of 2010. Competency evaluation has improved the
reliability and fairness of human resource management. In addition, with the results of the competency
assessment reflected in training, overall government competitiveness has been upgraded.
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Competencies subject to assessment include strategic decision-making and commitment to change, for
high-ranking government officials for example, along with skills required for effective organisation
management and efficient policy execution. Assessment focuses on work competencies needed to run
an organisation. Competencies are organised around three main areas, as shown below.
In Mexico, the National Council for Normalisation and Certification of Competencies (Consejo Nacional
de Normalización y Certificación de Competencias, CONOCER) is the authority in charge of
establishing competency standards and managing the National Competencies System, which aims to
promote economic competitiveness and educational development. It issues the accreditation of several
public and private institutions for the certification of competencies. Also in Mexico, the Federal Electricity
Commission (Comisión Federal de Electricidad, CFE) has been certifying procurement staff for more
than 15 years. The result has been a rise in the standards of procurement and it provides employees
with ample room for a career in the profession.
Source: OECD (2017[106]), Regional Demography, https://stats.oecd.org/Index.aspx?DataSetCode=REGION_DEMOGR.
Strengthening capacity building and learning-by-doing practices
Strengthening the capacities and professional skills of subnational staff is a necessary condition to ensure
that regions and municipalities can effectively cope with their responsibilities.
A majority of OECD countries have in place some mechanism to strengthen the technical skills of
policymakers. Out of a sample of 26 OECD countries, 18 have put in place, for example, technical
assistance for contract management capacity (e.g. procurement, public-private partnerships [PPPs],
among others) and a similar proportion have developed a specific strategy to strengthen national and
subnational capabilities to design and manage public investment projects (Figure 4.14) (OECD, 2019[53]).
Chile, for example, has a special department – the Academy of Regional and Municipal Capacity Building
to provide continuous training for regional and municipal public officials. In the context of digitalisation,
some OECD countries have also adopted new IT tools or joint e-government platforms to narrow the gaps
in capacity across regions or localities and facilitate peer learning. For example, KiTerritorial is a webbased toolkit developed by the Department of National Planning (DNP) in Colombia which offers specific
instruments to support local leaders in the formulation of their territorial development plans (PDT). In
Australia, an online mapping tool is being developed by the national government to assist applicants of the
Regional Growth Fund to determine the benefit, location and coverage of their projects.
Greek regions could take a more proactive role in capacity building processes. Some small island
municipalities resort to the expertise of the regions to prepare and mature technical projects related to the
construction and maintenance of critical infrastructure. However, this support depends to a large extent on
the willingness of regional authorities to support municipalities within their jurisdictions since they are not
obliged by law to do so. Technical assistance to prepare investment projects or planning instruments,
management support to implement programmes, projects or investments can be done more systematically
by regions, which often have more technical and administrative capacity than municipalities. Technical
support in regions also allow more targeted assistance as they are closer to their concerns than the national
government. Regions could also take a more proactive role in supporting critical projects that require crossjurisdictional co-operation and in encouraging peer learning practices. They could, for example, have the
mandate to incentivise municipal co-operation for investment projects financed through the National
Investment Programme or EU funds with technical support and as a political facilitator.
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Figure 4.14. Capacity building in OECD countries – Monitoring of the implementation of the OECD
Recommendation on Effective Public Investments across Levels of Government
Has your country introduced the policies/mechanisms listed below to reinforce the skills and capacities of national
and subnational public officials and institutions to better support public investment for regional development?
Technical assistance for contract management capacity
(e.g. procurement, PPPs)
Specific government strategy to strengthen their capabilities
to design and manage public investment strategies/projects
New IT tools to facilitate public investment management/reporting
Public investment management training at the national/subnational levels
Incentives to pool expertise across subnational governments
in technical areas such as procurement or PPPs
0
2
4
6
8
10
12
14
16
18
20
Note: Results of the OECD Monitoring Survey with a total of 27 respondents.
Source: OECD (2019[53]), Effective Public Investment across Levels of Government: Implementing the OECD Principles,
https://www.oecd.org/effective-public-investment-toolkit/ (accessed on 16 August 2019).
Box 4.31. Capacity building at the subnational level
Chile
The National Investment System (SNI) offers specialised training courses on the formulation and
evaluation of public investment projects (Capacitación en Formulación y Evaluación de Proyectos de
Inversión Pública) for national and subnational officials. It has a dedicated on-field training module and
regional workshops (Capacitación en Terreno y Taller Regional) for entities in charge of formulating
investment initiatives, mainly municipalities and other public services at the local level. The objective is
to develop the appropriate competencies of subnational civil servants in the formulation and preparation
of investment projects, as well as in the methodologies of social evaluation. The training sessions take
place in the municipalities and are designed by investment analysts from the Regional Office of the
Ministry of Social Development in each region. The timing is defined by the Regional Co-ordinator of
Training with the Investment Co-ordinator from the Regional Office. Training sessions are designed for
groups of 2 to 11 people.
Source: OECD (2019[53]), Effective Public Investment across Levels of Government: Implementing the OECD Principles,
https://www.oecd.org/effective-public-investment-toolkit/ (accessed on 16 August 2019).
Building the appropriate capacities at the local level is also a learning-by-doing process in which
subnational governments learn while acquiring more autonomy. This is why some countries have
implemented pilot experiences in the devolution of responsibilities to subnational governments. In Sweden
for example, two successful pilot experiences on asymmetric decentralisation were established at the end
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325
of the 1990s to transfer the responsibility of regional growth from regional state agencies (County
Administrative Boards) to regional political bodies (elected regional councils). Since then, the responsibility
has gradually been transferred from regional state agencies to regional political bodies in other counties
as well (OECD, 2018[1]). Pilot experiences allow policymakers to experiment and learn while avoiding
subnational governments with low capacities becoming overwhelmed with new responsibilities (OECD,
2018[1]). To build the capacities needed, the “learning-by-doing” process needs to go hand-in-hand with
regular, differentiated and targeted capacity building activities and technical assistance.
Simplifying rules to design and implement regional development policies more efficiently
Improving the regulatory environment is a precondition for Greece to successfully stimulate economic
activity, create jobs and raise productivity. In addition to economic effects, improving the regulatory
environment should also lead to better efficiency of public administration in Greece, reduced opportunities
for corruption and maladministration in public service and, therefore, increased trust in state institutions
and the government (OECD, 2014[78]). Over-regulation, overlapping or constantly changing regulations can
lead to higher costs, which can be burdensome especially for subnational governments with low capacities,
which in most cases are island or mountainous municipalities.
Improving the regulatory environment has been a priority for the Greek government
Since the crisis, a priority for Greece has been the improvement of the regulatory environment to ensure
the quality of regulation for policymakers at all levels of government. This is reflected by OECD indicators
that highlights the sharpest reduction in the rigidity of product market regulation between the end of 2007
and the end of 2012 among OECD countries (OECD, 2014[78]). These trends are echoed by World Bank
data that shows the business regulatory environment improved more in 2012 than during the six preceding
years (OECD, 2014[78]). In 2012, Greece enacted the Law on Better Regulation that states basic principles
for regulation, such as efficiency and transparency. The law, for example, makes it compulsory to conduct
a Regulatory Impact Assessment (RIA) for every primary law as well as an ex post impact assessment of
the regulations’ costs, benefits and impacts (Box 4.32). Draft regulations are published on a portal
(www.opengov.gr) to facilitate public consultation.
Box 4.32. Law on Better Regulation of 2012
The Law on Better Regulation adopted in February 2012 states the principles of Better Regulation –
including necessity, proportionality, effectiveness and efficiency of the regulation, transparency,
accessibility and the avoidance of controversial regulations – and mandates the regulator to comply
with these principles. In addition to ex ante RIA for every legislative draft or amendment to existing
regulations, it requires an ex post impact assessment of the regulation’s costs, benefits and impacts.
This must take place after three years and no later than five years after implementation. It also defines
steps and deadlines of public consultation procedures for new legislation, describes procedures for the
transposition of the EU law and reinforces the institutional framework for a regulatory policy through the
establishment of the Office for the Support of Better Regulation in the General Secretariat of the
government.
Source: OECD (2015[107]), OECD Regulatory Policy Outlook 2015, https://dx.doi.org/10.1787/9789264238770-en.
However, major challenges persist in fully implementing the Law on Better Regulation (OECD, 2015[107]).
Public consultations, for example, are usually informal and it is unclear how comments received are
considered. RIA quality is often poor due to the limited time to develop new drafts and ex post reviews of
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existing regulations, required by the law, have also rarely been used (OECD, 2018[5]). The OECD has also
identified that a major challenge for implementing the Better Regulation Law is the lack of budget and
appropriate skills within the Better Regulation Office of the General Secretariat of the Government (BRO),
which is responsible for the co-ordination of regulatory policy and oversight of the quality of RIAs, amongst
others (OECD, 2018[5]). To address this, the Ministry of Administrative Reconstruction is beginning an
extensive evaluation of existing legislation, with a view to curtailing the large “stock” of regulations (OECD,
2018[5]).
Figure 4.15. Composite indicators: Ex post evaluation for primary laws, 2018
Methodology
Systematic adoption
Transparency
Oversight and quality control
TOTAL 2015
iREG score
4
3.5
3
2.5
2
1.5
1
0.5
0
Note: Data for OECD countries are based on the 34 countries that were OECD members in 2014 and the EU. Data on new OECD member and
accession countries in 2017 include Colombia, Costa Rica, Latvia and Lithuania. The more regulatory practices as advocated in the 2012
Recommendation a country has implemented, the higher its iREG score.
Source: OECD (2018[108]), OECD Regulatory Policy Outlook 2018, https://dx.doi.org/10.1787/9789264303072-en.
Greece has also improved its public procurement regulation. Law 4412/2016 on public procurement
intends to solve a longstanding problem of fragmented legal framework where procurement regulation was
divided horizontally between sectors and vertically between levels of government (ICLG, 2019[109]). This
law has codified in a single act numerous legal acts and its provisions apply to all type of contracts
regardless of their estimated value and to all type of contracting authorities irrespective of their legal status.
The law also implements EU Procurement Directives in one single legislative act. One of the key significant
changes introduced by this law is the overhaul of rules regarding review proceedings as well as the
execution and monitoring of public contracts (ICLG, 2019[109]). However, by the end of 2018 – two years
after its introduction – the law had already been amended, modified or added to through specific articles
and paragraphs more than 25 times (ICLG, 2019[109]). There is also a generalised criticism that the law has
also made public tenders more rather than less complex. The limited capacity of local governments to
respond to the requirements of the new legal framework for public procurement has impacted municipal
public investment (Greek Government, 2019[28]).
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While Law 4412/2016 has been an important further step, there is still some room for improvement and
greater simplification, in particular merging stages of the bidding process (dead times), from the project’s
announcement to its contracting. It is also important to identify the possibility of shortening the time
requested for pre-approvals from the deconcentrated administration, which usually leads to a 1-2-month
delay for technical projects (e.g. the process of approval of environmental licensing of projects and
activities). For further simplification, when the law is amended, a transitional period could be given to
correct the standard tender documents. Furthermore, legislation is still not geared towards the electronic
monitoring of public contracts. A number of important issues that still need to be addressed include, among
others: the electronic monitoring of awarded contracts as well as the electronic recording of onsite
supervision results (“diary of works”), contract annulments, contract terminations and legal sanctions.
The Greek government has also put effort into improving regulations to attract businesses. Over the last
decade, Greece undertook extensive legislative reforms to reduce administrative burdens on SMEs and
improve the insolvency regime, currently in line with the OECD median level (OECD, 2019[110]). In addition,
in 2018, the country established the general business registry’s electronic one-stop-shop that offers
entrepreneurs the possibility to fast track their company registration upon presentation of the required data
and documents. This has led to a 70% reduction in registration costs (OECD, 2019[110]).
Further regulatory simplification is needed to improve regional development policy
outcomes
Despite this progress, Greece’s legal framework is considered complicated and strict, with an
overabundance of laws. Policymakers at all levels of government identify regulatory burden as one of the
main obstacles to effective and efficient use of regional development funds. Greece, as well as all EU
countries, needs to deal with administrative and regulatory burden arising from EU legislation as well as
the one stemming from its own national legislation. While the EU has made administrative simplification a
key priority for the next programming period, these efforts need to be echoed by the Greek national
government.
The administrative burden is particularly challenging for subnational governments, especially small
municipalities, which often lack the adequate capacities to cope with legal requirements. Regions and
municipalities often face lengthy administrative and regulatory procedures for legal checks and project
approval. All municipal and regional authority decisions must be legally vetted by the state decentralised
authorities, which often are viewed as a source of considerable delays and bureaucratic impediments
(Council of Europe, 2017[12]). Then, municipalities often need to wait 1-2 years after developing a proposal
to receive the necessary licences for public works. For example, some projects require authorisation from
the Ministry of Archaeology and the Ministry of Forestry, even in wetlands with no forest. Other examples
include delays in managing streets, for which authorisation is often required from the municipal authorities,
the regions and central government’s Ministry of the Environment (Council of Europe, 2017[12]). It has been
documented that, in some cases, municipalities could not get building permits for a new hotel because of
the burdensome and relatively unaccountable procedures (Council of Europe, 2017[12]). The municipality
of Thessaloniki reports having to obtain 33 authorising signatures from the national government in order
to install a sculpture that is 5 metres from the coastline.
Regulatory burden also affects Greek businesses, limiting the contribution of the private sector to
stimulating economic activity, creating jobs and raising productivity. In 2014, an OECD project that
measured and identified options for reducing administrative burdens in 13 areas ranging from company
law to public procurement, tax law, and agriculture and fisheries, estimated that the cost to businesses of
administrative burdens was about EUR 3.28 billion annually (OECD, 2014[78]). The study provides sectorspecific concrete recommendations on the 13 areas to reduce administrative burden, as well as general
recommendations focused on broader regulatory reforms. For example, for agriculture, information
obligations represent a total administrative cost of EUR 315.85 million to operators in Greece. Of this,
EUR 289.35 million (92%) were classified as administrative burdens. Some of the concrete
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recommendations to reduce administrative costs and burdens in agriculture include reducing the
supporting documents required for Rural Development Programme applications or improving Rural
Development Programme forms and templates by applying form design techniques to help applicants
understand how to complete more of the form without expert help.
Box 4.33. Measurement and reduction of administrative burdens in Greece
In 2014, the OECD engaged with the Greek Ministry of Administrative Reform and e-government in a
project to measure and identify options for reducing administrative burdens in 13 areas. Administrative
burdens, stemming from 20% of laws and regulations in the sectors identified as the most burdensome
and/or irritating, were quantified. The total administrative burdens identified were EUR 3.28 billion and
administrative costs EUR 4.08 billion annually. Over three-quarters of the administrative burdens
measured accrue in three of the priority areas: tax (VAT), company law and annual accounts, and public
procurement.
The report makes 86 specific recommendations to reduce unnecessary administrative burdens and/or
irritation factors for businesses in Greece. It also provides some more general recommendations that
stress the need to focus on broader regulatory reforms which include setting up a proper institutional
framework to support regulatory quality and better implementation of the 2012 Law on Better
Regulation. These general recommendations include:
Broadening and widening administrative burden reduction projects on other costs than just the
administrative ones and citizens and public authorities.
Continuing the process of quantifying administrative burdens; cautiously, however, and with
efficiency in mind. Qualitative methods should complement the quantitative ones, to better
target efforts.
Strengthening the institutional structures supporting burden reduction, moving to a more
bottom-up approach, providing sufficient political support and improving co-ordination through
the establishment of a high-level committee.
Developing 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.
Developing an evaluation strategy for burden reduction that also focus on other outcomes and
effects for society than pure administrative burden reduction.
Moving from administrative burden reduction to other broader approaches to reforming
regulation, including programmed reviews of existing regulations.
Source: OECD (2014[78]), Measurement and Reduction of Administrative Burdens in Greece: An Overview of 13 Sectors,
https://dx.doi.org/10.1787/9789264213524-en.
The Council of Europe has documented administrative and regulatory burdens and has provided specific
recommendations that would help Greece in achieving a more efficient system. Among these, the council
suggests that Greece could introduce more effective and better-defined time limits into legal bases that
might be accompanied by “silent-is-consent” rules, implying that in the event of non-response by an
authority, the applicant can assume the request was authorised. This specific recommendation might
accelerate some procedures preventing subnational governments from waiting for responses and
approvals from the central entities (Council of Europe, 2017[12]). Administrative simplification is also at the
core of the OECD Council Recommendation on Regulatory Policy and Governance stating that countries
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should “conduct systematic programme reviews of the stock of significant regulation against clearly defined
policy goals, including consideration of costs and benefits, to ensure that regulations remain up-to-date,
cost-justified, cost-effective and consistent, and deliver the intended policy objectives”.
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Notes
1
Deconcentration refers to the delegation of central government tasks to non-elected central government
units based in regions. Deconcentrated state services represent the central government at the territorial
level and are responsible for implementing national policies at the regional and local levels, ensuring that
they are in line with subnational government policies. Deconcentrated state services may also provide
national public services at the territorial level.
2
Values from the Greek Tourism Organisation. Numbers can vary with size definition.
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
337
3
This has been set up in view of line ministries being responsible for sectoral policies and are represented
vis à vis ROP MAs by the Executive Units (see ESF inclusion policies, culture, education infrastructure,
health, etc.) but not regarding planning of specific regional policy.
4
In 2010, the EC, the European Central Bank (ECB) and the International Monetary Fund (IMF),
colloquially called the European troika, agreed with the Greek government to a three-year financial aid
programme that was outlined in an MoU. A second MoU was signed in 2012 and the third was signed in
2015. The third and last Economic Adjustment Programme expired in August 2018.
5
For midterm regional planning, a four-year operational programme is elaborated. The purpose of the
four-year regional OPs is to monitor the implementation of the Spatial and Development Planning at the
regional level and to contribute to planning feedback and revision, in the context of the existing conditions.
The four-year plan is set out annually in an Annual Action Plan. The technical programme is part of the
Annual Action Plan. The annual budget for each year as well as the annual technical programme must be
in line with the guidelines and assumptions of the relevant Annual Action Plan, as well as with the four-year
OP.
6
These are still under discussion at the time of drafting this report.
7
Civic engagement is one dimension of citizen well-being and is a composite indicator based on voter
turnout and stakeholder engagement for developing regulations.
REGIONAL POLICY FOR GREECE POST-2020 © OECD 2020
OECD Territorial Reviews
Regional Policy for Greece Post-2020
The Territorial Review of Greece offers analysis and policy guidance to strengthen regional development
and well-being. It examines Greece’s regional development framework, the EU Cohesion policy and multilevel
governance in Greece. Since the global financial crisis, Greece has undertaken an impressive number
of structural reforms. Recovery initiated in 2017 but the current COVID-19 pandemic is slowing down Greece’s
efforts. The country is now facing a number of strategic development priorities including fostering digitalisation,
improving entrepreneurial and business ecosystems, and addressing environmental challenges. These new
priorities must also tackle existing social challenges and mitigate rising inequalities. The Review examines
a range of policies that have the potential to propel inclusive growth in Greece’s regions and improve the quality
of life for their residents. It stresses that policies for economic growth, social capital and environmental
sustainability are more effective when they recognise the different economic and social realities where people
live and work. OECD work illustrates the importance to align place based regional development strategies
with sectoral policies (support for private investment, infrastructure and human capital policies) in each place
to generate multiplier effects. To fulfil this task, Greece will need to continue advancing the reform of its
institutional and fiscal multi-level governance system.
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