OECD: Slams Greek courts – What it recommends for SMEs, work, competitiveness

The recommendations of the Organization for Economic Co-operation and Development (OECD) for Greece may be positive, but with many footnotes as the challenges for the competitiveness of the economy still remain and prevent important investments. In particular, the OECD stands on the effectiveness of the judicial system, recommending changes.

OECD says significant steps have been taken on the reform front, especially in the arrangements to improve the business environment, but challenges remain, especially in terms of the responsiveness of the judicial system. It also recommends the simplification of administrative procedures and the “communication” of the benefit of alternative dispute resolution mechanisms in order to improve the effectiveness of the legal system.

On the business front, OECD reiterates that the Greek economy is dominated by small enterprises (SMEs) with low productivity and limited growth potential, dragging down overall productivity. Price competition remains low in many markets, while regulatory burdens on operating in some key sectors and redeveloping land are preventing new entrants. Non-performing loans weigh on the banking sector’s ability to finance investment. In this area it recommends removing barriers to entry, giving priority to professional services and simplifying land zoning rules.

In the labor market, the Organization finds that workers change jobs less frequently than in most OECD countries, but the green and digital transition will require many workers and businesses to adapt their operations. That is why there are recommendations to increase participation in quality active labor market policies and training, including in all sectors and areas affected by the transition to the green economy.

Digital transition

Public services are digitizing rapidly, but progress in the private sector is slower due to weak investment in equipment, software, training and organization, especially among the many small businesses, the OECD reports.

In this it recommends:

– Gradual reduction of withdrawal of social benefits for those entering the workforce and in-work benefits for the low-paid.
– Promote women’s participation in paid employment by encouraging the provision of more flexible working arrangements.
– Improving incentives to hire new workers with limited experience by reducing employer social security contributions for new hires.

Energy transition

The OECD finds that carbon (GHG) emissions have fallen, but further progress is needed. Greece’s economy is more carbon intensive than most OECD economies. However, large investments are required for the shift to renewable sources and the adaptation of energy use, for the implementation of which Greece’s recovery and resilience plan is taking measures. Improving the energy efficiency of older homes will help to contain energy consumption, reduce emissions and reduce energy poverty.

In this context, the OECD recommends that once prices in the energy market stabilize, Greece should gradually increase prices for emissions not covered by the EU emissions trading system to a floor consistent with achieving zero carbon target. Also put forward a timetable for stricter minimum energy efficiency standards, to be applied to all existing buildings by 2050. Essentially there will be a high standard of support for renovations, using more private finance through interest-subsidized loans that can be repaid through savings energy.