3. Policies and strategies for place-based development and inclusive growth

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.

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 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.

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.

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 (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 countries7 (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”.

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 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).

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.

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 sector13 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.

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.

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).

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

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

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 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.

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

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.

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.

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 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.

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.

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 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. 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. 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. 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. 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.

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.

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 place-based 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.

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.

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.

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 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”.

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:

  • 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.

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 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.

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]).

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 Second Economic Adjustment Programme for Greece35 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 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).

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]).

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 mechanism38 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.

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).

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 inter-municipal 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.

  • 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]).

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 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 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 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 inter-municipal 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 rural-urban linkages. But broader institutionalised practices are needed beyond these funding mechanisms.

  • 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).

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.

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%).

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).

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%).

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).

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).

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 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.

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 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.

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 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 medium-sized 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 low-cost 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 – 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.

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).

  • 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).

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 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.

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 small-scale 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.

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 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.

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 export-oriented 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).

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 agriculture-focused 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 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.

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.

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 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.

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:

  • 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.

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.

  • 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.

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]).

  • 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.

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 well-developed 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 value-added 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 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.

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, user-driven 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.

  • 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).

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]).

The blue economy is linked to many other economic activities and its impact goes beyond the above-mentioned 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]).

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 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 knowledge-based 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).

  • 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).

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 value-added 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 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]).

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 (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.

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

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]).

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]).

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 future-oriented 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.

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 cross-sectoral strategy is difficult to design and implement. This is the case also of Greece, where there 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]).

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, inter-ministerial 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. 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 high-volume 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.

  • 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 agro-tourism 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.

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).

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.

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).

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 long-term 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".

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.

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 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

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 tertiary-educated 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]).

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.

    • 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.

    • 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.

    • 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]).

    • 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]).

    • 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]).

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 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]).

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 employment policy design system, a larger use of Local Development Pacts77 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

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 self-employment) 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 non-standard 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]).

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]).

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]).

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. 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]).

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.

Numerous policy measures address poverty and social exclusion such as minimum income86 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 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, non-institutional 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.

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.

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 stop-gap 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).

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

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 (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]).

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 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

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:

    • Funding stability. Ensure that public financial support goes beyond short-term contract funding so that longer-term employment plans can be developed.

    • 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.

    • 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 individuals to offset the costs stemming from the loss of productivity associated with hiring individuals whose job performance is less than normal.

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 all projects) and short on tourism (5%) and environment (4% for waste management and water supply) (PwC, 2018[115]).

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 post-secondary 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]).

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

    • Promote economic growth and efficiency.

    • Increase regional and international connectivity.

    • Ensure environmental sustainability.

    • Increase personal accessibility and social inclusion.

    • Ensure safety and security.

  • Investments pillars

    • Enhancing safety, sustainability, efficiency and competitiveness of transport.

    • Building stronger international land connectivity.

    • Supporting the tourism sector.

    • Enhancing connectivity to the Greek islands.

    • Improving the efficiency of the logistics sector.

    • Developing an efficient urban and suburban public transport system to support national transport system.

    • Fostering regional mobility and growth.

    • 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.

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]).

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.

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]).

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 non-developed 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 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.

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]).

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 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.

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.

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

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.

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 long-term 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.

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).

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.

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.

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.

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 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 Desertification113 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 air-polluted 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 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]).

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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← 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/food-farming-fisheries/key-policies/common-agricultural-policy/rural-development/country/greece_en; https://ec.europa.eu/fisheries/cfp/emff/country-files.

← 11. 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.

← 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 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.

← 18. 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.

← 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.

← 21. Source: Ministry of Development and Investment; “Law4635/2019: an overview”, KLC Law Firm, 5 December 2019. www.klclawfirm.com.

← 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.

← 23. 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.

← 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 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 Education-Research 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.

← 33. 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.

← 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.

← 44. 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).

← 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-.

← 48. 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.

← 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 ii) EPANEK has funded the programme ΕΡΕΥΝΩ-ΚΑΙΝΟΤΟΜΩ-ΔΗΜΙΟΥΡΓΩ (Research-Innovate-Create) 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-2019-the-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).

← 71. 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”.

← 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 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 non-tradeable 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.

← 79. “Recent Employment Developments and the Productive Model of the Greek Economy”, Institute of Labour – Greek General Confederation of Labour’s - INE- GSEE, July 2018.

← 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-agenda-migration/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&langId=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-Achievement-Details/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/.

← 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]).

← 101. OECD Environmental performance reviews 2010; OECD Territorial Reviews of Greece 2019 – Answers to questionnaires and from interviews.

← 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/grdp-en/.

← 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-to-expand-to-all-regions-of-greece-by-2022.

← 109. OECD Territorial Reviews of Greece 2019 – Answers to questionnaires and from interviews; OECD Environmental performance reviews 2020 – Greece (forthcoming).

← 110. Under the Clean Energy for all Europeans package, EU countries are required to draft 10-year National 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’).

← 114. OECD Territorial Reviews of Greece 2019 – Answers to questionnaires and from interviews; OECD Environmental performance reviews 2020 – Greece (forthcoming).

← 115. OECD Territorial Reviews of Greece 2019 – Answers to questionnaires and from interviews; OECD Environmental performance reviews 2020 – Greece (forthcoming).

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