4. Multi-level governance for regional development

As discussed in Chapter 3, Greece would benefit from place-based development strategies where territorial and sectoral policies meet and interact in each place, generating multiplier effects. Place-based policies might also help Greece exploit the growth potential of each region and ensuring that growth benefits reach different population groups and places – from continental, mountainous and island localities. A place-based approach to regional development and investment – compared to spatially blind policies require an adjustment of the objectives, the intervention scale, the tools and actors involved in the policymaking process, and how they interact during the whole policymaking process.

Moving towards a stronger place-based approach to regional policy in Greece as recommended in Chapter 3 requires finetuning the overall multi-level governance (MLG) system of the country. This is the approach taken by Greece since the early 2010s, with deep changes in the Greek institutional and fiscal MLG system. Since 2010, Greece has established a new architecture of the MLG system to deliver regional and local development policies. A number of improvements have been made and the shift towards a greater place-based approach to regional development policy is taking place, through the following changes: i) a decentralisation agenda, in particular regionalisation; ii) a more strategic approach to European Union (EU) funds management and a greater regional approach in the 2014-20 programming period compared to the previous one.

Adopting a systemic approach to multi-level governance is crucial to enhance the effectiveness of public investment and EU funds management more specifically. Indeed, institutional quality and governance processes affect the expected returns to public investment and have a positive influence on the capacity of public investment to leverage private investment, rather than to crowd it out (OECD, 2018[1]). Evidence shows that government quality matters for regional growth and that, in particular, government quality improvements are essential for low-growth regions (Rodríguez-Pose and Ketterer, 2019[2]). Thus, delivering a place-based regional policy requires a sound multi-level governance system that ensures co-ordinated policy measures, the involvement of a broad range of stakeholders and the adaptation to the specific conditions of regions and localities (OECD, 2019[3]).

Fine-tuning the multi-level governance system is all the more important in the current COVID-19 crisis. The COVID-19 global crisis has a strong territorial dimension impacting differently regions and cities within countries, some of them being harder hit than others. The combination of national and subnational measures and an ability to work together is fundamental for an effective response to this crisis. Regional and local authorities are responsible for delivering critical short-term containment measures and more long-term recovery activity – from health and social care to economic development and public investment. A co-ordinated response by all levels of government can minimise crisis-management failures. Effective crisis response so far highlights that robust vertical and horizontal co-ordination mechanisms are more important than ever. Furthermore, national and subnational governments will be leading the economic recovery effort, including through regional and local recovery plans that are likely to include business support and stimulus packages targeting public investment (OECD, 2020[4]).

Regional policy in Greece is largely driven by the European Cohesion Policy. Investments funded through European Structural and Investment Fund (ESIF) account for 80% of public investment in the country (OECD, 2018[5]). Structural funds have permitted Greece to invest in new infrastructure and modernise small- and medium-sized enterprises (SMEs), among others. Cohesion Policy in Greece has also been a key contributor to reducing territorial inequalities, in particular between island and continent regions and municipalities.

To make the most of regional development policies in Greece it is important to focus on improving the whole multi-level governance system of the country. This means: i) putting a strong focus on improving the governance of EU funds within the country as they represent the largest part of regional policy in Greece; and ii) using these improvements as leverage to improve the whole multi-level governance system.

To assess the current multi-level governance system of regional development policies in Greece and provide actionable recommendations in this matter, it is necessary to look at two interrelated dimensions:

  1. 1. Decentralisation and regionalisation reforms: Greece has established, in a short amount of time, a new architecture to deliver regional polices. Decentralisation reforms undertaken during the last 30 years have resulted in the creation of a new tier with directly elected regional governments responsible for the implementation of regional development policies. With decentralisation reforms Greek regions and municipalities can also have greater ownership over development policies, playing a more active role in the definition of priorities.

  2. 2. The multi-level governance of regional policies: Regional policy in Greece is mainly delivered through investments financed by European funds. For the current programming period 2014-20, Greece has introduced a number of adjustments to the management and control system (MCS) that govern the use of European funds in the country, including the creation of new institutions as well as tools to ensure the appropriate co-ordination among them and more strategic use of funds. Finetuning the multi-level governance framework for the implementation of EU funds in the country is a lever to improve the multi-level governance system as a whole, encompassing also policies and investments funded through the national investment programme.

Considering these two interrelated dimensions, this chapter provides a comprehensive assessment of the multi-level governance system as a whole in Greece. It is informed by research interviews conducted with key actors from across Greece’s 13 regions in order to understand how the multi-level governance framework and instruments meet the needs of diverse regional contexts and by questionnaires answered by Greek experts, data analysis, academic and grey literature.

The chapter first focuses on the territorial and decentralisation reforms that have taken place during the last years in the country and assesses how these reforms can further contribute to support the regional development policy agenda. The second part of the chapter focuses on the need to pursue the progress made in the 2014-20 programming period for the strategic governance of EU funds. It then analyses how EU funds may be further used as a lever to strengthen the overall multi-level governance system for regional development and public investment.

Greece has established, in a short amount of time, a new architecture to deliver regional polices. Decentralisation reforms undertaken during the last 30 years have resulted in the creation of a new tier with directly elected regional governments responsible for the implementation of regional development policies. By granting regions and municipalities more responsibilities, the decentralisation and regionalisation reforms have allowed Greek subnational governments to play a more active role in the definition of their own development.

As decentralisation in Greece is relatively new, responsibilities are continuously evolving, including responsibilities for elaborating and delivering regional policy, which sometimes overlap or are unclear. In its current efforts to assess, clarify and potentially reassign responsibilities to the regional level, it is crucial for Greece to clearly define the roles of and interactions between the different actors involved in the design and execution of policies and ensure co-ordination.

In the transition towards a more locally-led policymaking to deliver place-based policies, the degree to which Greek regions and municipalities are policymakers, as opposed to policy “takers”, is still limited. Greek regions and municipalities have low autonomy compared to other OECD countries as they are highly reliant on central government and EU funds to carry out their activities. This in part results from the post-recession context, which has put strong pressure on regional and local governments. Limits on hiring of new employees and significant budget shortfalls limit the capacity of regions and municipalities to deliver on their new roles. Further strengthening the capacity of regional and local actors to identify their strengths and opportunities and to build on them is fundamental to the success of modern regional policies. As regional governments build capacity and increase own-source revenues, their role as policy “takers” will change and they will be better places to adopt tailored solutions to local needs.

Greece forms part of a large group of countries, within and beyond the OECD, that are increasingly providing subnational governments, and especially regions, with more responsibilities and autonomy. Since the 1960s, European countries are increasingly decentralising responsibilities from the national level to the second tier of government to take advantage of economies of scale in public service provision, improve co-ordination between municipalities and intermediate levels of government, and increase competitiveness, among others (Box 4.1). Regions have a key strategic role, relative to local and national governments, to implement a more integrated territorial development planning. This is why strengthening the Greek second-tier needs to be seen as a strategic decision to enhance productivity and ultimately inclusive development across the country.

The first major change took place in 1997 when the Greek government adopted the Kapodistrias reform (Law No. 2539/1997). This reform reorganised the country’s administrative divisions reducing the number of local authorities (communities and municipalities) and providing municipalities with more competencies. This reform also aimed at modernising the economic and administrative management of municipalities. It was part of a general effort to increase transparency and reduce the levels of corruption, especially at the local level. The Politeia Programme of 2000, for example, contemplated the development of new technologies and adoption of modern techniques of administrative control, the adoption of more efficient financial management measures for public services, the reduction of administrative procedures and the facilitation of citizen participation, amongst others (OECD, 2001[6]).

In 2010, the Kallikratis reform (Law No. 3852/2010) rearranged the distribution of power in favour of subnational governments. Through institutional and territorial restructuring, the Kallikratis plan sought to rationalise resources and local spending by creating economies of scale and improving service delivery to citizens and enterprises at the local level. The reform put special emphasis on state efficiency and the improvement of the management of human and financial resources.

To this end, the 13 administrative regions were transformed into self-governed regions with directly elected regional councils. These 13 administrative regions were first introduced in 1986 (Law No. 1622/1986) with the unique purpose of co-ordinating regional development policies and managing EU Structural Funds (Kalimeri, 2018[7]). The Kallikratis reform transformed these administrative entities into new self-governed regions with a regional council composed of members elected by direct universal suffrage for a period of five years. This deliberative assembly is the regional authority’s decision-making body (Figure 4.2). The regional council is composed of a number of committees, including the financial and the regional committees for consultation. On the executive side, the Executive Committee is mainly responsible for co-ordination of policies, while the Economic Committee is responsible mainly for economic affairs, budgeting, public procurements and tendering procedures. Regions can also create a regional “development enterprise” (private law entity) in order to promote development projects, as well as, in some cases, non-profit companies (Hlepas, 2015[8]).

A number of competencies were transferred to regions, notably in the areas of regional planning, transport, employment and education, amongst others. The transfer of competencies followed, in general, the homogeneous principle by which all regions were transferred the same competencies and functions at the same time. The Executive Committee, composed of the head of the region and the deputy head, is responsible for monitoring the implementation of regional policy.

The Kallikratis reform introduced a degree of differentiation in the transfer of competencies for urban areas (see section “Making the most of Greece’s metropolitan areas). The reform provided the Metropolitan Region of Attica and the Metropolitan Unit of Thessaloniki with more responsibilities in four strategic sectors: transport and networks, environment and the quality of life, civil protection and security, spatial planning and urban regeneration. The metropolitan status of these regions aimed mainly at promoting environmental protection, improving quality of life and urban and land planning in these areas. Some of their main tasks include implementing European development policies and promoting regional development projects (Kalimeri, 2018[7]).

Together with the 13 regions, the reform created seven deconcentrated1 authorities headed by a general secretary appointed by the Ministry of the Interior (Figure 4.2). These deconcentrated administrations are since then responsible for overseeing regional governments and municipalities to ensure the legality and transparency of their actions and decisions. They also have responsibilities in regional and urban planning and environmental protection, as well as in migration, citizenship and energy policies. As in other OECD countries, such as France, Italy, Poland or Sweden, having such state representatives at the territorial level means that the central level continues to play a key role in implementing national policies at the local level (OECD, 2017[10]).

At the same time, the number of municipalities was reduced from 1 033 to 325 through a top-down process of mandatory mergers. This important reduction of municipalities is generally considered a major achievement (Council of Europe, 2017[12]). The reform established a one-island one-municipality principle, with the exception of those with Polynesian character (“archipelagos”) and Crete which comprises 21 municipalities (Council of Europe, 2017[13]). With this restructuring, the average size of municipalities increased significantly; municipalities now average 33 200 inhabitants, which is well above of the OECD average of 9 700 inhabitants and the EU28 average of 5 900 (OECD, 2019[14]). A reduced number of municipalities facilitates more efficient policymaking by taking advantage of greater economies of scale in service delivery and infrastructure investments.

The 325 municipalities have a municipal council, composed of members elected by direct universal suffrage for a 5-year term. This Deliberative Assembly is the decision-making body of the municipality. The municipal council is composed of a number of committees including the Financial Committee, the Quality of Life Committee and the Board of Immigrant Integration (Figure 4.2). The Executive Committee is composed of the mayor and deputy mayors and monitors the implementation of municipal policy, as adopted by the municipal council.

The Kallikratis reform has conferred more responsibilities to municipalities. They have competencies over urban planning and environment being responsible for the design and implementation of local land use and statutory plan. They also issue building permits and monitor their implementation. The construction and management of waste disposal facilities is also under municipal responsibility. In terms of employment policies, they take over employment support policies and citizens services centres. For education, they care of adult day care centres, they set up and manage pre-school education centres, and construct and maintain schools and sports venues. For transport, they have responsibilities regarding road network and traffic management.

While the Kallikratis reform follows a homogeneous principle for the assignment of competencies, functions, and internal structures of municipal authorities (as it is the case for the regional level), the law also considers a certain degree of differentiation for island and mountainous municipalities. The law grants the possibility to island municipalities to be conferred more competencies in four sectors, namely: i) agriculture and fisheries; ii) natural resources, energy and industry; iii) transport and communication; and iv) planning and environment. The law also considers that, in such cases, island municipalities would receive additional personnel and technical infrastructure. However, the decree to apply this provision considered by the law has not yet been adopted and, in practice, these competencies are now in the hands of the regions (Council of Europe, 2017[13]).

The compliance with austerity measures explains the reform’s hastily enactment (CEMR, 2013[15]). The implementation of the Kallikratis reform needs to be understood and assessed in the context of the Greek government-debt crisis and the memoranda of understanding (MoUs) signed by Greece, with the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF) in 2010, 2012 and 2015. These financial aid packages, and in particular the first and the second, had specific provisions concerning local government’s role in ensuring austerity (Kalimeri, 2018[7]). The second MoU set specifically rigid targets for the reduction of personnel and put a restriction on hiring (Dimitropoulos, 2012[16]). The amalgamation and reduction of the number of municipalities and public employees responded to the general effort in creating a smaller state and cutting public spending.

The economic and fiscal crisis affected the success of the decentralisation reform’s implementation. Perceived as imposed, local actors did not engage properly during the design and implementations processes. Actors from regions and municipalities could not entail in any negotiation process and had to accept memorandum provisions, undermining the commitment of local actors to a more collective implementation of the reform (Hazakis and Ioannidis, 2014[17]; Ioannidis, 2016[18]; Ioannidis, 2015[19]). Not only decentralisation reforms but many policies have been imposed on the Greek state through bailout conditions and this has impacted public trust in politicians and European institutions alike. Indeed, while the proportion of citizens who have a positive image of the EU in Greece has increased by 8 percentage points in the last 2019 Eurobarometer survey, still 62% of the population tend not to trust in the EU, the higher ratio among EU countries (EC, 2019[20]; Dijkstra, Poelman and Rodríguez-Pose, 2018[21]). This context of mistrust might affect the degree to which subnational actors own the reform and the degree to which they perceive it as a promising way to enhance the productivity and development of regions and municipalities.

While Greek regional and local actors are eager to handle more responsibilities, there is a widespread feeling that the reform is incomplete. In particular, actors have expressed that the reform needs some adjustments to reflect regional disparities in terms of resources, capacities and geographic characteristics. The weak ownership and the difficulties to communicate the advantages and challenges of the reform have been also affected by the rooted centralised organisational culture of the Greek public sector.

The fast implementation of decentralisation and regionalisation reforms in Greece, especially the Kallikratis plan, has also posed important challenges to the regions and municipalities, which often do not have the adequate institutional, administrative and financial capacities to deal with the new responsibilities. Building capacities at the subnational level requires time and is often a learning-by-doing process. Therefore, it needs a long-term commitment from central and subnational government levels (OECD, 2019[22]).

In a context that imposes enormous challenges, regional governments and municipalities have done important work in dealing with the new tasks they have been assigned. At the local level, administrations actively responded to unprecedented demands for social services, which have been aggravated by the current refugee and migration crisis affecting local communities (Council of Europe, 2017[12]).

Success with decentralisation reform depends on a number of preconditions (OECD, 2019[22]). Among these, clarifying the responsibilities and functions assigned to each government levels is fundamental. Other preconditions include allowing for territorially specific policies and the possibility for asymmetric decentralisation, with differentiated sets of responsibilities given to different types of regions/cities, in particular the metropolitan areas. Such mechanisms are critical to providing institutional and fiscal arrangements that best respond to local needs. Greece needs to address these preconditions in order to ensure that decentralisation reform is an enabling tool to foster productivity and social inclusion across the country. The OECD has identified ten guidelines to make decentralisation work (Box 4.3) which are key elements that need to in place to enable effective outcomes from decentralisation policies. Some of these key elements will be addressed in detail in the following sections.

Despite the transfer of responsibilities foreseen by the Kallikratis reform, Greece remains among the most centralised countries of the OECD in terms of subnational spending together with Chile, Ireland, New Zealand and Turkey. Subnational expenditures in Greece accounted for 3.5% of gross domestic product (GDP) and 7.1% of total public expenditure in 2016, the lowest level in the OECD (EC, 2018[23]). While public expenditure in Greece is relatively high when compared to the OECD average, subnational public expenditure is considerably lower than the OECD average, even when considering only unitary countries (Figure 4.3). Overall, the share of subnational expenditure (as of GDP and total public spending) has not increased compared to 1995 (OECD/UCLG, 2019[24]). The share of staff spending at the regional and municipal levels (10.6%) is also among the lowest in the OECD and well below the OECD average for unitary countries (43%) (EC, 2018[23]).

The reduced share of public expenditures of subnational governments results, in part, from the fiscal consolidation measures taken by Greece, as well as the compliance with the MoUs. Fiscal consolidation measures resulted in several budget cuts, including the downsizing of the subnational government public sector through staff reduction, limitations in hiring new and qualified staff and pay cuts. Between 2010 and 2013, the Greek civil service was downsized by around 19% at the subnational level and subnational spending decreased by 2.8% per year in real terms between 2007 and 2017 (OECD/UCLG, 2019[24]).

The modest share of subnational expenditures also reflects the fact that some of the most important public service delivery systems, such as public education, public health services and social protection, are subject to direct control by the central government (OECD/UCLG, 2019[24]). Moreover, regional expenditure is subject to special restrictions controlled by the State Treasury and the Court of Audit (Article 98 of the Constitution), which also controls public contracting (Hlepas, 2015[8]).

Greece also belongs to the group of countries with limited subnational investment. In Greece, regions and municipalities are only responsible for 18.5% of total public investment – the third-lowest rate in the OECD after Chile and Ireland, a rate that is much lower of the average of OECD unitary countries of almost 51% (Figure 4.4). The low level of public investment at the subnational level is a result, at least partially, of the crisis: between 2008 and 2017, public investment at the subnational level decreased on average 10% per year in real terms. This number is also relatively low as an investment at the local level is primarily funded by the state and through EU Structural Funds, and the corresponding resources do not always appear in local budgets (Torres Pereira and Mosler-Törnström, 2015[26]).

However, investment remains one of the most important tasks of subnational governments in Greece as it represented 19.3% of their total expenditure in 2016, above the OECD average for unitary countries of 13.8% (EC, 2018[23]). The majority of local investment (64%) goes to economic affairs and transports (road networks, urbanisation projects and land acquisition, etc.) while housing and community amenities (street lighting, water supply networks, etc.), environmental protection (sewage systems, green areas) and general public services (administrative infrastructure, buildings and equipment) accounted for the same share (around 9%-10%).

The crisis had a significant impact on subnational government revenues, which decreased, on average, 2% per year between 2007 and 2017 in real terms (OECD/UCLG, 2019[24]). This decrease came particularly from cuts in grants by the central government, which were reduced on average by 3.5% per year in real terms during those 10 years.

Greek subnational governments rely heavily on central government transfers, especially the regional level. In 2016, central transfers accounted for more than 65% of subnational government’s revenue, well above the OECD average for unitary countries that reaches 48.8% (Figure 4.5) (EC, 2018[23]). Revenues of regions depend almost exclusively on state grants, which represent 95% of regional revenues. Regions still do not collect taxes or raise any revenue to fund specific projects. Taxes, fees, charges and rates set by law are a negligible part of regional revenues and ordinary resources essentially come from the special grants and the so-called central autonomous funds (CAF) (Torres Pereira and Mosler-Törnström, 2015[26]). Still, subnational governments have had to raise own-revenue sources (tax revenues, user fees) due to recent fiscal adjustment measures combined with successive waves of responsibility transfers from the central to local levels. As a result, the share of tax revenues and user fees in local revenues has risen while the share of grants has fallen, reflecting a small decline in local government financial dependence on state funding (Greek Government, 2019[28]). Municipalities have greater discretion than regions over their revenues. Almost one-third of municipal revenue comes from municipal fees, taxes and charges (Torres Pereira and Mosler-Törnström, 2015[26]).

At the municipal level, the amount of the grants coming from the central level are defined by fixed percentages of state revenues on property tax, income tax and value added tax (VAT). The allocation of the central grants depends mainly on two variables: the number of permanent population registered in municipalities – which is the most determinant one – and a variable that estimates the minimum operational cost of every municipality (Council of Europe, 2017[12]; Council of Europe, 2017[13]).

Fiscal decentralisation in Greece has not been pursued to the same degree as political and administrative decentralisation. This is partially explained by the debt-crisis context where subnational governments were called to pursue austerity measures. The initial plan of fiscal decentralisation called the ELLADA programme, that would have allowed subnational governments to develop their fiscal capacity by collecting their own resources, was finally abandoned (Greek Government, 2019[28]).

While the Kallikratis reform had an important impact on fiscal consolidation – in particular for small municipalities (Council of Europe, 2017[12]), there is consensus on the need for subnational governments to further develop their fiscal capacity. Indeed, the share of tax of 24.5% is below the OECD average for unitary countries of 38.7%. Tax revenues are entirely own-source, benefitting municipalities almost exclusively (regional tax revenues are negligible) and concentrated on the property tax which accounts for 92% of municipal tax revenue (EC, 2018[23]). Other minor taxes include street cleaning and lighting tax, beer tax, advertising tax and the tourist tax, particularly important in several coastal areas. Tariffs and fees coming from waste management, water and sewage services provided by local public companies, use of public/communal space for professional activity, operation of cemeteries and the use of municipal water resources by bottling and refreshment companies, and car licensing are also low by international comparison (OECD/UCLG, 2019[24]).

However, the ability to set rates over these taxes is restricted (Table 4.1) (OECD/UCLG, 2019[24]). For example, the property tax takes into account the location and the age of the building, both of which are determined centrally by the Ministry of Finance, and municipalities can set rates within legally binding limits (Torres Pereira and Mosler-Törnström, 2015[26]). It is also the central level that collects this tax for local authorities through the electricity bills which ensures a very high level of collection (Torres Pereira and Mosler-Törnström, 2015[26]). While in the past municipalities had greater space to set up the variables defining the property tax, this levy was restricted through an act in 2000 which reduced their manoeuvre considerably (Torres Pereira and Mosler-Törnström, 2015[26]).

The crisis, together with the introduction of strict rules to manage debt at the local level, have resulted in low levels of indebtedness of regions and municipalities. Greek subnational governments can engage in medium- and long-term borrowing in the credit and capital markets (loans and bonds). Borrowing is authorised to finance investment projects following the “golden rule” and to refinance existing debt under better conditions. In 2013, Greece introduced stricter rules for subnational governments’ access to borrowing. Through Law 4111/2013, subnational governments have to comply with additional fiscal rules limiting debt and need to receive the approval of the Minister of Finance to access any kind of loans. Additionally, the law introduced a debt-brake for the few municipalities facing over-indebtedness problems, which have to join a Special Economic Recovery Programme. Overall, the level of local debt remains low as a percentage of GDP and total public debt, especially compared to the OECD average for unitary countries (14.5% of GDP and 11.8% of public debt). In 2016, it was made up of financial debt (68%) and other accounts payable (32%). Financial debt is exclusively composed of loans (OECD/UCLG, 2019[24]). Borrowing autonomy, as shown by the Local Authority Index (Box 4.4) also shows a decrease in Greece, which is most probably due to the financial crisis.

The Regional Authority Index (RAI) presents a useful way to explore the authority or power of regions in a large number of countries. This index is a comprehensive attempt to measure the real degree of power of intermediate governments, going beyond fiscal indicators. The RAI specifically focuses on regional government, which is defined as an intermediate tier of government between the lowest, local tier and national government, with at least 150 000 inhabitants per regional unit on average control (OECD, 2019[22]). This indicator traces regional authorities across 10 dimensions in 81 countries between 1950 and 2010 (Hooghe et al., 2016[29]; Hooghe, Marks and Schakel, 2010[30]) (Box 4.4). When comparing the Regional Authority Index (RAI) of Greek regions with OECD countries and beyond, Greece is part of the group of countries with the lower index values.

Greek municipalities have also a limited degree of autonomy. The Local Autonomy Index (LAI) is an attempt to measure decentralisation beyond recording the share of funds managed by local authorities and should capture to what extent local authorities have a say in how these funds are spent (Ladner, Keuffer and Baldersheim, 2015[33]) (Box 4.4). As per the LAI, Greek municipalities pertain to the group of medium-low degree of autonomy together with Albania, Hungary, Slovenia, Ukraine and the United Kingdom.

Greece has moved to ensure the fiscal consolidation of subnational governments and to increase the effectiveness of management, accounting and financial control. For example, in 2012, Greece introduced an internal stability pact for local government (based on a balanced budget constraint) in order to strengthen tax and budget management. In addition, according to the Medium-Term Fiscal Strategy Framework (MTFS) for 2015-18, approved by Law 4263/2014, subnational governments are required to contribute to the overall fiscal effort. In 2014, the country put in place the Observatory for the Financial Autonomy of Local Government (set up by Law 4111/2013 and further implemented by Laws 4270/2014 and 4555/2018) to monitor, on a monthly basis, the management and implementation of subnational governments budgets (OECD/UCLG, 2019[24]).

The fiscal dimension has been the missing link in Greek decentralisation reforms. This has been the case in a number of OECD countries as well. One of the most frequent challenges, particularly in countries at an early stage of decentralisation, is the misalignment between responsibilities allocated to subnational governments and the resources available to them. Unfunded or under-funded mandates – where subnational governments are responsible for providing services or managing policies but without the requisite resources – are common (OECD, 2019[22]).

The implementation of political and administrative reforms in Greece has created a mismatch between the responsibilities of subnational governments and their financial capacities. The transfer of responsibilities was not accompanied by a corresponding transfer of resources but rather by an attempt to reduce them (George and Nikos, 2015[35]). This is not an exclusive feature of the Greek decentralisation process, as in most OECD countries the alignment of responsibilities and revenues is an important concern (OECD, 2019[22]).

In Greece, subnational funding is based mostly on transfers from the central level. The population criteria by which municipalities receive grants based on the number of permanent (registered) citizens does not consider the differences in geographical conditions and economic strength of the Greek municipalities (Council of Europe, 2017[12]). This criterion does not have specific provisions or complementary indicators for insular and mountainous municipalities or localities that receive the most important influx of tourist in a certain period of the year. This puts strong pressure on certain municipalities, in particular small touristic islands, which need to ensure services for an important floating population without the corresponding necessary funding. The effectiveness of the population criteria to determine grants is also put at stake by the fact that official statistics and indicators are not necessarily updated regularly (Council of Europe, 2017[12]; Council of Europe, 2017[13]).

Beyond the challenges linked to the assignment of funds through the population criteria, different institutions and scholars have highlighted some other key challenges of the municipalities’ financing system. The Council of Europe, for example, has highlighted that some critical aspects of the system are linked to: i) the lack of an up-to-date and reliable data source, in particular the municipality resident’s registry; ii) small amount of transfers which often do not even cover municipality’s operating costs leaving a small proportion for local authorities to dedicate to investments or other policies; iii) lack of transparency of the transfer system resulting in some municipalities receiving less than was stipulated in the state budget (Council of Europe, 2017[12]).

The mismatch between responsibilities and revenues makes regions and municipalities very dependent on European funding, in particular for public investment. The dependence on external funding entails some important risks. First, as EU funding levels can change from one seven-year programming period to the next, European funds are not necessarily sustainable in the long term, an extreme (or almost exclusive) reliance on these funds can be risky in the long term and may prevent long-term planning (George and Nikos, 2015[35]). The high dependence on European co-financing may also benefit more those regions and municipalities that are more prepared in terms of administrative and institutional capacities to prepare mature projects able to be funded by European funds.

A better balance between revenue-generating means with expenditure needs might help Greece in creating better accountability and responsiveness to local preferences (OECD, 2019[22]). In Greece, a series of laws and policy measures have drastically restricted space of discretion and initiative given to local authorities during the previous years concerning financial resources management (Hlepas, 2015[8]). However, evidence shows that subnational governments work best when local residents self-finance local services through local taxes and charges. This enhances the efficiency and accountability of local service provision by encouraging local residents to evaluate the costs and benefits of local service provision. It is also a way of facilitating yardstick competition, which encourages local politicians to maximise the welfare of local residents instead of promoting their own self-interested goals (OECD, 2019[22]). This might be particularly relevant for the geographical and contextual specificities of Greek subnational governments – especially islands – which might need particular financing policies to address higher costs of service delivery and investments.

Better balancing revenue-generating means with expenditure needs is also crucial but more challenging in the current COVID-19 crisis. This COVID-19 global crisis is putting strong pressure on subnational finance in Greece as well as in all OECD countries. Subnational governments in most countries may experience a large drop in revenue, including tax revenue, user charges and tariffs and asset income. A strong decrease in tax revenues is expected, both from shared and own-source taxes. A strong decrease in revenues combined with a continuous increase in expenditure (due to social spending and investment) could result in a scissor effect and therefore in subnational government deficit, as was the case in 2007-08. It is thus likely that central governments will design recovery strategies and counter-cyclical measures to mitigate the impact of the crisis on subnational government budgets, prevent them from carrying out pro-cyclical actions and ensure coherence in the overall government response to the crisis (OECD, 2020[4])

During the last years, regions and municipalities have been increasingly responsible for key policy areas resulting from the transfer of competencies started in 2011. At the regional level, the new regions are mainly responsible for regional planning and development, including the management of EU operational programmes. At the municipal level, the law has defined eight specific areas of responsibilities, which remain broad. The Kallikratis programme transferred additional responsibilities related to local development, child protection, elderly care, social assistance to the unemployed/poor and preventative healthcare.

The national and subnational levels in Greece share a number of responsibilities in different sectors, as is the case in all OECD countries. Some of the competencies shared among the three levels of government are linked to key policy sectors such as education (pre-school, primary and secondary education), health, urban and regional planning, environment, and transport (urban roads), among others. In most countries, due to the complexity of interactions in shared rule, there are many ambiguities in the assignment of responsibilities (OECD, 2019[22]).

Like in most OECD countries, responsibilities of national and subnational governments in Greece are often overlapping, ambiguous or unclear. Regions and municipalities have almost no exclusive competencies and the dividing lines between central and subnational governments for shared competencies are not well established. Although the competencies of the central, regional and local governments are defined legislatively, the practical division of responsibilities is not always clear, leading to implementation gaps or overlaps (Koutalakis and Allio, 2016[36]). Overlapping and unclear assignment of competencies and responsibilities between the deconcentrated authorities, regions and municipalities is particularly challenging in key sectors like infrastructure and transport. For example, all three levels of government are responsible for some aspects of road maintenance (Council of Europe, 2017[13]) and floodwater management. Another example lies in the management of traffic lights, which is a responsibility that was partially transferred to subnational levels. This makes it difficult to identify, for example, who is responsible for changing a sign in a route. This lack of clarity for concurrent or shared responsibilities might contribute to government failures or inefficiency and inequity in public service provision and negatively impacts accountability (OECD, 2019[22]). In turn, this lack of clarity and accountability may affect transparency and citizen’s trust in the public sector.

Regarding regional development responsibilities, the overlap of competencies is particularly acute between the regions and the deconcentrated authorities. The role of the seven state administrations is especially unclear as they become progressively weaker, as a consequence of the empowerment of regions (Torres Pereira and Mosler-Törnström, 2015[26]). The seven deconcentrated administrative authorities exercise devolved powers, in town and urban planning, environmental policy, forest policy, migration policy, citizenship and energy policy (Council of Europe, 2012[37]). These deconcentrated structures are also tasked with supervising regions and municipalities. Regional governments are the main party responsible for the implementation of regional development policies through the management and implementation of a considerable part of the EU Structural Funds. However, this role is partially hampered by the overlap of competencies with the deconcentrated state authorities. This might contribute to policy delays, in particular for critical infrastructure projects. The lack of any legal basis to establish co-ordination mechanisms between these institutions impedes overcoming those overlaps for a more efficient policy planning and implementation (Council of Europe, 2017[12]).

A clear and transparent division of powers is crucial for Greek subnational governments at all levels to deliver on their mandates and be held accountable by citizens. National and subnational actors are strongly aware of the need to review municipal and regional competencies in order to reduce the space of conflicts in its allocation. Better clarity in the division of power is also critical for Greece to build subnational government capacities as well as instituting mechanisms for intergovernmental partnership and co-ordination (OECD, 2019[22]).

Greece is making important efforts to better define the roles of and interactions between the different actors involved in the design and execution of policies. In June 2018, Greece approved Law 4555/2018 known as the Kleisthenis reform. This reform touches upon various issues concerning subnational governments such as the electoral system in local and regional elections, establishes a new system of representation in local and regional councils and reorganises the supervision authorities (see Box 4.5).

One of the key issues addressed by the Kleisthenis reform is the introduction of new tools to monitor and assess past and scheduled transfers of responsibilities to municipalities and regions. It also contemplates reconsidering the current allocation of subnational government responsibilities. The law establishes new Inter-ministerial Committees for the Redefinition of Competences and Procedures (Δ.Ε.ΑΝ.Α.Δ.) for each sector or policy field with the task of recording the competencies and procedures of the central administration, the deconcentrated administrations and regional and local government levels. These committees should assess if the conditions to properly exercise competencies are in place and identify which are the main challenges and dysfunctions in its exercise. It also creates a permanent committee within the Ministry of the Interior to evaluate every new bill that involves the transfer of responsibilities. All of this follows the principles of proximity, subsidiarity and effectiveness.

In the complex task of assessing the allocation of competencies among levels of government, the inter-ministerial committees should ensure a balance in the way different responsibilities and functions are decentralised. Balanced decentralisation means that the various responsibilities are decentralised to a similar extent. In this respect, OECD work has shown that balanced decentralisation is important for local economic development and growth (OECD, 2016[39]). It is also important to ensure balance in the way various policy functions are decentralised to allow for complementarities across decentralised policies and integrated policy packages (OECD, 2019[22]). Indeed, if decentralisation only takes place in two or three policy areas (such as housing or education) in an unbalanced way vis-à-vis other policy areas, this prevents subnational governments from designing integrated regional and local development strategies (OECD, 2019[22]). Inter-Ministerial Committees could also explore the possibility of increasing the number of exclusive competencies for regions and/or municipalities and reducing the number of shared ones.

While there is no unique model for assigning responsibilities among levels of government, Greece can consider some key elements for breaking down responsibilities (Box 4.6). The optimal assignment of responsibilities within each public service area depends largely on the type of service. In many OECD countries, the municipal level tends to manage community services (e.g. streetlights, local schools and child day care). For municipal responsibilities, regulations often refer to the general clause of competency or “subsidiarity principle”. This principle gives local authorities explicit freedom to act in the best interests at the local level. In this case, laws rarely limit or specify local responsibilities but enumerate broad functions instead, except if a particular responsibility is devolved by law to another government level. However, the economies of scale in service production should also be taken into account here. For example, in some cases, a higher-level government may be able to invest in technology that enables more efficient service provision (OECD, 2019[40]).

In two-tier systems of subnational government, it is often the regional level that provides the services of regional interest which benefit from economies of scale, generate spill-overs, involve redistribution and are required to meet the same standards across the jurisdiction (Kitchen and Slack, 2006[41]; OECD, 2017[42]). Public services with important redistributive features (e.g. specialised healthcare, secondary and higher education) are often best suited for regional or national governments, mainly because redistribution at the local level would be inefficient. Public services with considerable positive externalities or spill-overs, such as major roads or main water pipelines, are also usually better provided by higher levels of government (OECD, 2019[40]). The regional tier is also often called to facilitate co-operation and strategic planning (OECD, 2017[42]).

The 325 Greek municipalities and 13 regions are very diverse in different dimensions (Chapter 2):

  • Geography and resources: Greece has important geographical fragmentation with around 6 000 islands2 that represent about 20% of the national territory, out of which only 227 are inhabited, and sometimes with very low population levels. Most of the Greek territory is at the same mountainous.

  • Size, density and population: Regions range from 206 000 inhabitants in the Ionian Islands to 3.765 million in the region of Attica. Greek predominantly urban regions contain 45% of the total population, a share that is slightly lower than the OECD average of 48%. Predominantly rural regions (3.4 million people) contain a larger percentage of people and a smaller percentage of land; 3 million live in rural remote regions, making Greece the country with the third-largest share of the rural population in remote regions across OECD countries.

  • Socio-economic characteristics: In 2016, GDP per capita in the top 20% of regions was 2.5 higher than in the bottom 20% of regions. Attica is the best-performing region concentrating almost half (48%) of the country’s GDP which is twice as high as in East Macedonia, the region with the lowest GDP per capita in the country (OECD/UCLG, 2019[24]). There are also important disparities in terms of the capacity to administer, deliver services and manage their territory. Often, more isolated island or mountainous municipalities have weaker administrative and financing capacities.

The heterogeneity of Greek territories calls for a differentiated multi-level governance system. According to their location and level of development, Greek subnational governments face challenges that could be addressed individually and differently. Countries confronted with disparities in local capacities and/or various territorial, political or international cultural contexts are increasingly developing differentiated or asymmetric decentralisation structures (Box 4.7).

While most of the Greek legal framework is based on the principle of uniformity, the law considers some differentiation in the assignment of responsibilities reflecting upon the municipalities’ diversity of geographic conditions. To better serve the populations of insular municipalities, island municipalities have a wider set of competencies in the areas of: agriculture; natural resources, energy and industry; employment, trade and tourism; transport and communications; and public works, urban and spatial planning and the environment. In the same logic, mountain municipalities have also a wider set of powers in the areas of energy, water, forestry, agriculture and support to the local community and economy. Still, despite their diversity, almost all Greek municipalities have the same political organisation, functions and funding arrangements.

At the regional level, Greek law also considers a slight differentiation in the assignment of responsibilities. Insular regions, in addition to their regional responsibilities, exercise powers related to the planning, approval and monitoring of intraregional transport plans (Council of Europe, 2012[37]). The metropolitan regions of Attika and Thessaloniki have also some additional responsibilities in the areas of: the environment and quality of life; spatial planning and urban regeneration; transport and communication; and civil protection and security, beyond the municipal administrative boundaries (see below).

However, Greece still has some scope to introduce more differentiation in the allocation of competencies to reflect not only the geographic conditions but also different local governments’ capacities. In particular, it is important for Greece to move forward with the decree allowing for territorially specific policies and the possibility for asymmetric decentralisation foreseen by the Kallikratis Law, with differentiated sets of responsibilities given to different types of regions/cities, in particular to island municipalities, in the domains of agriculture, natural resources, transport and planning, and the environment.

There are different ways to implement differentiated decentralisation according to the capacity and performance of municipalities: devolving additional competencies to the most capable municipalities; allocating additional fiscal powers to municipalities with greater financial and technical capacities (e.g. access to borrowing, tax power, ability to define user fees and tariffs, etc.); simplifying reporting mechanisms of weaker municipalities to alleviate the administrative burden.

To differentiate responsibilities according to capacities, Greece could follow an approach similar to the one implemented by Colombia, for example. Colombia has developed a certification system to identify subnational governments that are best capable of providing important public services (Box 4.7). In any case, the criteria used to differentiate the powers of municipalities and/or regions needs to be transparent and agreed upon with all interested stakeholders.

Differentiated governance approaches also entail some risks linked with institutional complexity and inequalities. By definition, differentiated arrangements do not directly promote equal treatment of subnational governments and citizens. These arrangements might also be perceived as a way to support the wealthiest regions or subnational governments. To minimise those risks, it is crucial to ensure that positive spill-over effects result from the differentiated arrangements between subnational governments, for instance, conditions set to encourage subnational governments to assist their weaker neighbours, the creation of co-operation frameworks between subnational governments and the promotion of good practice dissemination (OECD, 2019[40]). This risk can also be attenuated if the differentiated assignment is made on a voluntary basis while the central government ensures service provision for those regions or municipalities that do not volunteer to take on more responsibilities.

Countries are increasingly adopting pilot experiences in the devolution of responsibilities to subnational governments. In Sweden for example, two successful pilot experiences on asymmetric decentralisation were established at the end of the 1990s (regions of Skåne and Västra Götaland) to transfer the responsibility of regional growth from regional state agencies (County Administrative Boards) to regional political bodies (elected regional councils). Since then, the responsibility has been gradually transferred from regional state agencies to regional political bodies in other counties as well (to county councils and county co-operation bodies). This policy might be rolled out to the entire country based on the pros – that outweigh the cons – of its implementation (OECD, 2018[1]). These approaches might allow a better match between policies and local needs without going through radical administrative or constitutional reforms. Indeed, pilot experiences allow policymakers to experiment and learn while avoiding subnational governments with low capacities becoming overwhelmed by new responsibilities (OECD, 2018[1]).

Greek urban areas are the main engines of the economy and, as such, face particular challenges. The regions of Attica and Central Macedonia concentrate the majority of the population and are responsible for almost two-thirds of the national GDP. Attica alone concentrates almost half of the country’s GDP (Greek urban areas were also the most affected by the economic crisis, compared to intermediate or rural regions in the country [Chapter 2]).

With the Kallikratis reform, Greece advanced in the management of its two major metropolitan areas. The reform provided, for the first time, a metropolitan status to the metropolitan areas of Attika and Thessaloniki (the Metropolitan Region of Attica, which comprises 66 municipalities, and the Metropolitan Unit of Thessaloniki, which comprises 14 municipalities). This special status confers to these two areas additional functions and responsibilities beyond the municipal administrative boundaries in the areas of the environment and quality of life, spatial planning and urban regeneration, transport and networks, and civil protection and security. In this framework, Athens does not have a special status as a capital city but is included in the metropolitan region of Attica. This new status meant a significant change for Athens: since the reform, the metropolitan regional authority is represented in the European Committee of the Regions and the 66 municipalities now participate in European Groupings of Territorial Cooperation with other EU subnational governments to promote common economic interests (Chorianopoulos and Pagonis, 2015[44]).

Together with the transfer of competencies, the law creates metropolitan committees to address metropolitan issues that have, however, limited space for action. The metropolitan governance structure includes four metropolitan committees in the region of Attica (spatial planning and urban reform, transport and communications, civil protection, and the environment and quality of life) and one metropolitan committee of Thessaloniki in the region of Central Macedonia. These committees, headed by a deputy head of the region, are supposed to deal with relevant local government issues and submit suggestions to the regional council. However, these committees have not taken full responsibility, they meet on an ad hoc basis for deliberative purposes and do not hold any decision-making power. In addition, municipalities are not systematically represented in the committees, although they are occasionally requested to provide data on relevant topics under discussion (Council of Europe, 2018[45]; OECD, 2015[46]).

Despite the transfer of additional competencies, the management and governance of metropolitan areas are still fragmented. Regarding metropolitan competencies, the three levels of government have fragmented responsibilities over key issues such as the management of floods and natural disasters. The fragmented administration has also had an impact, for example, in refuse collection and the location of landfills (Council of Europe, 2018[45]). At the same time, even if there are some metropolitan-wide co-ordination institutions to deal with urban policies such as transport or the environment, the lack of a single metropolitan administration structure limits their impact (Council of Europe, 2018[45]). This is what happens in Athens, for example, where different organisations are in charge of co-ordinating and implementing environmental, waste management and transport policies at the metropolitan scale:

  • The Athens Urban Transport Organisation (OASA S.A.) is a public company responsible for the planning, co-ordination and control of all public transport modes within the region of Attica. It operates under the supervision of the Ministry of Infrastructure, Transport and Networks and its managing director is appointed by the Minister of Finance and the Minister of Infrastructure. Co-ordination between the OASA and municipalities on transport planning is undertaken on an ad hoc basis, with no systematic procedure in place. The same happens with the co-ordination between transport planning and overall metropolitan planning (OECD, 2015[46]).

  • The Organisation for Planning and Environmental Protection of Athens (ORSA) was created in 1985 as a special agency of the Ministry of the Environment, Energy and Climate Change, which serves as an advisory council to municipalities. One of its main responsibilities is the implementation and revisions of the Regulatory Master Plan of Athens (1985) and its subsequent update (Law 4277/2014). Despite its unique metropolitan-wide mandate, the ORSA has been struggling with limited formal competencies, insufficient implementation powers and the structural deficiencies of the Greek planning system (OECD, 2015[46]).

Besides the fragmentation, the central level plays a decisive role in metropolitan issues with little involvement of the regional or municipal levels. The main responsibilities for spatial planning for example, such as the approval of comprehensive urban plans as well as the implementation of the Regulatory Plan and the Urbanisation Control Zones (ZOE), remain under the jurisdiction of the central government (Chorianopoulos and Pagonis, 2015[44]). The lack of a metropolitan authority, as well as the financial crisis context, has also meant an increasing role for private foundations in urban planning, interventions and projects of metropolitan significance (e.g. Rethink Athens, Hellinikon S.A., among others). Most of these institutions are controlled by the central government (Chorianopoulos and Pagonis, 2015[44]).

Most OECD countries have trouble producing policies at the appropriate level, including in critical areas such as transport and housing. Still, evidence shows that for a given population size, a metropolitan area with twice the number of municipalities is associated with around 6% lower productivity, an effect that is mitigated by almost half when a governance body at the metropolitan level exists (Ahrend et al., 2014[47]). This is why an increasing number of countries are implementing differentiated governance structures for metropolitan areas to make the most out of urbanisation and agglomeration economies. Currently, around two-thirds of the metropolitan areas in the OECD have a metropolitan governance body.

The metropolitan governance models implemented by countries are not unique and must respond to particular circumstances and institutional contexts. Regardless of the model, basic features, such as political representation through direct election, clear assignment of expenditure responsibilities and revenue sources, geographic boundaries that match boundaries of the economic region (functional area), fiscal autonomy, adequate capacity and revenues that match expenditures, are essential elements for any successful metropolitan area governance (Allain-Dupré, Chatry and Moisio, forthcoming[48]). The United Kingdom has an interesting model where urban areas are governed through arrangements between the national and subnational governments by allowing a degree of “tailored” devolution of responsibility to English cities (Box 4.8). This model can be interesting for Greece, as it would only mean an enlargement of the implementation of the current regulation on contracts across levels of government. A recent example of metropolitan governance includes the 2013 French Law on Metropolitan Areas which contemplated differentiated governance for Aix-Marseille, Lyon and Paris to include governance structures with own-taxing powers and the shift of competencies from regions and departments (Box 4.8).

In Greece, the need to establish a metropolitan governance structure is widely acknowledged. Programmatic contracts and inter-municipal co-operation have been available as tools in Greece since Law 1622/1986 (updated by the Kallikratis reform) but they could be further used. Some useful tools exist in spatial law and are hardly used today. There is a broad consensus on the necessity of reforming governance in the metropolitan area, in particular for Athens. In the path towards a more integrated metropolitan governance, a first step for Athens would be to integrate the multiple bodies dealing with metropolitan issues (such as the OASA or ORSA) into the region of Attica’s metropolitan committees in order to consolidate both inter-municipal and cross-sectoral co-ordination. This could also serve to strengthen their role as an interface with the national and EU levels. The structure of the Urban Authority for the Sustainable Urban Development Plan in Thessaloniki could be also expanded or specialised.

The existence of a wide-metropolitan governance structure may help Athens and Thessaloniki to deliver integrated urban and spatial strategies and enhance metropolitan productivity. In Greece, space and economy are still planned separately from each other, with little alignment between regional and municipal objectives and few implementation tools (OECD, 2015[46]). Comprehensive urban and spatial planning for metropolitan areas is necessary to connect spatial planning considerations with broader economic, social and environmental goals and objectives. Such a strategy may help to align strategic investments in a wide range of policy areas – health, education, transport and energy investments and infrastructure – with land use considerations. They can also help co-ordinate the actions of functionally connected municipalities around common policy objectives (Chapter 3). Together with this, a metropolitan governance structure may help Greek urban areas to become more resilient to an economic crisis and better manage the negative aspects of agglomeration such as growing congestion and sprawl.

In order to be successful, metropolitan institutional structures must enjoy a degree of decision-making authority over resources and own revenues. Evidence shows that metropolitan authorities that can generate own-source revenue and have control over their finance tend to flourish, while those that are held in check by their funders face greater difficulties (OECD, 2013[51]). In general, when unitary countries undertake metropolitan reforms, the central government plays a key role in financing the new metropolitan body. If Greece wants to make progress in the area of metropolitan area governance, the central government needs to provide municipal areas with adequate funding to ensure responsibilities have adequate funding. Otherwise, any proposed institution with a metropolitan ambition would simply inherit an unfunded mandate, which is likely to generate frustrations and eventually perpetuate costly inertia (OECD, 2015[46]). For example, to start, specific tax regimes for inter-municipal groupings or metropolitan areas could be promoted without taking resources away from the municipalities.

While the decentralisation process that Greece is pursuing is a key step to deliver on place-based approaches, this does not occur spontaneously with decentralisation. The impact of decentralisation reforms on regional development policy depends, to a significant extent, on how governments ensure the conditions to make it work. It is necessary to put in place multi-level governance arrangements that facilitate co-ordination and integration of sectoral policies, as well as co-ordination arrangements that allow delivering regional policies and investments at the relevant scale and bring together relevant public, private and civil society actors. Regions and municipalities also need to have sufficient capacities – administrative, financial and professional – to deliver and be able to produce genuine place-based regional policies.

In addition, the central government needs to strengthen its place-based approach to regional development policy and public investment. Greece’s regional policy is largely driven by the European Cohesion Policy. In the absence of a specific regional development strategy, regional development is implicitly served through the regional allocations and programmes of the European Structural and Investments Funds (ESIF) and to some extent, Greece’s own Public Investment Programme (PIP). To improve the multi-level governance for regional development in Greece, it is thus crucial to focus on the governance of EU funds in the country. Indeed, the influence of European funding has played an important role in helping Greece upgrade its institutions and governance models for regional development. Improving how Greece manages EU-funded investments serves as a lever to improve the overall multi-level governance of regional policy across the country.

While Greece has put new structures in place, an important challenge remains on how to further implement and consolidate the new structure and, particularly, the role of the regions, given their recent institutional change to local government organisations with elected leaders (governors), in regional development and investment policies. Several studies have pointed out Greece’s weak institutional framework and capabilities as a key explanation for the low efficiency of regional development policies and, in particular, for investments financed by EU Structural Funds. Low planning capacity, cumbersome bureaucratic procedures and lack of experienced staff are cited amongst the factors delaying decisions and forestalling outcomes) (Huliaras and Petropoulos, 2016[52]). A more strategic and reinforced partnership between the central, regional and municipal level is not only important for the management of EU funds but the public investment system as a whole. This would also enhance the capability of regions to produce genuine regional development strategies.

The OECD Recommendation on Effective Public Investment across Levels of Government (OECD, 2019[53]) provides a generic analytical framework as well as guidance on how countries can take out the most of investments opportunities.

In Greece, between 2010 and 2018, public investment co-financed by the EU accounted for about 80% of total public investment (OECD, 2018[5]). The large share of EU funds protected investment from more severe cuts during the crisis. As a result, the share of public investment in total expenditure ranged between 11%-12%, remaining broadly stable between 2013 and 2017 (OECD, 2018[5]). Structural funds have permitted Greece to invest in new infrastructure, modernise SMEs, among others. Cohesion policy in Greece is also a key contributor to reducing territorial inequalities, in particular between island and continent regions and municipalities.

The Partnership Agreement (PA) for the Development Framework 2014-2020 (Box 4.10), together with the recently adopted National Growth Strategy (2018), constitute the two strategic documents that guide Greece’s national development (Chapter 3). They benefit from the contribution of significant resources originating from the European Structural and Investment Funds (ESIF) of the EU.

The PA specifies among its strategic goals the improvement of the public administration, enhancement of competitiveness, tackling high unemployment, in particular of young people, reducing social exclusion and poverty, upgrading infrastructure to promote growth and jobs, and efficient use of natural resources/climate change and mitigation the impacts.

For the 2014-20 programming period, Greece was allocated EUR 21.4 billion from ESIF, with the national government being responsible for EUR 4.8 billion in national co-financing. Within the context of EU funding, 40% (EUR 8.6 billion) is from the European Regional Development Fund (ERDF), 22% (EUR 4.7 billion) from the European Agricultural Fund for Rural Development (EAFRD), 18% (EUR 3.9 billion) from the European Social Fund (ESF) and 15% (EUR 3.3 billion) from the Cohesion Fund (CF). The rest comes from the European Maritime and Fisheries Fund (EMFF) and the Youth Employment Initiative (YEI).

Resources allocated to Greece and its regions from the EU Cohesion Policy envelope of the European budget have been attributed to 5 national OPs and 13 Regional Operational Programmes (ROPs) (Table 4.3). The total OP envelope is formed by adding the corresponding national co-financing, typically of the order of 25%. These allocations concern the ERDF, ESF and CF and include supplementary resources allocated to Greece following the midterm review. This is also true for OPs financed through the ERDF under the European Territorial Co-operation (ETC).

At the beginning of the negotiation process for the Partnership Agreement (PA) for the National Strategic Reference Framework (NSRF) 2014-2020, Greece, under the leadership of the Ministry of Development and Investments, submitted the PA to the EC. This PA included Operational and Regional Programmes and a summary report of NSRF 2014-20 providing key information including objectives and performance by OP. The final PA was approved by the EC in May 2014.

While Greece had no official document to inform the negotiation of the 2014-20 PA, the National Growth Strategy developed in 2018 set the basis for the upcoming 2020-27 programming period. The strategy offers a prescient assessment of the central challenges facing Greek society and its economy and proposes a range of measures to address them. Greece’s next agreement with the EU for Cohesion Policy post-2020 shall be informed by these development objectives and the strategy needs to be used to harmonise national and EC goals and national policy directions.

All funding programmes follow the same implementation and monitoring procedures which are defined by the EC and Greece. The creation of a call for tender, as well as the project selection, is done by the relevant MA. The monitoring committee is approves the selection criteria, the programme specification and the evaluation methodology.

For the 2014-20 programming period, Greece introduced a new architecture for the management of EU funds in order to address some of the key challenges confronted during the 2007-13 period. One of the main objectives of the new architecture is to strengthen the capacity of regional and local authorities to implement a full range of actions according to the PA priorities. This is why the architecture of the 2014-20 PA includes:

  • Seven National Operational Programmes (including programmes for rural development and fisheries) covering one or more sectors and whose geographic scope and implementation applies across the country.

  • Thirteen Regional Operational Programmes (ROPs), one for each of the 13 administrative regions of the country, including regional-scale activities.

Each programme includes strategic priorities and indicative actions that shape its contribution to the achievement of the PA objectives and therefore the implementation of the EU strategy for smart, sustainable and inclusive growth. Each and every one of the Greek regions is the subject of a regional programme that includes projects and regional-scale actions and is funded by the ERDF and the ESF.

For this programming period, National Operational Programmes represent 71.5% of the total OP budget. However, a significant part of these resources is invested in ROP projects: more than 90% of the total budget of sectoral OPs are committed to regional projects.

For the ROPs, each region designs an OP for the ESI funds allocated by the Ministry of Development and Investments and uses the funds to cover some of the region’s needs. Each region distributes the allocated budget across its chosen target areas while maintaining compliance with European regulations and covering local needs in the most appropriate way. In essence, however, in the planning and implementation of the funds, a share of the budget dedicated to ROPs is planned and implemented by regional authorities, while another share is planned and implemented by the central government. In most programming periods, the share of EU Structural Funds allocated to regional authorities has been small and on average, it does not exceed 30% of the funds over the period. The remaining 70% is managed at the central government level, which in some cases is justified by the size of certain projects.

When the EC entrusts a member state with implementing programmes at the national level, the country is responsible for setting up a Management and Control System (MCS) which complies with the requirements of EU regulations. The EC plays a supervisory role by ensuring that the arrangements governing the MCS are compliant.

A country’s MCS is the “machinery” used to deliver effectively on the country’s development policies (Box 4.11). The EU has issued extensive guidance on ESIF, including on the setup of MCS (EC, 2014[58]). The MCS sets the institutional and legal framework for ESIF investment and OP implementation, as well as the common rules, procedures and monitoring mechanism in a country. At the same time, EU-level regulations govern the allocation and use of ESIF (including control, verification, monitoring and audit processes). The MCS includes all the ex ante financial controls (i.e. before the EU claims), while the audit bodies carry out ex post controls (i.e. after EU claims). This “shared management” (by the EU and the member state) model – the main principle for implementing cohesion policy agreed at EU political level – creates a complex system of multiple checks where EU-, national- and programme-level bodies participate in a range of internal and external management and control activities.

Countries have discretion on how MCS and MAs are organised. The OECD does not support a single “best practice” in terms of organisational set-up of public administrations (nor of MAs) respecting the different missions, activities and contexts of governments and cohesion strategies. At a minimum, administrations should be organised in ways that avoid duplication and fragmentation of tasks; respect integrity (i.e. with sufficient accountability mechanisms and “arms-length” institutions to provide objective, independent oversight); and with adequate horizontal and vertical mechanisms for information sharing and communication (OECD, 2019[59]).

The main actors involved in the implementation of the Partnership Agreement 2014-20 are the MAs, the Audit Authority and the Certifying Authority. Their role and respective functions are provided in European Regulation 1303/13. Other key actors and institutions involved are the National Co-ordination Authority and the Executive Units (Figure 4.11).

The National Co-ordination Authority (NCA) is housed in the Ministry of Development and Investments. Its main objective is ensuring co-ordination and the effective management of co-financed assistance. It is the main point of contact with the EC and operates under the Secretary-General for Public Investments and Partnership Agreement. Through its six special services the NCA provides framework conditions, tools and guidance to the MAs (see below) on issues concerning all aspects of OP implementation, ranging from strategic planning to the single MIS.

The NCA is at the centre of the EU funds strategic planning process and comments and consults all OPs. It has overall responsibility for co-ordinating the different levels of programme design. During the preparation phase, three circulars were issued by the NCA, setting out the procedures to be followed in the design of the 2014-20 Partnership Agreement, its OPs and the bodies authorised to undertake these procedures. The NCA has a strategic role in programme implementation. All OP revisions over the 2014-20 period are directed by the NCA and carried out by the competent MAs, in line with the guidelines of the NCA.

Specifically, the NCA through six special services is responsible for the strategic monitoring, programme evaluation, institutional support, internal co-ordination among MAs as well as the co-ordination of state aid. The Special Service for the Implementation (EYSE) is responsible for the strategic monitoring of the 2014-20 PA OPs. For this purpose, the MAs are in continuous and close collaboration with the EYSE which is responsible for co-ordinating and overseeing the management and implementation of OPs supported by ESI funds. The EYSE performs monitoring of compliance with the N+3 rule, monitoring of the thematic concentration and the allocation of resources by category of region. It also ensures and monitors the proper funding from the Public Investments Programme. The EYSE has developed: analytical forecasting techniques to identify and respond to emerging N+3 issues; a special alarm procedure when specific absorption problems are forecast; and close-monitoring and follow-up measures on the basis of particular operations. In order to improve the financial progress of all of the OPs, it draws up action plans whose implementation is monitored on a quarterly basis in constant co-operation with the MAs.

The Special Service for Strategy, Planning and Evaluation (EYSSA) holds the key responsibility for programme evaluation. During the OP’s design, the circular on the implementation of the ex ante evaluation and strategic environmental assessment of the OPs for the period 2014-20 set out the main guidelines for organising and carrying out the ex ante evaluations for OPs, which were completed and submitted to the EC together with the OPs. In the implementation phase, the EYSSA provided guidelines to the MAs in order to draw up and submit an evaluation plan; another circular provided guidelines for organising and carrying out the ongoing evaluations of the OPs. Finally, the NCA provided guidance to the Mas in issues of quantitative targets and indicators contained therein, contributing thus to the development of a single system of indicators for the PA 2014-20.

The Special Service for Institutional Support (EYTHY) is responsible for the drafting and monitoring of the MCS. It provides legal support to all special services and staff structures of the NSRF 2014-2020 to ensure the compatibility of the interventions with EU and national law. It plays a key role in defining MCS architecture as it is responsible for formulating and presenting proposals for the continued simplification of the system for the implementation of co-financed operations. This service is also in charge of developing the strategy for the prevention and fight against fraud in structural actions and ensures the establishment and operation of an effective complaints’ mechanism.

The Special Service for the Co-ordination and Monitoring of ESF Actions (EYSEKT) co-ordinates the design and evaluation of ESF interventions implemented in the NSRF and OPs.

The Special Service for State Aid (EYKE) is the central administrator of the State Aid Information System (PSC), the use of which is mandatory for all entrepreneurship support actions funded by the NSRF 2014-2020, as well as for the other actions of the Ministry of Development and Competitiveness. It also supports all MAs on state aid rules.

The Special Service for the Monitoring Information System (MIS) plans, develops and adapts the integrated information system (IIS) to the implementation requirements of NSRF 2014-2020 and other development programmes. It provides training and supports users in the operation of the MIS and parallel auxiliary information systems. The service is also in charge of processing and exploiting the data entered in the MIS in order to satisfy system user requirements and provide statistical data for assessing the performance and adoption of measures or establishing the need for new ones.

Greek MAs – responsible for the efficient management and implementation of an OP – have common rules for their organisation, staffing and functioning. All MAs have the same competencies as specified in the regulatory provisions. They are responsible for a range of activities, including programming and evaluation, monitoring, technical assistance, which require technical knowledge and a broad array of professional competencies. As is the case across the EU, Greek MAs operate in a tightly controlled legislative and regulatory environment where processes and procedures are clearly delineated in order to minimise the potential for error or fraud.

The MAs organisational structure is uniform across the Greek system and reflects the distribution of competencies set by the regulations. Countries have discretion over the internal organisation of MAs. All Greek MAs have three types of units (Figure 4.12) but the number of each type of units can differ by MA. This configuration ensures the separation between the functions of: i) issuing calls for proposals and project selection; and ii) monitoring projects and verifications needed. Public procurement and payment processes related to project implementation do not fall under the responsibility of MAs unless the MA itself is a beneficiary of the OP. Each MA has an annual action plan with specific targets, as well as a website for publishing calls for proposals and approval decisions of operations.

For the 2014-20 programming period, MAs responsible for national OPs moved out of the relevant line ministries into the Ministry of Development and Investments, under the responsibility of two special secretariats (which after July 2019 have been merged to only one special secretariat) established for this purpose. This choice of centralising the management of OPs within the Ministry of Development and Investments reflects an attempt to separate: (i) the managerial responsibility which lies with the political leadership supervising the MA; from (ii) policy planning responsibility which lies with the political leadership of the line ministries, by supervising beneficiaries implementing the sectoral policies. With this demarcation, the strategic policy planning role falls within each line ministry.

In addition, Greece has also limited the number of MAs managing a fewer number of national OPs. In the 2014-20 period, Greece has only five national OPs, in contrast with nine in the previous programming period. To manage these five national OPs, some MAs merged (e.g. the MA for Infrastructure with the MA for the Environment, the MA for Education with the MA for Employment, etc.) The MA for the OP for Transport Infrastructure, the Environment and Sustainable Development, for example, results from the merger of three MAs, each responsible for their own OPs in the 2000-06 and 2007-13 programming periods and situated within the relevant line ministries. At the regional level, there are 13 MAs as each of the 13 regions is responsible for its own regional OP. This is also an important change as in the previous programming period, Greece had a complex scheme of three regions merged into one single OP that was managed directly by the NCA; in this scheme, regions were acting as intermediary MAs. For the 2014-20 programming period, the head of each regional MA is the relevant regional governor, who has the same responsibilities as the administrative head (the Special Secretary at the Ministry of Development and Investment) of the national OPs. The regional MA’s services belong to the regional administration special organisational units designated as MAs. They are not, however, included in the chart of the respective institutional structure as is the case for all special services linked to PA 2014-20. The regional governor is the political supervisor of a regional MA and, thus, the regional MA’s staff reports to the regional governor, and all MA documents and decisions are signed by the regional governor, whereas the decisions of the national OP MAs are signed by the special secretary. Administratively speaking, the heads of both types of OPs (national and regional) have exactly the same responsibilities.

Executive Units were created through Law 4314/2014 for the 2014-20 programming period within different line ministries. These units were introduced to help line ministries in policy planning and delivery, mainly by enhancing ministries’ capacity to transform sector policies into a solid and coherent set of specific projects/actions able to deliver the policies with funding by the relevant OPs of PA 2014-20 or other financing instruments. In this regard, the mandate of these executive units is twofold: i) to ensure effective policy design as well as funding for sector policies mainly through ESIF co-financed programmes; and ii) to support and strengthen the administrative capacity of line ministries or other government entities in the sector to develop and implement their co-financed activities. They are also actively involved in the OP’s specialisation process and in monitoring the overall progress of the operations falling within the relevant sector of the ministry, in co-operation with the MA, for the adoption of troubleshooting measures.

They are responsible for designing policies of the relevant ministry, and planning, preparing and implementing projects or actions that are funded by ESIF. They are entitled to translate sector strategy stemming from all ministry services and bodies into concrete operational plans with corresponding resources, as well as to collaborate with relevant MAs in drafting calls for proposals once they have agreed upon a budget. Being officially part of the corresponding line ministry, the Executive Units have a broker role between the line ministry and the MA. This requires co-operation at three levels: i) with the line ministry services and entities to form a consolidated operational plan, comprising funding priorities for each sectoral policy; ii) with the MA to further detail the actions to be included in the call for proposals; and iii) with ministry services/entities to support project implementation.

In addition, they monitor the overall programming and implementation progress for their sector. They also support ministries/entities in developing (up until they are sufficiently “mature” to be financed) and implementing their co-financed actions and, in certain cases, they can act as beneficiaries for the ministry. Before issuing a call, both the Executive Unit and the MA have to co-ordinate and decide on the call, the resources, the content, the beneficiaries, the indicators and the targets, as well as the criteria of evaluation.

The creation of these units separates the strategic planning process and the management and implementation of OPs. This demarcation maintains line ministries’ responsibility for sectoral planning and avoids conflict of interest in the management and implementation of OPs as they are in charge of monitoring and supporting beneficiaries but not of selecting their projects. It is important to note that the services established as the new Executive Units for the 2014-20 programming period had a different role previously, either as MAs of sectoral OPs, as intermediary bodies (IBs) or main beneficiaries for actions in the respective policy sector. However, as the official creation of these units is somewhat recent – and their responsibilities have been broadened – they have encountered significant challenges in clearly identifying and realising their role and responsibilities in the new programme architecture.

Other key actors of the Greek Management and Control System are the intermediate bodies to which an MA has entrusted part or all of its competencies, the beneficiaries which are the ones that execute the different projects and the Certifying and Auditing Authority (Box 4.12).

The Management Organisation Unit of Development Programmes (MOU), founded in 1996 following a joint decision of the Greek government and the EC, is a non-profit institution reporting to the Ministry of Economy and Development. it was created to safeguard community interventions in terms of sound management, quality assurance and project monitoring, against a background of an underperforming Greek public administration. Its mission is to support and strengthen the Greek public administration in the effective management and implementation of EU co-funded OPs, covering needs in specialised human resources, management systems, tools, procedures and expertise.

One of the main responsibilities of the MOU is the staffing of the special services (MAs, Executive Units, IBs) for all OPs. For this, the MOU hired expert staff with experience in the managing and monitoring of EU programmes and public works. The MOU also supports the daily operation of special services, addressing their operating needs (payroll and personnel administration, housing, provision of necessary infrastructure and office equipment), ensuring high operating standards and quality work conditions. To accomplish this task, the MOU conducts training (e-learning) and implements practices for knowledge transfer. They are also key in capacity building for beneficiaries by establishing expert teams, which provide advisory, managerial and technical support to the weakest beneficiaries. The MOU is also engaged in other projects related to the management and implementation of ESIF, e.g. production of guidelines for beneficiaries regarding project maturity, operational reviews of various services, development of tools, etc.

In accordance with the provisions of the PA 2014-20 for Greece, a major restructuring and streamlining of all management structures, including the MOU, took place in 2014, taking into consideration the new OPs’ architecture. A uniform system of HR management (under MOU responsibility) was established for all ESIF structures, governed by eight principles, including: independence, transparent and merit-based recruitment system, strict operating rules and clear definition of job profiles and responsibilities, staff mobility, performance appraisal, continuous training, modern and efficient operating environment, and accountability.

The establishment of the MOU was an experiment aiming to support and reinforce the Greek public administration and facilitate its closer co-operation with the private sector. Today, the MOU is an innovative unit within the Greek administration playing an important role in the effective management and implementation of EU co-funded programmes.

For the 2014-20 programming period, Greece made significant changes in its management system in order to better manage EU funds, including changes and adjustments to the OP Management and Control System (MCS).

The main adjustment introduced by Greece to its MCS was the delimitation and separation of the strategic planning functions from the management and implementation of the OPs. Several reasons explain this change, which, all together, make this separation – the Executive Units on one side and the MA on the other – an efficient way of managing and implementing the PA. Among these reasons are: i) the reduction of national sectoral OPs from nine to five, involving the merger of different sectors into a unique OP; ii) moving all MAs from the line ministries to the Ministry of Development and Investments. This contributes to the alignment between strategic documents that support the MA and its OP and national and sector strategies.

At the regional level, while all regions have their own OP for this programming period, this separation between planning (Executive Units) and management and implementation (MAs) is not in place.3 Some MAs have the view that the Directorates of Development Planning of the regions could undertake this role, as, according to the Kallikratis reform, the regions are mainly responsible for regional planning and development, including the management of EU OPs. However, there is also a common understanding that with the staff shortcomings faced by regions, this division between MAs and Executive Units is difficult to implement in regions. However, some MAs consider that if those directorates had the appropriate human resources in terms of quantity and expertise, they could be more actively involved in the regional planning and set the regional priorities related to the environment, transport and other sectors. For example, they could identify and prepare the regional transport projects that should be included under the Strategic Transport Investment Framework 2014-2025, or the sewage treatment projects, among others. They could also work in close collaboration with the Executive Units of the line ministries in the fields of tourism, culture, poverty and social inclusion, employment, etc. in order to identify and prioritise relevant regional interventions and ensure synergies and complementarities between the sectoral and regional OPs; this task is now executed by the MAs.

The co-existence of the Executive Units and the MAs at the national level may allow the system to work more efficiently. On the one hand, the line ministries are the “policy owners” and remain the main strategic planners while the MAs can focus on the implementation, management, monitoring and evaluation of the OPs – which require particular expertise. On the other, it reduces conflict of interest as the Executive Units are now the ones responsible for supporting and building capacities of beneficiaries; i.e. beneficiaries receive support from a different entity than the one that finally assigns the projects and evaluates. At the same time, having all MAs under the same ministry may facilitate economies of scale as well as co-ordination among them. If well managed, it also may facilitate peer learning across the different MAs.

In general, the collaboration between MAs and the Executive Units seems to be positive. Some Executive Units, such as those linked to health, culture or energy, or the Executive Units of the Ministry of Labour, undertook a co-ordination role in programme implementation during the programming period. For those Executive Units that did not to play such a co-ordination role, the experience with collaboration is also generally positive. The positive collaboration between MAs and the Executive Units will persist and might be reinforced if the Executive Units accomplish their role as described by the legislation (policy design, preparation of projects, specialisation process), avoiding entering other stages of implementation, which comes under the responsibilities of the MAs. For example, MAs are responsible for consultations with the beneficiaries, as well as the day-to-day activities regarding project implementation. The involvement of the Executive Units in monitoring and management stages could result in overlapping, which would multiply the burden and is a crucial factor of implementation, especially under the light of staff shortages reported by the MAs and the Executive Units.

The reduction of the number of MAs at the national level (as a result of the reduction of the number of national OPs) as well as the regrouping of all MAs under the Ministry of Development and Investments also allows for some more flexibility in management and implementation. First, the more priorities and resources are set under the same programme, the more they support programme management, as internal transfers within the programme are easier whenever required, or imposed by the need to avoid loss of funding due to the N+3 rule. Second, the NCA can directly ask MAs (instead of a great number of different ministers) to make the relevant modifications or amendments to programme documents and financial resource transfers.

At the same time, the changes introduced in the 2014-20 programming period were burdensome and costly for a majority of actors and parties within the MCS. Any organisational change, whether in the private or public sector, puts pressure on the parties involved and may generate, at least at the beginning, some resistance. In the public sector, organisational change is an exercise of negotiation and compromise and not simply an exercise in convincing the various stakeholders to get on side (Cunningham and Kempling, 2009[60]). In the new structure, public employees and policymakers needed to re-learn how to navigate within the MCS. With the merger of the Environment and Transport MAs, for example, officials worked to create a single MA entity, trying to harmonise different sectors (transport and the environment), blend differences in working cultures and manage programme and project portfolios that vary in size and scope (OECD, n.d.[61]).

For the next programming period, Greece may focus on strengthening the existing scheme instead of introducing new changes, which would bring further administrative costs and uncertainty. To effectively implement organisational changes in the public sector, it is important to implement a programme of continuous improvement, focusing on the actions, initiatives and measures that are in place (Cunningham and Kempling, 2009[60]). To make the most out of changes, all actors need to incorporate the new policies and structures into their daily routines; this is a learning-by-doing process (Fernandez and Rainey, 2006[62]). For this, it may now be necessary to make the system mature, investing in its optimisation, without subjecting it to the stress of structural and profound changes.

Indeed, while the overall architecture has been set, the framework condition and tools to make it function well are not always there and the capacity needed is often underdeveloped. Law 4314/2014 that regulates the management, control and implementation of the interventions for the 2014-20 programming period, that introduces mandatory measures such as the specialisation process or the creation of the Executive Units, has not yet been fully implemented. This is the case, for example, of the selection of managers through a new process or of the anti-fraud measures regarding personnel rotation. Similarly, the Regional Development Planning Committees foreseen by this law are not yet operational (see below). For the next programming period, it will be necessary to ensure the full operationalisation of the management, control and implementation law by, for example, introducing concrete mechanisms to monitor the whole process and the respect of the relevant deadlines throughout the programming period.

There are four key conditions and areas that need to be strengthened in order to make the system function better. These are; i) better delineating the responsibilities of the different actors at the national and subnational levels; ii) strengthening and deepening co-ordination mechanisms, especially between the national and subnational levels; (iii) reinforcing the administrative capacities of the different parties with a special focus on beneficiaries; and (iv) continuing efforts in streamlining the rules and procedures to navigate within the MCS and to increase efficiency and accountability. All of this whilst ensuring that tools to make the MCS more efficient need to better suit regional and local realities and capacities.

A majority of national stakeholders see the distinction between management (MAs) and planning (Executive Units) as a positive experience. The Executive Units, for example, have helped in the maturity of projects, by supporting beneficiaries and filtering the projects submitted to the final calls by the different agencies of the ministries.

However, the role and effectiveness of the Executive Units vary, depending on the circumstances and conditions in different line ministries. In some cases, Executive Units lack the capacity to act as brokers between the line ministry and the MAs. While all Executive Units should be able to translate strategic priorities of line ministries into concrete programming, not all of them are able to deliver on this task. For example, the Executive Unit of the health sector played an important role in the implementation of all regional programmes, as all of them included specific priorities regarding the sector. In practice, this executive unit played a much wider co-ordinating role in the OP implementation than other units within the system. This Executive Unit not only decided the policy but also prepared the relevant projects, monitored their implementation as well as the indicators and co-ordinated the OPs’ revision whenever required. In other words, the Executive Unit divided the national policy into specific projects per region, to be financed by the regional programmes, after a consultation process with the regions. This was also the case for other Executive Units such as the Executive Unit of Energy, the Executive Unit of Culture or Executive Units of the Ministry of Labour (LKN Analysis, 2020[63])

With the move of all MAs to the Ministry of Development and Investments, and the creation of Executive Units in line ministries, the officials previously responsible for planning within the MCS moved to the Ministry of Development and Investments together with the whole MA structure. Therefore, for this programming period, some Executive Units lack sufficient planning expertise. For the next programming period, Executive Units will benefit from the learning-by-doing process and should be able to better accomplish their tasks.

Moreover, this has meant that, while officially MAs are no longer responsible for strategic planning, in practice, some MAs still have a hand in planning processes. This is why some stakeholders also point out the need to further clarify, in practice, the responsibilities of the MAs and the Executive Units. This is particularly true when the Executive Unit lacks sufficient capacity to undertake its role.

To further reinforce the alignment between OPs and national and sectoral strategic priorities in the 2021-27 programme, the broker role of the Executive Units needs to be strengthened. To do so, it is necessary to better clarify and communicate the role and responsibilities of the Executive Units and MAs to all the parties involved in the planning and management of EU funds as well as to those that are not part of the MCS. A system works better when all the parties involved have clarity on the roles they accomplish and their main objectives and targets. It would also help to improve accountability frameworks and co-ordination (instead of competition) between actors. For the Executive Units to accomplish their role effectively, it is important to ensure that they all have adequate personnel and internal capacities to fulfil their responsibilities. For the 2014-20 programming period, some executive units had less than 10 employees while others had more than 40.

To increase the efficiency in the use of EU funds for investments, ensuring sufficient co-ordination in the OP design and implementation processes is key. This includes actively establishing partnerships among actors at different levels of government, which could help reduce information asymmetries and ensuring the alignment of strategic priorities for the OP.

Moreover, as analysed in Chapter 3, a key challenge for Greece for the next programming period is embedding its regional policies and investments – which are now de facto the different OPs – in a territorial perspective. Moving towards a place-based regional policy in Greece that frames the Partnership Agreement for the next period requires strengthening co-ordination at the national level across sectors and key actors of the MCS, as well as with subnational stakeholders. Horizontal co-ordination across sectors and vertically with regions and municipalities is necessary to avoid overlaps in the different OPs and ensure that the regional OPs include targeted actions for each region.

Greece has made progress in encouraging and facilitating co-ordination between actors within the MCS, including with beneficiaries. In order to facilitate OP project management and streamline efforts and approaches, the NCA has set up a number of “thematic networks”, including the participation of regional MAs, to discuss specific issues such as public procurement, evaluation, integrated territorial investments, anti-fraud policies, risk management, among others. These networks meet two to three times per year and act as information exchange fora. They are entitled to formulate specific proposals for the effective implementation of their policy field. These networks have proven to be useful for different Geek stakeholders to be up to date on the main issues and requirements on specific topics. They are also a tool to exchange experiences and seek advice from peers. Some MAs have the view that the thematic networks that have been set up by the National Co-ordination Authority have an added value and provide opportunities for information and exchange of experience but, although they are entitled to formulate specific proposals for the effective implementation of their policy field, this is not happening in practice.

To complement the work done by the thematic networks, Greece has also set up a number of technical inter-ministerial bodies to accelerate the implementation of co-financed projects. The Major Projects Inter-ministerial Committee, for example, is in charge of simplifying the legal framework that directly affects the implementation of major investment projects. Other inter-ministerial committees set up at the technical level and co-ordinated by the NCA are responsible, for example, for the improvement of roads and ports construction legislation, the review of the legislative framework for expropriations and the simplification of the procedures related to archaeological works. Some specific proposals of the above bodies have already been incorporated in the respective legal framework.

Still, systematic co-ordination of policy priorities and collaboration on policy design and implementation among the different actors of the MCS can further improve the effectiveness and impact of EU-funded investments in Greece. Co-ordination among MAs/IBs, both national and regional, on the content of the OPs, the call for projects, their management and evaluation occur mostly on an ad hoc basis. This is why in some cases it is possible, for example, to find similar and overlapping calls for projects stemming from different MAs. The lack of co-ordination among sectoral and territorial approaches, policies and programmes is a longstanding problem in many countries and affects ESIF management across the EU.

A more systematic approach to the design of tenders, and a posteriori a co-ordinated approach to the management and evaluation of projects would result in more efficient public investments. For example, Greece would benefit from a co-ordinated approach for the call processes by defining a clear centralised plan agreed by all relevant parties (e.g. different MAs/IBs, including the Monitoring Committee) and developing a centralised calendar for the calls. To complement this work, Greece would also benefit from integrated outcome indicators for the projects’ monitoring defined by all parties, beyond the sectoral output and impact indicators. Such co-ordination could also reinforce MA/IB collaboration on identifying and discussing programming and technical project problems and finding realistic solutions.

To address this challenge, Portugal, for example, has set up a network of MAs, which articulates the content and timing of the calls and elaborates a yearly plan for all calls. Beneficiaries then apply in the same portal to a common call. The network also agrees on the evaluation criteria. The Balcão 2020 is the portal where all potential beneficiaries of the EU Cohesion Policy funds must apply, whether they are companies, public institutions or other private entities. For Portugal, this has created operational articulation on calls, procedures and deadlines coming from the thematic networks of MAs and has allowed having coherent monitoring and evaluation results for all OPs at the national, regional and local levels.

In Spain, the Economic and Regional Policy Forum brings together national and regional MA and IB authorities to discuss ESIF management. As an expert network, it provides space for knowledge sharing on challenges, issues and new requirements or regulations, while also offering participants an opportunity to seek advice and exchange experiences (OECD, forthcoming[64]).

Better co-ordination between the MAs implementing state aid actions and the State Aid Special Service is also necessary. This co-ordination could be improved by setting up a platform and/or a state aid database with direct access by the MAs. At the same time, it could be of help developing standard templates for state aid calls for proposals with reference to the institutional framework and, consequently, continuous updating in a database/platform in order to save time on the controls implemented by the State Aid Special Service to the calls issued by the MAs. The State Aid Information System (PSKE) could also create standard templates as regards the different levels of reporting produced by the system (the kind of data that each involved stakeholder [applicant, MA] can access). In parallel, to improve co-ordinated measures, it is necessary to provide continuous training/seminars for MA staff on state aid issues.

Beyond fine-tuning co-ordination and collaboration within the MCS, Greece needs to develop a stronger cross-sectoral and whole-of-government perspective for regional development policies and investments to step out from a project-by-project design logic. Greece would benefit from an active co-ordination platform to define its regional and territorial development policy priorities. Setting up a cross-ministerial committee, including subnational actors, on regional development policies and investments would guide and complement the work done at the technical level by the numerous thematic networks and committees. This is, indeed, at the core of the EU Cohesion Policy which aims at promoting more balanced and sustainable territorial development.

To this end, several EU countries have set up inter-ministerial committees for regional policies. The Polish permanent inter-ministerial Co-ordinating Committee for Development Policy (CCDP), for example, carries out analysis and drafts documents to facilitate the implementation of the country’s Strategy for Responsible Development with a strong territorial dimension. Portugal has also set the Council for Territorial Dialogue, which is a political body that promotes consultation and concertation between the government and the different political institutions, at regional and local levels.

The role of the National Co-ordination Authority (NCA) is vital for the efficient functioning of the MCS. The NCA (see above) provides directions, regulations and guidelines, and assists the different parties when necessary. They lead and ensure the co-ordination between the different actors involved in public investments. For this purpose, they have set the thematic networks and the inter-ministerial committees that have proven to be successful in co-ordinating specific key issues for a better-functioning MCS.

The NCA is the actor better placed within the MCS to ensure a better alignment between state aid and EU-funded projects, as well as projects financed through national and regional OPs. The NCA could further ensure that co-financed and nationally funded public investment are co-ordinated, by promoting complementarities and avoiding overlapping.

The NCA could further expand their guidance to deal with specific issues regarding the programmes’ design and implementation. For the current programming period, the fulfilment of the ex ante conditionalities, for example, at the beginning of the programming period was a factor delaying programme activation in most cases. The need for the formulation of regional smart specialisation strategies, the implementation of projects in the fields of innovation, social inclusion, the new legislation on public procurement, the development of national policies in main sectors and the frequent changes of legislation are some other reasons causing delays. The MAs (especially the regional ones) frequently express the need for more guidance on those issues and the provision of specific solutions, a task that could be undertaken by the NCA. The elaboration of specific issues by the NCA – in collaboration with the Executive Unit in charge – and its dissemination to the MAs would be a helpful tool for them, solving problems and accelerating the implementation.

In parallel, the knowledge-sharing networks and task forces could also be expanded, in particular, bringing together the NCA services, the MAs and the Executive Units. For the current 2014-20 programming period, the regional MAs had to deal with a variety of issues as specific policy priorities were implemented horizontally in the ROPs for the first time (smart specialisation strategies, innovation and entrepreneurship, poverty and social inclusion, sustainable urban development, integrated territorial investments, etc.). Task forces or thematic networks dealing with this horizontal issue could be effective, in particular if they consider the participation of thematic experts to provide solutions. For this, it is important that these networks, beyond being a forum for information and experience exchange, are able to formulate specific proposals for the effective implementation of their policy field, which has not been the case so far with the existing networks (MOU, 2020[67]).

For all countries receiving ESIF, the EC requires the creation of a Monitoring Committee (MC) in charge of checking the implementation of all of the country’s OPs. The MC is in charge of: assessing the effectiveness and quality of OPs; approving criteria for financing under each OP; making periodical reviews of OPs and their progress towards specific targets; examining the results of implementation to assess whether those targets have been met; and, where necessary, proposing revisions to OPs, including changes related to their financial management. As such, the MC complements the programme-level monitoring by overseeing the quality, efficiency and effectiveness of OP implementation. In practice, the MC is required to meet at least once a year and be comprised of various stakeholders from public, private and non-profit institutions (Batory and Cartwright, 2011[68]).

The regulation also considers the creation of OP Monitoring Committees, supposed to be the steering body providing guidance to the MA for the effective implementation of the OP’s strategy. In order to ensure the participation of a wide range of stakeholders, the MCs comprise a large number of participants, exceeding 80 members in the case of large sectoral OPs. Normally, the MCs gather socio-economic partners, representatives of the line ministries (via the Executive Units) of sectors related to the OP strategy, as well as representatives from the NCA. In the case of regional OPs, there are also representatives of municipalities. The EC also has a seat, without voting rights.

In Greece, the MC overseeing the whole PA implementation, as well as the OP MCs could better support efficient implementation of the different OPs. In Greece, as is the case in a majority of EU countries, the MCs are in place mostly to accomplish a formal requirement and their strategic role remains limited (Bachtler, Mendez and Oraže, 2013[69]; OECD, forthcoming[64]). Different Greek stakeholders pointed out that the MCs do not fulfil a role as a steering committee and members lack ownership of policy results. This is partly the result of heavy information and burdensome procedures. Documents to inform OP MC members are of a significant volume and include an important amount of information using ESIF jargon, which is not necessarily easily accessible to “outsiders” of the system. In some cases, this limits the possibility of real engagement of the different stakeholders, limiting the discussions of MCs as well as the impact of their work. The MC, thus, ends up being a formal rather than a participatory process aimed at monitoring the OP.

To improve the functioning of the MCs and transform them into effective steering groups that ensure better use of funds, a key step would be to improve the communication among members as well as clearer communication of what is expected from this body. To facilitate engagement beyond formalities, the information shared with MC members could be reduced and synthesised, avoiding the use of EU jargon as much as possible. Indeed, presenting information in a simple way helps all sides engage in fruitful dialogue and keeping instructions as clear, succinct, and convenient as possible might help to improve participation and reduce errors (OECD, 2018[1]). Making the MCs more accessible could also facilitate its role in improving programme monitoring, including by discussing evaluation results at their meetings and providing feedback to the MA. Given the composition of MCs (including socio-economic partners, NGOs and regional and local authorities), they could also play a role in influencing resource allocation (OECD, forthcoming[64]). If MCs are able to conduct strategic discussions and decisions, they can effectively help the MAs in better informing investment needs and priorities as well as the impact of programmes and projects. To facilitate their task, a smaller but potentially more targeted MC in terms of representation could be more functionally operational and efficient. Therefore, the possibility of reducing the number of members while keeping the representation of all relevant stakeholders should be examined.

The reduction of the number of MAs is a way of facilitating co-ordination and coherence between the different sectoral policies. Indeed, it is a way of moving from planning based on sectors towards planning based on objectives. If well implemented, this can be the first step towards place-based regional development planning.

The merger of different MAs into a single one has facilitated the adoption of good practices by sharing the experiences of officials that were previously located in different line ministries. For example, in the MA for Transport and the Environment, a single system for the administration and management of document workflow has been established, and although it is early days, there is scope for greater professionalisation of key business operations such as performance evaluation, outreach and recruitment, and mobility (OECD, n.d.[61]).

While progress has been made towards an effective merging of functions and expertise, there is still space to improve the synergies that these mergers can create. The consolidation of OPs in fewer and bigger budget programmes created important difficulties in managing them. The mergers lack sufficient planning and preparation and the MAs merged were not involved in the process from the beginning. Therefore, the parties have dedicated important resources and time to overcome administrative, technical and cultural issues arising from these mergers. For the MA on Transport and the Environment, for example, officials have proven difficulties in creating a single MA entity due to differences in working culture and differences in the management of projects of different size and scope, among others. This lack of organisational harmonisation might risk duplication of efforts, miscommunication and, in some cases, frustration as different teams allegedly approach key reporting requirements with differing degrees of urgency and method. As a result, there is room for the MA to further harness the synergies and strategic complementarities between an OP’s two thematic sectors (OECD, n.d.[61]). It is thus important that the merged MA capitalise on the synergies and complementarities that can exist between the different sectors in order to move effectively from sector-based planning towards objective-based planning.

Greece has benefitted from the EU Cohesion Policy partnership principle by improving the degree to which the national and subnational governments collaborate. The dialogue and collaboration with subnational governments are at the core of EU Cohesion Policy and, for this, it has developed its own, unique system of multi-level governance. Through programming, it aims at reconciling and integrating the perspectives of different development partners, ranging from the EC, national governments, and regional and local institutions to private companies and civil society. In this context, Greece has implemented some vertical co-ordination tools mostly in the framework of EU policies and access to EU funding (Hlepas, 2015[8]). For example, in each region, the Regional Development Planning Committee should have an advisory character for the compilation of ROPs and may elaborate some recommendations to the MAs of the sectoral OPs on the priority axes or specific objectives or categories of action they have as beneficiaries of municipalities. There were also several rounds of consultation with relevant stakeholders in the development of the PA and OPs.

Greece has made efforts to improve co-ordination and collaboration among the national, regional and local levels. Greek law foresees a range of contracting and networking possibilities to co-ordinate policies between the two tiers of subnational governments. The various co-ordination networks within Greece’s overall system of OP management – the network for smart specialisation, the thematic networks to promote exchange on public procurement, evaluation, integrated territorial investments (ITI), anti-fraud, risk management and publicity; the inter-ministerial bodies focused on accelerating project implementation; and the networks formed by the MA and its IBs – all contribute to the knowledge base for more effective ERDF and Cohesion Fund investment.

For the 2014-20 programming period, Greece has also promoted co-ordination with regional actors and among the different parties of the MCS. Within the system, co-ordination between the different levels of government occurs mostly in three concrete instances with formal channels in which the NCA, the MAs (national and regional) and sometimes the beneficiaries sit together:

  • Preparation and planning of the PA: The architecture of OP budget allocation among ROPs and policy sectors was decided at the political level, following consultation with regional governments (conferences, workshops, among others) and line ministries, on the basis of a proposal from the Ministry of Development and Investments. The priorities and budget allocation were proposed by the NCA to the Ministry of Development and Investments taking into account relevant EC documents, such as the position paper, as well as stakeholders’ proposals, during a gradual strategic planning process. The proportion of budget allocated to ROPs is one of the key decisions taken during this process and represents a source of tension between the Ministry of Development and Investments and the regional governors. It is crucial that, in this process, all parties agree on the demarcation of actions to be implemented through the two categories (national and regional) of OPs, in a way to avoid overlaps and exploit synergies. For the 2021-27 period, line ministries should set up “strategic planning teams”, under the responsibility of the respective Executive Unit and the participation of the current MAs.

  • Preparation and planning of OPs: For the 2014-20 period, further consultation among stakeholders and line ministries took place, with the active participation of the MAs under the co-ordination of Ministry of Development and Investments. During this process, all the parties agree on priorities, policy objectives and specific objectives for each OP. Line ministries and regions set up “strategic planning teams” in charge of the OP design and drafting. As regards the regional strategic planning teams they comprised representatives of the relevant MA, of the Directorate for Development Planning and other directorates within the region. The strategic planning teams were supported in their work by external consultants. In some regions, thematic working groups were also set up to provide expertise in specific issues.

  • Prioritisation of projects within the OP: For the first time in the 2014-20 programming period, the specialisation process (Box 4.14) details budget allocations and specifies the different actions, investment priorities, potential beneficiaries, expected results and time schedule. The specialisation process is completed by the call for proposals, defining the project selection criteria, led by the MAs (in consultation with the Executive Unit for the national OPs). The specialisation process involves the NCA, OP MAs, Executive Units of the line ministries or, in the absence of such, the relevant departments of the ministries, the OP Monitoring Committees and the governors (for regional OPs) or the Special Secretary of the Ministry of Development and Investments (for the sectoral OPs).

Greece has also had good experiences with setting working groups to discuss and address specific issues. In 2018, for wastewater treatment projects for example, the MA on Transport and the Environment set up a working group across levels of government to foster co-operation among the Ministry of the Environment and Energy, the municipalities, the municipal water supply and sewage companies and the project owners (Psycharis, 2019[57]). Another example is the Special Management Service for the Rural Development Program (MA) which is responsible for co-ordinating all stakeholders, ensuring the development of their monitoring capabilities, guiding and facilitating co-operation between the stakeholders.

However, as it is the case for the planning of regional development policies (see Chapter 3), some of the co-ordination channels established in the context of the PA respond to formalities and their concrete impact remains limited. Law 4314/2014 for the management, control and implementation of development interventions for the 2014-20 programming period, for example, foresees the creation of a Regional Development Planning Committee in each region as an advisory body. These committees may elaborate some recommendations to OP MAs on priority axes or specific objectives or categories of action they have as beneficiaries of municipalities. However, despite their provision by law, none of these committees are operational. The lack of targeted measures in ROPs reflects a limited involvement of regional actors when defining the objectives and priorities that the OPs should meet. Policy priorities and guidelines do not always match local priorities, needs and capacity.

The OECD has also observed that subnational actors have difficulties in grasping the consequences and seeing the impacts of co-ordination and collaboration. Subnational stakeholders from across the country point the lack of co-ordination and bottom-up approach to policymaking, in particular when it comes to funding allocation. The existence of formal co-ordination tools does not in themselves ensure proper co-ordination. The parties involved must perceive an impact and be able to see a concrete output, otherwise, the benefits are limited and future participation of subnational actors is at risk. Indeed, trust in the process and among the parties is essential for any co-ordination tool to work properly. Trust is both a condition for an effective dialogue and a long-term outcome of collaboration (OECD, 2018[1]).

Another example of the limited participation of local actors in policy planning and implementation is the impact of ROP MCs. While municipalities should directly participate in these bodies, their participation has been reported as fragmented (Council of Europe, 2017[12]). There is scope for improving the co-ordination between regions and municipalities, for instance by strengthening the institutions that facilitate consultation as well as the role of regional associations of municipalities in formulating common positions and issuing eligible programmes to be considered for incorporation into the ROPs (Council of Europe, 2017[12]).

Greece needs to take a more systematic approach to co-ordination and collaboration, especially with regards to beneficiaries. Collaboration among the different levels of government, including with civil society and citizens, is crucial to embed national and regional OPs with a territorial approach (Chapter 3). Effective exchanges between national government, MAs, regional MAs and beneficiary local authorities, help to ensure that national OPs make room for regional MAs to tailor regional-level interventions and investments. At the same time, it is a way of avoiding overlaps and creating synergies between national and regional OPs as well as ensuring that regional OPs are tailored to the different regional and local realities. They also help to ensure the alignment of objectives and expectations of all parties, as well as flagging where subnational governments may lack capacities to design or implement projects. This is also a way of building ownership over OP projects among regional and local authorities. Ownership over sectoral OP projects is particularly important as many Greek regions act not only in the interest of their own OP but also as intermediary bodies (IBs) for sectoral national OPs. For effective implementation, regions must “own” the objectives of the national OP and agree with the implementation process.

At the same time, regular opportunities for two-way communication between MAs, IBs and beneficiaries regarding changes in regulations, processes or programmes might be helpful and contribute to reducing project delays. Regular co-ordination and communication among these parties are also helpful to gain insight into how to better support its beneficiaries throughout the project cycle. This could help an MA better tap into “on the ground” knowledge of beneficiaries, thereby supporting more effective OP design, monitoring and implementation, while also building subnational capacity. Indeed, ESIF investment relies on effective information flows and knowledge sharing among multiple stakeholders at all levels of government, and beyond. Without good and timely communication among those responsible for OP implementation, large biases and information asymmetries may arise.

To ensure the alignment of priorities and co-ordination among levels of government, OECD countries have developed different strategies. In Poland, for example, local authority investment projects may be financed using EU funds on the condition that they contribute to the implementation of a multi-annual development strategy. A recent OECD study shows that this approach has a positive impact on regional programme effectiveness and the sustainability of project financing when there is room for subnational governments to negotiate and influence conditions set by the national level. This experience suggests that conditions around which the two levels agree may work better than those imposed by one side or the other (OECD, 2013[70]). To deliver EU Cohesion Policy in a co-ordinated way, Portugal has used contracts among levels of governments known as Pacts for Territorial Development Cohesion (see Box 4.15).

Administrative capacity is recognised as one of the key factors contributing to the success of EU Cohesion Policy (Boijmans, 2013[71]; Rodriguez-Pose and Garcilazo, 2013[72]). Successfully managing and administering ESIF rests on the effective governance of the investment process, on the administrative capacity of MAs, and on the capacities of a diverse range of stakeholders – from multiple levels of government to private firms and not-for-profit entities that intervene in the process.

The EC has made administrative capacity building central to EU Cohesion Policy and the Europe 2020 strategy. Since the beginning of the current programme period, the EC and specifically DG REGIO, offers EU member state administrations diverse mechanisms to strengthen their institutional capacity and professionalise those managing ESIF. These include institutional capacity building and reforms under Thematic Objective (TO) 11, technical assistance (TA) for authorities that administer and use ESIF as well as specific programmes, such as the S3 Platform, the Urban Development Network, guidance for practitioners on how to avoid public procurement errors; training seminars; and the EU Competency Framework for managing and implementing the ERDF/CF together with its self-assessment tool, which identifies and addresses competency gaps (OECD, forthcoming[64]).

A key challenge for the next programming period is linked to the financing of technical assistance. While TA will still exist, there will no longer be a separate thematic objective (currently TO 11) dedicated to capacity building. In practice, this means that countries will no longer receive a lump sum for administrative capacity. In its place, as stipulated by Article 25 of the Regulation of the European Parliament and the Council, additional technical assistance financing will be secured by developing roadmaps for specific administrative capacity building actions (EC, 2019[73]). To support European member states and their MAs adapting to this shift, DG REGIO launched a pilot project, with the support of the OECD, to give an initial shape and test an approach to designing MA roadmaps that could eventually be used for obtaining technical assistance in the post-2020 ESIF system.

Greek employees within the MCS have a long experience in the structural funds’ area, which is an advantage for the efficiency of the system itself. Given the freeze on recruitment introduced in the wake of the economic crisis, the staff have been working together for several years and have built up deep expertise and institutional knowledge in ESIF management. This accumulated experience has helped to respond to different challenges during the implementation in a timely and effective way. Several stakeholders recognised the rich experience of certain national MAs in managing the OPs, especially their knowledge in understanding funding procedures and project implementation. For example, Greek stakeholders, as well as EC authorities, identify the MA for Transport and the Environment as one of the best-performing MAs thanks to the professionalism and knowledge of the MA staff. Both the MOU personnel and the personnel that comes from the public sector are both highly qualified, with very high standards of knowledge and experience. For example, more than 96% of the current staff holds a university degree, while 56% are postgraduates (MOU, 2020[67]).

Greece has to be aware that, while the stability of employees has brought important advantages for the functioning of the system, the lack of new personnel can be also prejudicial as the system does not benefit from new perspectives that new and younger employees might bring. It might also affect motivation as employees have limited opportunities for career progression and there are few tools to recognise and reward performance (OECD, n.d.[61]).

At the regional level, there is also some cumulated experience. While the newly created regions are officially MAs for the first time during the current programming period, in the previous period, the regional level was also managing EU funds, either as an MA or an IB. Still, planning for the current programming period was done, to a large extent, by external consultants. While this may support regions to reinforce planning capacities, it also limits the ability for regions to create capacities internally on this matter. For the next programming period, Greece will have to make a special effort in reinforcing the planning capacities within the regions themselves by gradually internalising tasks that have been so far conducted mainly by external consultants

The compliance with MoUs4 signed between the EC, the ECB and the International Monetary Fund (IMF), limited the capacity of regions and municipalities to hire new and qualified professionals. Memorandum II sets rigid goals for personnel reduction and a hiring cap on new personnel. The rule of one recruitment for five exits that applies to national and subnational governments has meant that many posts have gone unfulfilled and that the types of skills that are needed to implement reforms have been filled externally. Moreover, given the hiring freeze, managers are often reluctant to support secondments of high-quality staff to the MA, limiting the possibilities for MAs to fulfil their needs (OECD, n.d.[61]). Special consideration must be given to the fact that high workload, long working hours and insufficient incentives inevitably drive staff away from MAs towards other less-demanding government departments or the private sector. As a result, a disquieting phenomenon of erratic mobility and high staff turnover is increasingly being observed (MOU, 2020[67]).

To illustrate the staff shortages, the Joint Ministerial Decrees foresaw 2 055 jobs in the special services but only 1 471 of these have been filled (MOU, n.d.[76]). Besides the shortage of staff, some MAs struggle to find people with the right qualifications and knowledge, especially at the subnational level. According to mapping exercise conducted by the MOU in December 2017, the special services have urgent specific shortages in law (particularly in the field of public procurement), IT and software engineering, financial instruments, auditing, accounting, construction engineering and regional development (MOU, 2020[67]).

The shortage of staff and lack of capacities also affects the Executive Units. The Executive Units should have expertise in the sector they operate and on the management and implementation processes in order to be able to prepare mature projects for their sector. As they operate within line ministries, the first requirement is covered by definition. The second is in many cases undermined by the availability of appropriate human resources in some Executive Units, as among them, there are units with less than 10 employees and others with more than 40. The specific needs of the Executive Units need to be assessed through an in-depth analysis of the potential gaps in their operation, considering their different degree of involvement in programme implementation, in view of strengthening their role in the next programming period. In this regard, the assessment of the Executive Units that will be prepared by the NCA will be crucial to identify the main capacity gap of these entities. This exercise will indicate the specific actions that should be undertaken at the level of each specific Executive Units considering that their role and responsibilities would remain the same for the next programming period.

At the regional level, the capacity gap also represents an important challenge, especially with regards to planning capacities. In general, the Directorates of Development Planning within each region lack the appropriate human resources in terms of quantity and expertise in order to fulfil effectively their role in regional planning. Of course, there are variations between regions in this field; some perform better than others. It is worth mentioning that representatives of the Directorates of Development Planning participate in the “strategic planning teams” which were set up for the design of the OPs in the current and previous programming periods. They also participate along with the other region directorates in the design of the four-year regional programme,5 according to the Kleisthenis programme, which includes the strategic plan, accompanied by the operational plan and indicators for monitoring and evaluation. This means that they have acquired on the ground a level of knowledge as regards the ESIF OPs’ design. However, a major challenge remains matching and adapting the regional priorities to the specific priorities and guidelines included in the ESIF programming as applies in each programming period.

Human resources planning and recruitment are particularly challenging in Greece as MAs do not hire their personnel directly. All their staff is seconded from different parts of the public sector, or the Management and Organisation Unit (MOU). The ESIF Special Services (46 distinct structures in ministries and regions) constitute, from a human resources point of view, hybrid teams which are staffed with both tenured civil servants and seconded MOU personnel. The MOU seconds to ESIF Special Services more than 70.6% of its workforce and only 13.4% is employed in the MOU headquarters (providing to ESIF services human resources management, training, know-how and tools, information systems, infrastructure and ongoing support to beneficiaries) and 16% is seconded to other public entities (MOU, 2020[67]). Candidates from outside the public administration apply to the MOU to work on EU funds, and, if successful, enter the Partnership Agreement pool. They are immediately seconded to an MA or other body for 5 years, renewable. Candidates from inside the public administration also need to be seconded to the MA, which requires selection procedures (written examination, interview and knowledge) and experience criteria, as well as agreement from their home department.

While MOU staff is known for its high-qualification, the last open call for personnel took place in 2005. This has translated into an ageing staff – the mean average of MOU’s staff is currently over 50 years – which cannot cover specific needs, namely in the fields of law, IT, finance or local development. Thanks to the flexibilisation of the attrition rule to 1:1, in 2018, there was an agreement to conduct a new open call to hire 300 new employees through the MOU, specialised in fields such as finance, IT, local development and law. Nevertheless, this agreement has not yet received final approval and the hiring process has not yet started. Ad portas of the new programming period, the hiring of the new personnel is a top priority; new staff needs to be involved from the planning stage of the new PA.

The MOU has played a key role in the optimisation of human resources within the ESIF management system. The MOU regularly carries out a mapping of human resources in special services. It has a comprehensive view on the status of the human resources of the entire MCS by recording data such as the number of staff (both civil servants and MOU officials), job positions, qualifications and professional experience, tasks and employee status as well as staffing priorities of the ESIF special services. This data reflects that, despite important staff shortages, there is an overall satisfactory distribution of specialisations within the various MCS areas (e.g. a high number of engineers in services managing ERDF actions) (MOU, n.d.[76]).

Without the possibility of hiring new staff, Greece needs to continue its efforts in building capacities within the MCS, in particular at the regional and local levels. For this purpose, the MOU offers a wide range of capacity building activities. They organise seminars as well as e-learning platforms for MAs and beneficiaries focused primarily on EU technical knowledge issues, managerial competencies and project management (Box 4.17). The Hellenic Agency for Local Development and Local Government (EETAA) is also a key actor for capacity building of local government authorities. They offer, for example, technical support of small and remote municipalities in order to carry out technical projects, and they issue guides and tools to promote local development.

While there has been an increasing offer of capacity building practices, MAs – in particular regional ones – emphasise the need for benefitting from more targeted and dedicated training that effectively address their needs. For this purpose, Greece could develop a more systematic approach to reviewing training needs of operational staff and managers. In parallel, a flexibilisation of the attrition rule for the MOU would allow them to hire new qualified personnel through open competition, in order to cover urgent and longstanding needs in the management and implementation of ESIF OPs. This new staff would need to be distributed in all regions, according to the specific priorities of each special service and the priorities set by the coming programming period.

In most OECD countries, competency frameworks are used to align training and development to organisational and individual development needs, and link training to career progression. The lack of a competency framework in most MAs and Executive Units means training does not address the long-term needs of the organisation, nor of individuals. Instead, training is sometimes seen as a burden rather than as core staff and organisational development activity. To develop such a strategy, an important preliminary step is the need for an evidence-based gap analysis, to understand which skills and competencies are available in the MA, and which ones should be developed in order to properly manage ESIF-financed projects (OECD, forthcoming[64]). The EC’s Competency Framework and Self-Assessment Tool is designed to provide this kind of analysis. In this line, the Campania region in Italy carries out a gap analysis on skills for senior management of the regional council of Campania. The results of this analysis are shared with the National School of Administration, which then plans training accordingly.

In parallel, Greece could focus on finding innovative solutions to recruitment challenges. This is what has been done by Italy for example, in the regions of Calabria, Friuli-Venezia-Giulia and Umbria. These three regions have collaborated to set up a registry of chartered accountants specialised in the management and control of programmes co-financed by ESIF. Its purpose is to facilitate MA access to candidates with sought-after skills but who can prove difficult to attract. The registry will be piloted until the end of 2019 and will be evaluated by independent evaluations occurring as part of the Italian Plans for Administrative Reinforcement (OECD, forthcoming[64]). Partnerships with local universities can also be a way for regional MAs to leverage possible expertise among students and faculty for specific projects that could add value to the MA. This type of partnership needs the direct involvement of MA staff to avoid over-relying on “externals” and build, together with experts, the internal capacity to carry out their different functions.

The low level of capacities of beneficiaries is a longstanding problem in Greece that concerns micro and small beneficiaries – which represented over 96% of the beneficiaries in 2017 – as well as larger ones. It has been largely documented that smaller Greek municipalities are especially affected by the lack of qualified personnel. Some Greek municipalities face shortage not only of expert administrators carrying out specific technical duties but also of personnel to perform even basic tasks (Council of Europe, 2017[12]). In the same line, several evaluations have noted that beneficiaries, in particular municipalities, have insufficient expertise and that this has led to delays or even projects being cancelled (Huliaras and Petropoulos, 2016[52]). Indeed, beneficiaries frequently re-submit technical bulletins up to the selection of the project proposal due to the low degree of maturity of the proposals and the failure to complete the standard forms of the MCS 2014-20. This translates at the end in low rates of payment progress that contrast with the budget activation rates. While the activation rates are high (even exceeding the budget allocated) for all types of regions, payments rates are low: in less developed regions, verified payments represent only 25% of their total budget (Psycharis, 2019[57]). Although the discussion frequently focuses on the small beneficiaries (municipalities are the most frequently referred example), the problem also concerns the larger ones. The delays regarding project implementation with a very high share of the budget in the sectors of transport or the environment leads to the conclusion that specific actions must be undertaken regarding all levels of beneficiaries.

In the case of municipalities, a lack of the right technical expertise on staff is well acknowledged and they have been struggling under rules limiting the hiring of permanent public service staff that have been imposed since 2010. The lack of capacities particularly affects smaller and remote (mountainous and islands) municipalities. For example, as per MOU numbers, approximately 35 small island municipalities and 10 mountainous municipalities do not possess in house technical services for tendering their projects and have to seek other public services to assist them. This process is complicated and time-consuming (MOU, n.d.[76]). Most of the small island municipalities are understaffed and do not have an engineering department (islands without such a department constitute 75% of all island municipalities) (LKN Analysis, 2020[63]).

The most frequently identified problems that beneficiaries face during project implementation relate to:

  • Failure by the beneficiary to comply with the institutional framework of public procurement, which may lead to non-eligible expenditure.

  • Improper project management by the beneficiary, which may lead to non-eligible expenditure.

  • Non-compliance with deadlines by the beneficiary and failure to take appropriate measures to resolve the problems that arise, which has a negative impact on the OP’s indicators.

  • Implementing a project without taking into account the current legal and regulatory framework which leads to unlawful actions.

Weak capacities of beneficiaries are a common issue across many EU states and efforts are made to address it through initiatives under the Technical Assistance Plan. However, while in principle these funds would be used in Greece to upgrade the system’s capacity to manage and absorb earmarked funding, in practice, they have been used for hiring consultancy firms to do the job (Huliaras and Petropoulos, 2016[52]). This has limited the creation of internal capacity.

While Greece has made efforts to strengthen the support to beneficiaries, the tools used do not necessarily respond adequately to specific needs. In order to assist beneficiaries that lack technical staff (i.e. engineers) to supervise public works, a provision was included in the NSRF 2014-2020 Law 4314/2014, article 28. The idea was the creation (by MOU or the Technical Chamber of Greece) of a register of freelance engineers willing to undertake project supervision to support weak beneficiaries. A ministerial decree was published to stipulate the details of the register (eligible engineers, their compensation and the criteria for their selection in each project). Unfortunately, the register itself has not been made available yet. For the next programming period, it will be necessary to activate the register. In addition, a ministerial decree (issued in May 2016 by the Deputy Minister of Economy and Development) regulates the support of beneficiaries in the current programming period. The decree aims to provide guidelines on how support weak beneficiaries focusing on strengthening their managerial, operational and financial capacity within the frame of NSRF projects. The advantage of this ministerial decree is that it sets a framework and describes the role of the stakeholders involved. However, in practice, this decree does not necessarily provide the required flexibility needed for support activities. Its main disadvantage is that it introduces heavy and time-consuming bureaucratic procedures which, in practice, are fulfilled after the actual beginning of the support (MOU, n.d.[76]). To further develop the support for weak beneficiaries in the next programming period, it is important to simplify the procedures specified in the decree.

In parallel, the MOU leads the training activities for beneficiaries. For the 2014-20 programming period, the MOU led, for example, the technical assistance model for the wastewater sector. Wastewater has been for several years a very complex and challenging issue for Greece and a significant amount of structural funds have been approved in Greece to equip the country with modern sewerage facilities. In this context, the MOU was responsible for implementing a technical assistance project to draw up 13 regional plans with a new methodology for identifying priorities between small agglomerations, updating the national wastewater database for reporting and monitoring. To date, Greece has achieved important progress resulting for the technical assistance project, most of them linked to the governance of the wastewater management system. Among this progress is the creation of a steering committee and technical secretariat, the development of the 13 master plans with a timetable for their implementation, the creation of a reporting system and methodology to identify projects at risk and how to resolve them, among others. Based on this experience, the MOU can further develop targeted actions to help small municipalities and their institutions to improve their technical, managerial and organisational skills for the implementation of their projects.

Still, several stakeholders agree that training activities are often insufficient to keep them abreast of the latest developments with legislation, regulations, procedures and processes. Indeed, the lack of capacities is strongly related to changing and burdensome rules. There is little engagement with beneficiaries to identify their training needs and this is why some stakeholders perceive that training does not necessarily add significant value to day-to-day work and longer-term career and personal development. As a result, in the context of important workload pressure – municipalities often do not have sufficient staff to deal with daily tasks – training is rarely prioritised or incentivised. This is particularly true when learning is not well aligned to the needs of individuals and their organisations.

Capacity building activities need to be appropriately tailored to local reality to encourage the involvement of beneficiaries. Capacity building can be done at different levels, with different short- and long-term objectives and using different mechanisms. Beneficiaries need, at least in the short term, stronger targeted support to prepare specific studies required to implement a proposal for evaluation and financing. This support can come from the MOU, the NCA, the national or regional MAs, or through inter-municipal structures. The MOU should pursue, for example, the creation of a technical service to carry out all the necessary public tendering procedures up until the signing of the contract phase. To better target the support, the MOU could also expand the geographical coverage of their tasks forces which are currently present in some areas of Greece making it easier to address quickly any local requests. All types of support provided by the different actors must be strongly co-ordinated to avoid overlaps and better target it to the specific needs. This is why the role of the NCA (as co-ordinator) and regional MAs (to help target the needs) is crucial.

In parallel, the NCA should co-ordinate closely the MAs regarding the support and monitoring of the beneficiaries, through binding action plans, with strict timetables and milestones and appointment of specific persons in charge for its implementation (from the tendering process to the contracting phase and the supervision).

Beyond the specific and targeted support for project design, beneficiaries would benefit from regular knowledge-sharing activities. Communication, information and knowledge-sharing practices between the beneficiaries, the MAs and other actors in the OP management system, could help to jointly identify solutions to specific problems. This could also help better tap into “on the ground” knowledge of beneficiaries. Ensuring regular and well-structured exchanges between the MAs and beneficiaries could offer additional insight into regional needs and the true capacity of local beneficiaries, thereby supporting more effective OP design, monitoring and implementation. Periodic “knowledge workshops” could be developed under the leadership of the MAs (or a group of MAs, or NCA, or Thematic Working Group) and target specific topics. Optimally, themes should cover topics that the beneficiaries themselves highlight as important or of interest, but could include regulatory issues, state aid, etc. These workshops could also involve other relevant stakeholders and representatives from other knowledgeable bodies. These instances would help to actively exchange experiences and identify potential solutions to common challenges (OECD, n.d.[61]).

Improving the regulatory environment is a precondition for Greece to use EU funding more efficiently and with that, stimulate economic activity, create jobs and raise productivity among all regions. In addition to economic effects, improving the regulatory environment should also lead to reduced opportunities for corruption and maladministration in public service and therefore increase trust in state institutions and the government (OECD, 2014[78]). Regulatory burdens, combined with administrative capacity weaknesses leads to inefficient use of resources, affecting to a greater extent the less prepared regions and localities.

Greece, as well as all EU countries, needs to deal with administrative and regulatory burden arising from EU legislation as well as the one stemming from its own national legislation. While the EU has made administrative simplification a key priority for the next programming period, these efforts need to be echoed by the Greek national government.

Aware of the burden of the regulatory environment, the EC has made regulatory simplification a top priority. For example, in the 2014-20 period, there is a single set of rules covering the EU’s five ESI funds. Countries draft just one document to apply for funding (previously it was one per fund) and can use predefined accounting methods to simplify cost options (OECD, 2018[79]). Still, for the current programming period, the volume of rules for EU Cohesion Policy alone runs to over 600 pages of legislation and 5 000 pages of guidance (EC, 2017[80]). The EC High-Level Expert Group that monitors simplification for ESIF beneficiaries for the next programming period acknowledged that excessive and overlapping guidance at the EU level “has long passed the point of being able to be grasped either by beneficiaries or by the authorities involved” (EC, 2017[80]).

This is why, for the 2021-27 programming period, the EC aims to strike the right balance between accountability, simplification and performance, while still maintaining strict rules for the sound management of EU funds. The EC has proposed a number of changes to the Cohesion Policy framework6 for the 2021-27 programming period including simplification and fewer policy objectives.

Since the crisis, a priority for Greece has been the improvement of the regulatory environment. OECD indicators, for example, point to the sharpest reduction in the rigidity of product market regulation between the end of 2007 and the end of 2012 among OECD countries (OECD, 2014[78]). Indeed, it has been widely acknowledged that reducing the administrative burden is necessary to make EU Cohesion Policy more effective. Too much legislation and guidance and/or the proliferation of multiple conditions coupled with weak capacities may lead to low or inefficient use of cohesion funds by subnational governments. If the administrative burden exceeds the expected benefits of regional policy outcomes, project beneficiaries might not even bother applying for European grants to fund their initiatives. Administrative burden affects particularly small beneficiaries (e.g. small or weak subnational governments, SMEs, start-ups) and could potentially increase regional disparities instead of sustaining convergence. Moreover, while one of the main objectives of regulatory procedures might be setting controls, checks and balances to avoid corruption, they can, on the contrary, have the opposite effect, potentially incentivising illegal construction and corruptive behaviour (OECD, 2011[81]). It is thus crucial to compare the administrative burden with the expected policy benefits to avoid an excessive amount of guidance and legislation (OECD, 2018[1]).

Despite the progress, stakeholders across the country identify regulatory practices and the associated administrative burden, as one of the top challenges for the efficient use of EU funds. They point to the excessive number of time-consuming procedures delaying or/and blocking decision-making and implementation of programmes and operations (e.g. joint inter-ministerial decisions, issuance of permits, such as archaeological permits, tendering procedures and contracting, etc.). A survey conducted among the Local Action Groups (LAGs) shows that 71% of them consider that the LAG’s ability to implement LEADER is constrained by bureaucracy and administrative burden and the same proportion consider that time taken to approve selected projects has a negative effect (ENRD, 2018[82]).

The excessive administrative burden partly stems from the need to align priorities and compliance requirements in an environment with low levels of trust and confidence (Eurocities, 2017[83]). This is particularly challenging when diverse actors from different levels of government need to co-ordinate and collaborate or when regional policies are operating in areas with low governance capacity or risks of corruption. Simplifying administrative procedures requires, among other things, trust among the various actors involved (OECD, 2018[1]).

In addition to aligning with EU requirements for the management and control of European funds, Greece’s national regulatory framework has incorporated additional provisions. This results in gold-plating and can create an unjustified administrative burden. The reasoning behind the additional requirements rests on a series of operational factors, including the longstanding weaknesses in the Greek public procurement system, in project selection and monitoring, and in striving for compatibility with guidance notices issued by the EC. While EU regulations do not call for or lead to gold-plating in and of themselves, in its effort to implement the EC’s regulatory guidance, the Greek government has adopted a stricter system (often applied to public infrastructure projects and to some degree state-aid projects). In the day-to-day, this results in a significant administrative burden. Contracting authorities are known to require that technical offers include not only the necessary documentation per European directives but also documentation requested in previous national legislative framework(s) (OECD, n.d.[61]). Beneficiaries, in particular, are the ones that face the largest hurdles in accessing and applying regulations.

The frequent changes to regulatory frameworks – in particular the public procurement law – affects the ability of the MAs, IBs and beneficiaries to cope with the procedures required by law. As a result, MAs put important resources in keeping up with the changes, understanding their implications and how to apply them. Communicating the changes to the IBs and the beneficiaries and actively helping ensure compliance is also a very resource-intensive task for MAs. The Thematic Network on Public Procurement is a strong step toward managing some of these procurement-related difficulties.

For example, some of the main institutional and regulatory factors that have led to delays in the implementation of the 2014-20 OPs so far – that deserve further assessment to identify sources of simplification – include:

  • The adoption of Law 4412/2016 (Government Gazette A’147) for the award and execution of public works, supplies and service contracts (adoption of Directives 2014/24/EU and 2014/25/EU) and Law 4413/2016 (Government Gazette A’148) for the award and execution of concession projects (adoption of Directive 2014/23/ EU).

  • Delays in the update of the Regulation for Buildings’ Energy Performance (KENAK) which was finalised by the Joint Ministerial Decision on 12 September 2017 and further specified by the technical instructions of the Technical Chamber of Greece for the Energy Performance of Buildings (Decree 182365/17.11.2017, Government Gazette 4003/17.11.2017 and Government Gazette B‘4108/23.11.2017).

  • The adoption of the National Climate Change Adaptation Strategy (April 2016), as well as of the regional strategies for adaptation to climate change that contribute to the optimal implementation of the national policy with the further specialisation at the regional level.

  • The updates of the National Plan for Waste Management and of the National Strategic Plan for Waste Prevention, ratified by the Joint Ministerial Decision 51373/4684/25-11-2015 of the Ministers of Interior and Administrative Reconstruction and of the Environment, and the update and approval of the Regional Plans for Waste Management (PECA), being a prerequisite for the financing of the related projects.

  • The implementation of EU directives and regulations on state aid, in projects with technical specificities in terms of their physical scope, requiring adaptation to ensure the agreement of the EU on a number of projects.

Moreover, there is consensus – in Greece and across EU countries – on the uncertainty generated by differing interpretations of the regulatory framework by the MAs, the Audit Authority (AA), EC services and the European Court of Auditors. Three different authorities audit the MAs (the Certifying Authority [CA], the AA and the relevant services of the EC) and they all might have different interpretations on how to apply the regulations. Thus, audit approaches (and sometimes findings) can differ by auditor or by on-the-spot verification teams. To address this, the NCA needs to ensure a consistent and agreed interpretation of rules by national auditors and evaluators. Moreover, co-operation with audit authorities and the EU services is needed in order to define simpler rules and avoid national gold-plating of EU regulations.

The regulatory changes combined with the lack of clarity of regulatory procedures generate excessive administrative burden, instability and uncertainty in the investment process, which in turn causes delays in implementation and affects absorption capacity. This might be one of the reasons – not the only one – behind the low rates of payments observed, in particular, in the less developed regions. As of May 2019, the proportion of verified payments represented less than 30% of the total cost for all ROPs. This contrasts with the high rates of activation – which includes drawing up and publishing calls, call specialisation, evaluation of Executive Structures requests, approval by the Monitoring Committee and issue of the Inclusion Decision.Beyond the implementation delays, regulatory burden might also generate mistrust in the system and, at an extreme, a disincentive to use ESIF among beneficiaries.

Administrative simplification has remained high on the agenda in most OECD member countries over the last decade. All EU member states have adopted elements of administrative simplification and burden reduction strategies and most of them have a body responsible for the legal quality, administrative simplification/burden reduction, stakeholder engagement and overall legal quality (OECD, 2019[84]). The Danish Inter-Ministerial EU Implementation Committee, for example, oversee the transposition of EU law to avoid additional burdens for businesses through the transposition of EU directives (Box 4.20).

EU governments are also increasingly trying to limit the flow of regulatory costs stemming from new regulations and reduce the existing regulatory stock. Countries are increasingly resorting to offsetting new regulations by reducing the existing ones (Trnka and Thuerer, 2019[85]). Still, the use of stock-flow linkage rules, i.e. requirements to remove or rationalise existing regulation when introducing new regulations (e.g. one-in one-out rule), is not yet widespread among EU member states. Currently, only a few member states have formalised stock-flow linkage rules in place, requiring removal of existing regulations when introducing new ones or to reduce “red tape burdens” by certain amounts annually (OECD, 2019[84]). France, for example, has engaged in important simplification efforts. Following waves of simplification measures, the 2017 programme Action publique 2022 identifies administrative simplification as one of the five priority actions and ministers are tasked to develop simplification plans. France also introduced a “one-in, two-out” regulatory offsetting approach in 2017. When transposing EU legislation, the adoption of requirements going beyond those set by the EU measure is prohibited (OECD, 2019[84]) (Box 4.21).

A key element to reduce the administrative burden is introducing some space for flexibility in the regulatory framework. Simplicity comes with the need for greater flexibility that allows adapting programmes to different contexts. Currently, the MCS requires the same amount and type of documentation and licenses, number of approvals and obligations (e.g. to apply to an “open tender”) for large and expensive projects as it does for small and less expensive ones (OECD, n.d.[61]). While a one-size-fits-all framework might help to address accountability issues and facilitate higher-level management, control and co-ordination, it can also create unnecessary delays and increased project costs – in particular for small projects with limited expenses. A more flexible regulatory framework might ensure that resources are used in a more efficient way by responding more effectively to different needs, tailoring responses to specific challenges (OECD, 2018[1]).

The issue of flexibility in management and implementation is particularly relevant for MAs that manage projects of different sizes and from different sectors. In the MA for Transport and the Environment, for example, transport projects are large, costly, lengthy to design and implement, and tend to attract large beneficiaries with strong experience. In contrast, environment projects are often small, do not demand high levels of funding, are less time-consuming, and beneficiaries are often smaller and have less capacity or experience with applying for and managing EU funds.

To manage the trade-off between accountability and flexibility, the leading institution (the NCA could lead this process) must work closely with all relevant stakeholders from all levels of government. In preparation for the next programming period, a simpler and flexible MCS should result from a diagnosis of the regulatory issues that cut across levels of government (including the EU level) to identify where simplification and flexibility are needed. As recognised by the OECD Recommendation on Regulatory Policy and Governance, governments should co-operate with stakeholders on reviewing existing and developing new regulations by actively engaging all relevant stakeholders during the regulation-making process (OECD, 2012[86]). For this, the NCA needs to activate the MCS network including actors from all levels to serve as a consultative forum as well as a platform to share information and experience on critical matters such as system amendments, legal framework amendments and their impact, etc.

Fine-tuning the governance framework for the implementation of EU funds in the country is a lever to improve the multi-level governance system as a whole, also encompassing policies and investments funded through the national investment programme. This is even more important considering the implementation of the National Development Programme scheduled to start on 1 January 2021.

The processes of designing and implementing the Cohesion Policy, the Development Law and the Public Investment Programme – the three main regional development instruments – involve multiple institutional actors:

  1. 1. The Ministry of Development and Investments, which is the leading institution.

  2. 2. The Ministry of Finance, which controls and regulates public spending.

  3. 3. The Ministry of the Interior and Public Administration that provides funding for municipal budgets.

  4. 4. The Ministry of the Environment that is responsible for spatial planning at the national, regional and urban levels and controls environmental legislation (including permits for projects).

  5. 5. The Ministry of Agriculture, which controls the funds of the EU Common Agricultural Policy (CAP).

However, co-ordination across these institutions occurs mostly on an ad hoc basis with no active institutionalised platform to co-ordinate policies. In general, co-ordination between ministries is seen as problematic and each ministry focuses on its own policy area in order to keep decision power (Greek Government, 2019[28]). Moreover, the budget elaboration process and the policy planning process do not appear to be systematically co-ordinated (Council of Europe, 2017[13]). This fragmentation in the policymaking process is not exclusive to Greece. In most OECD countries, policymakers from different sectors and levels of governments tend to work in silos. It is not surprising that, for example, among the 15 dimensions of institutional quality for efficient public investment management by the IMF, central-local co-ordination is the one where advanced economies tend to fare the worst (IMF, 2015[87]). In the same line, a lack of co-ordination across sectors is identified as a top challenge by three-quarters of subnational governments across the EU (OECD-CoR, 2015[88]).

Collaboration among the different sectors and levels of governments to develop a coherent approach is particularly relevant in the Greek context of fragmented, overlapped and also sometimes fuzzy assignment of responsibilities. For example, most of the competencies over island policy are shared among several ministries (Ministry of Maritime Affairs and Insular Policy, Ministry of the Interior and the Ministry of Development and Investments, among others). While the Ministry of Maritime Affairs and Insular Policy is actively promoting horizontal co-ordination for island policies, there is a great margin for further strengthening structures and practices: if a national Committee for Island Policy is supposed to be in place, it has not yet been activated (Council of Europe, 2017[13]). This committee, which should be led by the office of the prime minister, is supposed to gather the main ministers with competencies over island policy, mayors, head of the island regions and representative of the social partners (Council of Europe, 2017[13]).

A stronger cross-sectoral and whole-of-government perspective for regional development will help Greece in stepping out from a project-by-project design logic, shifting away from an overreliance on EU funds. In the context of austerity, Greece has strongly relied on EU funds for regional policy. However, looking forward, effective cross-sectoral co-ordination needs to be in place in order to contribute to the pursuit of common development goals, limiting the scope of overlapped projects, promoting synergies between policies and investments, and ensuring that projects and local investments are mutually reinforcing.

In order to minimise administrative barriers for collaboration, dialogue across different sectors has been institutionalised in several OECD countries. Out of a sample of 27 OECD countries, 20 have put in place a permanent inter-ministerial committee on territorial development issues. Poland, for example, has established the Co-ordinating Committee for Development Policy (CCDP) as a permanent inter-ministerial committee linked to regional development issues through sub-committees (e.g. sub-committee for rural areas development, sub-committee for territorial dimension). The CCDP carries out analysis and drafts documents to facilitate the implementation of the country’s Strategy for Responsible Development with a strong territorial dimension (see Box 4.22). Some countries have also established joint investment funds that pool monies across public agencies/ministries to encourage consideration of a broader set of priorities across different sectors.

Legal frameworks to promote co-ordination and collaboration between the three levels of government has been established in the country mostly in the framework of EU policies and access to EU funding (Hlepas, 2015[8]). The Europeanisation of Greece – as some authors have called this process – has come together with the creation of co-ordination networks and institutions. In general, for the definition of ROPs, local actors can have an advisory role in the consultation phase for the formulation and designing of EU-based policies.

Beyond the management of EU funds, Greek law also foresees a range of contracting and networking possibilities to co-ordinate policies between the two tiers of subnational governments. Chapter G of the Kallikratis reform refers to all the different legal statuses that regions and municipalities can establish to cooperate:

  • Regions and municipalities may establish contracts of inter-municipal or cross-level co-operation where one part can offer support to the other or/and exercise the responsibility on behalf of one or more of the contracting parties (Art. 99).

  • Subnational governments can also enter into programmatic contracts (Art. 100) for the study and execution of specific projects and programmes (e.g. development projects, constructions, etc.). These contracts establish the scope of the study and the workings, their budget, rights and obligations of the parties involved as well as clear timeline and financial commitments. Local authorities as well as other public authorities (such as universities) or public sector entities (public enterprises, etc.) can become parts of these contracts.

  • Two or more municipalities or regions with common characteristics may also constitute networks to exercise and support policies that are linked to the specific characteristics of network members (Art. 101).

  • The law (Art. 105) also foresees the voluntary establishment of networks between several municipalities and the region to carry out public works, for service provision, for the fulfilment of concrete tasks or the design and development of programmes. These networks – which are legal entities governed by public law – are established by decision of the municipal and regional councils concerned. They also need to be approved by the Secretary-General of the Deconcentrated Administration.

At the regional level, the regional council is the main platform where several actors, such as the chambers of commerce, union of municipalities and trade unions, hold a seat. They are responsible for the design and implementation of designated policies at the regional level. Local governments, though, participate in these councils mostly as observers, limiting the impact of their involvement and their influence on final decisions.

However, co-ordination and collaboration between levels of government seem to be restrained to formalities for the planning and implementation of projects financed by the EU. The different co-ordination tools foreseen by the Kallikratis reforms are not widely used and do not have a comprehensive approach for regional development policies; they are set for specific and narrowed projects or purposes. There are also few active co-ordination instances in which municipalities and regions can participate together. At the same time, dialogue between regional authorities and the state representatives in regions is rather sporadic and depends heavily on personal initiatives and contacts, not least because of insufficient legal bases and lacking organisational and procedural arrangements (Council of Europe, 2017[12]).

While regional development policies are now more decentralised, the role of the central government is increasingly important for providing an overarching framework and guidelines and ensuring proper co-ordination. The central level needs to ensure overseeing co-ordination mechanisms within which regional policy can be formulated and implemented (OECD, 2019[22]). This is particularly crucial if Greece wants to develop place-based regional development policies that go beyond EU policies (Chapter 3).

OECD countries have developed a broad set of mechanisms to promote collaboration and bridge information, capacity, fiscal, administrative or policy gaps across national and subnational governments. These mechanisms can range from “binding” to “soft” instruments. They include, for example, financial incentives to support co-operation among levels of governments, co-financing mechanisms, joint investment strategies, the use of conditionalities when assigning funds, platforms of dialogue, or specific instruments such as contractual arrangements (Box 4.23). Some OECD countries have addressed these concerns early on in their decentralisation processes, improving governance structures between levels of government as well as across sectors. In Denmark, for example, the Regional Growth Forum integrates local, regional, national and EU development activities within a single, programme-based policy structure.

In the COVID-19 global crisis context, co-ordination across levels of government is crucial as a co-ordinated response by all levels of government can minimise crisis-management failures. The main risk of non-co-ordinated action in a crisis is to “pass the buck” to other levels of government, resulting in a disjointed response. What matters is the effectiveness of the co-ordination mechanisms in place, and the ability of government actors to align priorities, implement joint responses, support one another and foster day-to-day information sharing, including with citizens. Effective crisis response highlights that robust vertical and horizontal co-ordination mechanisms are more important than ever (OECD, 2020[4]).

Greece could establish, for example, a body dedicated to co-ordinating regional development planning which could help to inform the partnerships agreement or other sectoral strategies of the line ministries. For this purpose, Italy has three levels of “conferences” between central and subnational governments (Box 4.23), serving as fora for intergovernmental co-ordination: 1) the Conference of State-Regions; 2) the Conference of State-Municipalities and other Local Authorities; and 3) the Unified Conference of State-Regions-Municipalities and Local Authorities, which includes all members of the two other conferences. Portugal has also recently developed a permanent Council for Territorial Dialogue chaired by the prime minister to favour and institutionalise a continuous dialogue between the central government and subnational governments.

Greece could also strengthen and expand the scope of existing contracts to transform them into broader “territorial contracts” promoting specific territorial goals and regional development priorities. Greece could follow the example of France that has a long tradition of state-region planning contracts (Box 4.24). The design of these type of contracts needs to be as flexible as possible so they can adapt to different circumstances and local characteristics – urban and rural regions, mountainous and islands municipalities, etc. They can also target specific areas (island regions and municipalities, for example) providing a multi-annual strategy. The key point is to specify the regional development priorities supported by contracts, possibly through a careful assessment of needs and opportunities.

Strengthening co-operation across Greek regions and municipalities is necessary to invest and deliver services at the relevant scale and enhance synergies among policies of neighbouring (or otherwise linked) subnational governments. This is particularly relevant at the metropolitan scale where less fragmented governance structure can favour growth and productivity.

Inter-municipal co-operation in Greece has proven to be necessary in order for municipalities to cope with the increasing transfer of powers and responsibilities. Co-operation structures are also critical economic and development tools to tackle the cuts in local government resources that have resulted from the challenging economic situation of the country during the past decade.

Inter-municipal Greek structures with single or multiple tasks do exist but many of them are inactive. The Greek legal framework foresees the compulsory or voluntary creation of associations of local government authorities for public investment, service delivery or to exercise competencies belonging to local governments:

  • Article 245 of Law 3463/2006 allows for the establishment of municipal associations in the form of legal entities governed by public law and financed through municipal contributions and user charges. Most of these horizontal co-ordination structures are currently inactive (OECD/UCLG, 2019[24]).

  • The Kallikratis reform (Art. 95) also provides for a form of obligatory inter-municipal co-operation known as “administrative support” in order to help temporarily smaller municipalities carry out some responsibilities transferred to them under the Kallikratis programme (e.g. town planning, technical and welfare benefits services). Municipalities administratively support other municipalities receive an additional amount from the state for their operating expenses.

  • As mentioned in the previous section, the Kallikratis Law also foresees the establishment of contracts or networks for inter-municipal co-operation (see above).

Waste management has been a long-lasting challenge in Greece and its municipalities, through co-operation has found ways to address it successfully. In 2012, Greece launched the New National Waste Management Plan (NWMP) in compliance with Law 4042/2012, which sets out the policy, strategy, principles and targets for the management of waste in Greece. This plan reallocated waste management at the municipal level. Within this framework, for example, the municipalities of Agias Paraskevis, Papagou-Holargos and Zografou launched an inter-municipal local plan for waste transportation and deposit. Through this plan, the three municipalities pool resources to achieve economies of scale for transport and waste differentiation. This specific inter-municipal collaboration enjoyed significant support from both regional and central government authorities (Koutalakis and Allio, 2016[36]).

However, Greek law does not foresee concrete incentives to encourage municipalities to co-operate on a voluntary basis. It has been documented that inter-municipal co-operation has been underexploited because political leaders do not have incentives to intervene in affairs that do not necessarily pertain to their strict administrative or competency boundaries (Council of Europe, 2017[12]; Koutalakis and Allio, 2016[36]). Due to a lack of incentives to enter into a contract or form a network between different municipalities, their formation depends largely on the political will and personal contacts of local authorities. The lack of trust between different local authorities is another factor that is undermining co-operation (Council of Europe, 2017[12]). Thus, the lack of concrete incentives coupled with bureaucratic procedures results in weak co-operation between municipalities, even when the law formally allows it.

Organising co-operation between subnational governments has also been a relatively common method used by OECD countries to solve capacity issues, especially at the municipal level. These arrangements have been popular in particular among the Nordic countries (Denmark, Finland, Norway and Sweden) but they have also been practised for example in France, Italy, Poland and Spain (OECD, 2017[10]; OECD, 2019[40]). In Chile, for example, municipal associations have had a positive impact on investments and capacity building. Municipalities that are part of an association in Chile: present better investment projects in view of obtaining financing; positively affect smaller municipalities’ local capacities; and have more bargaining power than municipalities looking to obtain financing from regional and central levels on their own. All this results in more and better investments (OECD, 2017[42]).

The Greek central and regional governments can use specific incentives, whether financial or not, to encourage voluntary co-operation among municipalities. Some OECD countries have opted to encourage collaboration by providing consulting and technical assistance, promoting information sharing or providing specific guidelines on how to manage such collaborations. A way for Greece to encourage municipal co-operations is to take advantage of peer learning. Municipalities with successful stories can share their experience and encourage other municipalities to enter into such arrangements by showing that, through partnerships, municipalities can achieve more efficient and better results. Regions need to take a proactive role in supporting critical projects that require cross-jurisdictional co-operation, in particular regarding weaker and rural municipalities. They are the ones that can organise peer learning, offer technical support and act as a political facilitator.

The central governments can also create financial incentives whereby municipalities can access higher funding amounts for joint projects or shared services. Financial incentives can help to overcome the administrative costs that can be associated with the creation of networks or contracts. The central government can, for example, define specific National Investment Programme budget lines to finance exclusively municipal association projects or joint investments. Many OECD countries have recently passed regulations to encourage inter-municipal co-operation on a voluntary basis (Box 4.25). For instance, France offers special grants and a special tax regime in some cases and other countries like Estonia and Norway provide additional funds for joint public investments. Slovenia introduced a financial incentive in 2005 to encourage inter-municipal co-operation by reimbursing 50% of joint management body staff costs – leading to a notable rise in the number of such entities. In Switzerland, one-third of funds for regional development policy are reserved for projects involving inter-cantonal co-operation (Mizell and Allain-Dupré, 2013[89]).

Alternatively, Greece can promote co-financing arrangements for projects between the national government and municipal networks. This has been done by Portugal, for example, using multi-level contracts for this purpose. Japan, where inter-municipal co-operation was not particularly encouraged (amalgamations being the preferred option to consolidate municipalities and increase their efficiency), is now developing a new type of contract encouraging inter-municipal co-operation (OECD, 2017[10]).

Trust in government is both a driver of government effectiveness and economic development, and an outcome measure for government action (OECD, 2017[90]). Social trust underpins the effectiveness of place-based policies. In Greece, social trust significantly eroded over the crisis period, with declining levels of trust in both political and impartial institutions (Ervasti, Kouvo and Venetoklis, 2019[91]).

Greek authorities have acknowledged that high levels of political clientelism have impacted the country’s development. During the last 30 years, the levels of corruption have been increasing in the country (Hlepas, 2015[8]). In 2018, the Transparency International Corruption Perceptions Index for Greece was the worse (45) after Bulgaria, three points less than its score in 2017. The 2018 Greek National Growth Strategy explicitly recognises that clientelist practices and corruption have undermined opportunities for growth (Hellenic Republic, 2018[92]) – a finding echoed by others. Regulations that limit competition and the imposition of levies on transactions that have benefitted third parties are typical examples of a system that has encouraged rent-seeking and undermined growth (Huliaras and Petropoulos, 2016[52]).

As a result, citizens’ trust in Greek public institutions, including regional and local authorities, has been constantly shrinking (Hlepas, 2015[8]; Ervasti, Kouvo and Venetoklis, 2019[91]). Since 2007, trust in national governments have decreased by 25% and, in 2016, Greece ranked last among OECD countries in this indicator (Figure 4.13). Mistrust regarding the EU is also very high in Greece: it went up by 48 percentage points between 2004 and 2018. As of today, two-thirds of the Greek population tend not to trust the EU, the highest share among the EU member states. This opinion is also reflected in the high share of votes for parties against EU integration (Dijkstra, Poelman and Rodríguez-Pose, 2018[21]).

These low levels of trust impact policy outcomes. While trust is clearly a multifaceted concept – depending as much on subjective perception as on facts – its influence on the outcomes of public policy is significant and sufficiently tangible to make building trust an objective worth pursuing by public institutions (OECD, 2017[93]). Part of the answer to reinforcing trust lies in good economic management – trust will increase when incomes rise and jobs are easier to find. Experience shows, however, that good economic policies cannot do the job alone. Trust in institutions is driven not only by the substance and outcomes of policies but also by the process of policymaking. The way policies are designed and implemented, and the compliance that policymakers show with broader principles and standards of behaviour, matters in building trust (Baena et al., 2013[94]).

Decentralising decision-making may be a way to improve trust. There is evidence showing that trust is positively correlated with decentralisation. A study considering 42 countries over the period 1994-2007, for example, shows that fiscal decentralisation is positively related to citizen’s trust (Ligthart and van Oudheusden, 2015[95]). In the same line, preliminary analysis suggests that the Local Authority Index is positively related to trust in local and regional government, even when other variables are controlled (Keuffer and Ladner, 2018[96]). More decentralised systems may help to build trust as they respond more efficiently to citizen’s preferences. Furthermore, innovations in local public governance build trust by engaging citizens in all aspects and phases of local government operations from ideas to policy to implementation (OECD, 2019[22]).

Aware of the negative impacts of clientelism and corruption, Greece has made important efforts to strengthen transparency. In 2010, the Greek government enacted the Transparency Law (Law 3861/2010) that obliges all government entities to make public and accessible on an Internet platform all public expenses, regulatory acts, and public procurement and tendering. Some studies have shown that the publication of this information has led to self-restraint concerning some practices of maladministration and mismanagement (Hlepas, 2015[8]).

To reduce corruption and clientelist practices, Greece has also strengthened monitoring processes at all levels of government. The government has created such posts as auditors of public administration, general inspector of public administration, municipal and regional Ombudsmen, among others. This complex set of controls is completed by state supervision, which is provided in the constitution itself (Article 102, paragraph 4). Moreover, in each one of the 7 “deconcentrated administrations”, the Secretary-General is responsible for state supervision of the 13 regions. Decisions over tendering, loans, expropriation, imposing of taxes and fees, among others, are monitored and checked by the Secretary-General (Hlepas, 2015[8]).

In 2014, the Greek government enacted Law 4305/2014 on open disposal and reuse of documents, information and data in the public sector. The Greek government has also developed legal requirements whereby awards are provided to public sector institutions that set up effective and innovative processes in opening up their datasets as well as in promoting its reuse (OECD, 2018[97]).

In 2012, Greece also became part of the international co-operative initiative of Open Government Partnership (OGP) to show its commitment to openness, participation and accountability. Since then, Greece has adopted three National Action Plans for Open Governance. For the preparation of the third plan, covering the period 2016-18, Greece consulted citizens and private sector representatives, as well as civil society organisations. Another important initiative was the agreement signed in 2016 with the Open Technologies. The purpose of the agreement is to promote the implementation of open digital technologies that can support the reuse of open government data (OGD) in the field of education and research. In addition, the agreement aims to also encourage greater awareness of OGD, through workshops, conferences, etc. (OECD, 2018[97]).

This plan includes explicit commitments from regional and local governments. For example, one of the commitments of the region of Western Macedonia is to present data on their website in a user-friendly way by using tables, diagrams, comparisons to previous month/year etc. They have also committed to developing a Regional Council Platform. There are also commitments from the region of Central Crete and the municipality of Thessaloniki (Ministry of Interior and Administrative Reconstruction, 2016[98]).

Subnational governments across the OECD are increasingly developing open government and OGD. In the OGP framework, besides Greece, a number of countries have developed pilot programmes to reach regions, provinces and cities. Barcelona, London, Madrid, Melbourne and Montevideo, for example, have open government data portals where people can find data in a variety of categories (e.g. environment, population, jobs and economy, health, transport, community safety, infrastructure). There are also different datasets by categories ranging from housing (Barcelona) and household waste (London) to the number of traffic accidents (Madrid) and services for women (Melbourne). Greek local authorities could follow the example of the city of London, which is using open government data not only to improve transparency but as a tool for building accountability and promoting citizen participation in key policy issues (Box 4.26).

While the efforts made by the Greek government go in the right direction, there is still a lots of room for improvement in engagement, transparency and access to data, in particular at the local level. Indeed, many regional and local governments produce and publish data; however, these data are often not easily read and processed and are not produced by open licenses. The requirement over transparency after the crisis – and especially in the context of the MoUs, led municipalities to develop policies concerning open data. Most subnational governments comply with this requirement but publish data in a PDF form making it impossible to effectively use these data. As per the Open Knowledge Foundation, in 2016, only 11% of city data was open (Open Knowledge Foundation, 2016[99]).

Beyond the transparency of regulatory acts and the access to data, sound and transparent financial management is at the core of effective public investments for regional development. As the 2014, the OECD Recommendation on Effective Public Investment across Levels of Governments recognises that budgeting transparency throughout the investment cycle provides visibility to investments, clarifies recurrent budgetary implications and strengthens public accountability. Governments should make budgetary information regarding public investments publicly available to citizens and other stakeholders in a timely and user-friendly format (OECD, 2019[53]).

Effective regional development policies are not just a government activity but require the action of a wide range of private, public and third sector actors. By involving stakeholders in the decision-making process, governments at all levels can generate ownership, trust and a sense of fairness. Broader public engagement in the decision-making process is also important for holding the government to account and maintaining confidence in public institutions. Well-managed consultation may help governments to limit corruption, capture and mismanagement, in particular for big and complex infrastructure projects (OECD, 2017[100]).

Public consultation in Greece is today much better developed than it was ten years ago. Today, almost every piece of draft legislation or even policy initiative by the government is publicly posted online prior to its submission to parliament (Box 4.28). Citizens and organisations can submit comments, suggestions and criticisms article-by-article, through this platform. For example, there were several rounds of consultation with relevant stakeholders in the development of the Partnership Agreement and all sectoral and regional Operational Programmes for the Implementation of Cohesion Policy (for which the Ministry of Development and Investments is responsible).

Many municipalities and regions also have similar processes for public consultation but they are not always well developed and utilised. Consultations often consist of posting the planning document for written comment and this process is not often successful. While every programme is open to public consultation, the main characteristics (structure, topics etc.) of OPs, their topics and themes are predetermined and therefore calls for proposals are predefined by governmental authorities, limiting impact and meaningful engagement (Crowther, Quinn and Hillen-Moore, 2017[102]). The engagement of private and third sector actors at regional and local levels differs across the country, depending on the strength of local networks and levels of social trust.

Greece needs to shift from consultation formalities towards real public engagement at all levels of government. The formal process for public engagement in developing laws and regulations is one way to measure the extent to which people can become involved in government decisions on key issues that affect their lives. In Greece, the level of stakeholder engagement in developing regulations is 1.8 (on a scale of 0 to 4); lower than the OECD average of 2.47 (OECD, 2015[103]). However, consultation is not a true engagement. Engagement can be built through participatory governance, in which local public governance facilitates the participation and engagement of private citizens and other stakeholders in deliberations on public policy choices and the delivery of local public services (OECD, 2019[22]).

OECD countries have put in place different ways of building participatory governance. Some countries have opted to focus on transparency, for example, using open government methods such as open and competitive procurement, performance budgeting, maximum disclosure, citizens right to know and citizen-centric or participatory governance. Others have chosen to develop participatory planning and budgeting, civil society performance monitoring, social audits or direct democracy provisions (e.g. referenda on major initiatives/projects, recall of officials for dereliction of duty) (OECD, 2019[22]). Australian local governments, for example, collaborate on using common smart forms for local applications, common information and communication technology (ICT) platforms for tracking enquiries/transactions, measuring service delivery response times and surveying customers, set benchmarks for performance and measuring and reporting results. Australia’s Value Creation Workshops are valuable resources for strengthening local government officials’ capacity to engage citizens through training and access to relevant expertise (OECD, 2019[22]).

Greece has made some efforts to improve data accessibility for citizens and policymakers. For example, the national government’s “public spending” initiative provides data and visualisations on Greek public expenditure based on ideas from the UK’s “Where does my money go?” (Alexopoulos et al., 2018[104]). The national government’s website to track the implementation of the NSRF 2014-2020 (anaptyxi.gov.gr/el-gr) provides information on the number of projects that have been approved per region and municipality to date and their budgeted amounts, as well as its implementation stage and the problems faced during the process. It also includes helpful summary data visualisations on the thematic areas and beneficiaries by region and detailed information on specific projects in the different stages of the investment process with the respective subprojects, indicators and responsible bodies. An important feature of this database is that the source data is downloadable. Recently, the governments have also laid the groundwork for creating different “observatories” at the subnational level in order to collect information in different areas. The Regional Observatory of Social Inclusion, for example, will gather data on social inclusion issues involving a different and wide range of stakeholders. It aims to provide a geography of poverty and social inclusion in the country. The different observatories are still in their early stages of development and it remains unclear how the data collected will be finally used and co-ordinated with other sources of information.

Still, evidence-based decision-making remains undeveloped in the country. Authorities sometimes take decisions with insufficient external input, overlooking impacts on other levels of governments and underestimating opportunity costs of targeted budgetary expenditures (Council of Europe, 2017[12]). While it is true that the initiatives highlighted above go in the right direction, the available data often does not allow a clear and useful understanding of local issues to support decision-making (Alexopoulos et al., 2018[104]). The tracking of the NSRF 2014-2020 for example, does not show that “regional” data and thematic summary data is not readily available through its interface. Publicly available data also mostly focus on economic/financial datasets and, to a lesser extent, social, natural resources and legal datasets. More data is also needed on government spending, economic activity and firms and on agriculture, tourism and the environment (Alexopoulos et al., 2018[104]).

While the Hellenic Statistical Authority has made important progress in data collection and availability, the usefulness of the data for policymakers remains limited. Indeed, data available do not necessarily follow a common structure, as the hierarchy used to present data is not the same across the different datasets (some in statistics and series format, others only as cross-sections for individual years). The consistency of the data sets over time needs to be improved so that, for example, the name of regional units does not change over time and should be ready to be statistically processed (ready to be uploaded to a statistical software), especially for disaggregated data (Chapter 3).

Open data sources need to be redesigned to be more functional and usable. There is a need for more advanced tools mainly for data discovery, data visualisation (e.g. maps and charts) and user feedback. More emphasis should be placed on the use of structured and machine-processable file formats in publishing datasets and metadata (adopting existing metadata standards) (Alexopoulos et al., 2018[104]). Doing so would enable more effective browsing and discovery of datasets, and also linking and combining open government data from multiple sources.

Improving data quality and availability to inform investment and regional development strategies will help Greece to better tackle key issues for the country’s development. For example, local governments need better knowledge of the conditions in surrounding communities in order to identify functional linkages and prioritise areas of joint action. Better data would also help in improving the definition of urban areas for policy purposes, particularly in the capital city of Athens for which the spatial analysis unit is much smaller than its Functional Urban Region (Chapter 3).

The central level has a key role to play in facilitating data and encouraging its use. For example, many countries in the OECD have digitised their planning documents (e.g. France, the Netherlands) – a move which benefits residents and investors as well. France’s urban planning agencies provide advice and expert assessment on planning and land management issues and develop planning documents. They are a centre of expertise on spatial planning and are linked to a national federation which shares best practices, tracks major trends and provides opinions on major national and European debates related to spatial planning. This type of expertise is particularly important for smaller municipalities that have more limited capacity. The KOSTRA system in Norway has facilitated “bench-learning” and, by this means, informs policymaking. Portugal’s Regional Development Composite Index (ISDR) monitors regional development and informs in a simple manner both citizens and policymakers (Box 4.29).

As in many OECD countries, capacities in Greece vary largely across subnational governments. The low level of capacities in certain regions or municipalities is probably one of the most important bottlenecks to undertaking transformative and needed investments. Strengthening capacities at the subnational level is crucial, not only to improve the capabilities to design and implement regional development policies but also to move forward in the decentralisation agenda. The government’s decentralisation reform needs to be accompanied by appropriate initiatives to ensure that the greater autonomy given to regions and municipalities does not raise spatial inequalities.

Greek regions and municipalities are confronted with a double straitjacket in terms of quantity and quality of staff. On the one hand, many subnational governments are understaffed and often do not have sufficient personnel to deal with basic daily tasks. They also frequently lack the specialised staff to undertake specific responsibilities such as land use planning. On the other hand, regions and municipalities confront a qualitative challenge, as their staff sometimes lack specific skills, in particular in the use of new technologies.

Territorial and decentralisation reforms in Greece have outpaced improvements in an administrative capacity and professional skills. Since the crisis, the number of civil servants has been significantly reduced – public employment was reduced by almost 10% between 2006 and 2015 in regions (OECD, 2019[105]). The shortage of staff does not only affect EU funding-related tasks but the functioning of subnational governments as a whole. The rule of one recruitment for five exits strongly affected local government as a great number of the working force of the local entities was working under the status of temporary and seasonal employment (Dimitropoulos, 2012[16]). It limited the capacity of regions and municipalities to hire new and qualified professionals to undertake the new responsibilities devolved to them. Subnational governments have difficulties, for example, in dealing with regulations that oblige them to publish on the web local government decisions or managing the centralised system for public procurement (Torres Pereira and Mosler-Törnström, 2015[26]). This is not a challenge exclusive to Greece; in the EU, for example, two-thirds of subnational governments (65%) report that capacity to design adequate infrastructure strategies is lacking in their city/region. More than half of subnational governments (56%) report a lack of adequate own expertise on infrastructure (OECD-CoR, 2015[88]).

Greek smaller municipalities are especially affected by the lack of qualified personnel. Some Greek municipalities face shortage not only of expert administrators carrying out specific technical duties but also of personnel to perform even basic tasks (Torres Pereira and Mosler-Törnström, 2015[26]). For example, some islands municipalities have only one or less than five employees that are practically unable to take over the tasks provided by the Kallikratis reform. In those municipalities, the provision of public services is often based on voluntary contributions and engagement of individual citizens, third sector organisations and elected officials (Council of Europe, 2017[13]).

If there is a lack of personnel to deal with basic tasks, the challenge due to the lack of specially qualified staff such as civil engineers, lawyers and economists is even more acute. This is translated into poorer service provision and, in island municipalities, this means that citizens sometimes need to travel long distances to carry out simple transactions such as paying their water bills or local fees (Council of Europe, 2017[13]). To overcome low salaries and attract qualified personnel, Greece could put in place incentives for public administration employees to move to smaller and remote municipalities that might take the form of career advancements, allowances for housing and transport to personnel relocating to island municipalities.

Small municipalities depend to some extent on external assistance from larger municipalities. The Kallikratis reform introduced some provisions to deal with the shortages of administrative capacities in island municipalities. Article 204 of the Kallikratis Law, for example, specifies that the largest municipalities in the island regions are obliged to provide full administrative support to other municipalities in the regional unit that do not have the staff necessary to exercise the competencies transferred to them by the law. Island municipalities may also sign inter-municipal co-operation contracts to implement public works services and procurement and programmatic contracts (see above) with their respective region – a practice that is often employed for the implementation of technical infrastructure projects (Council of Europe, 2017[13]).

The new 1:1 attrition rule offers an important opportunity for Greece to overcome administrative capacity challenges. To make the most out of this opportunity, Greek authorities at all levels can engage in strategic workforce planning in order to fill the positions in a smart way. Strategic workforce planning would assist governments in anticipating possible future developments and maintaining a well-structured workforce of an appropriate size, which is able to meet the changing needs of the public service in general in a cost-efficient manner. For this, it is important to conduct an adequate and rigorous competency assessment of the capacity gap of municipalities and/or regions. In this task, the short-term operational dimension should be distinguished from the longer-term strategic dimension. In the short term, Greek subnational governments should ensure that the workforce is there for operational decisions. In the longer term, planning should ensure that the workforce responds to the long-term perspective of where government entities will be in a few years (OECD, 2017[42]).

For this, Greece might consider examples of OECD countries that are implementing competency management. In addition to performance management, some countries like Korea are increasingly considering competency management to identify the capabilities that senior managers should bring to their jobs, set consistent standards and reinforce the desired values and culture of the public service (Box 4.30). Typically, the required profile includes leadership capabilities, management skills, ability to achieve results and personal integrity. Competencies are commonly used in recruitment and selection, succession planning, identification of potential future leaders among middle management ranks, performance management, training and leadership development.

Strengthening the capacities and professional skills of subnational staff is a necessary condition to ensure that regions and municipalities can effectively cope with their responsibilities.

A majority of OECD countries have in place some mechanism to strengthen the technical skills of policymakers. Out of a sample of 26 OECD countries, 18 have put in place, for example, technical assistance for contract management capacity (e.g. procurement, public-private partnerships [PPPs], among others) and a similar proportion have developed a specific strategy to strengthen national and subnational capabilities to design and manage public investment projects (Figure 4.14) (OECD, 2019[53]). Chile, for example, has a special department – the Academy of Regional and Municipal Capacity Building to provide continuous training for regional and municipal public officials. In the context of digitalisation, some OECD countries have also adopted new IT tools or joint e-government platforms to narrow the gaps in capacity across regions or localities and facilitate peer learning. For example, KiTerritorial is a web-based toolkit developed by the Department of National Planning (DNP) in Colombia which offers specific instruments to support local leaders in the formulation of their territorial development plans (PDT). In Australia, an online mapping tool is being developed by the national government to assist applicants of the Regional Growth Fund to determine the benefit, location and coverage of their projects.

Greek regions could take a more proactive role in capacity building processes. Some small island municipalities resort to the expertise of the regions to prepare and mature technical projects related to the construction and maintenance of critical infrastructure. However, this support depends to a large extent on the willingness of regional authorities to support municipalities within their jurisdictions since they are not obliged by law to do so. Technical assistance to prepare investment projects or planning instruments, management support to implement programmes, projects or investments can be done more systematically by regions, which often have more technical and administrative capacity than municipalities. Technical support in regions also allow more targeted assistance as they are closer to their concerns than the national government. Regions could also take a more proactive role in supporting critical projects that require cross-jurisdictional co-operation and in encouraging peer learning practices. They could, for example, have the mandate to incentivise municipal co-operation for investment projects financed through the National Investment Programme or EU funds with technical support and as a political facilitator.

Building the appropriate capacities at the local level is also a learning-by-doing process in which subnational governments learn while acquiring more autonomy. This is why some countries have implemented pilot experiences in the devolution of responsibilities to subnational governments. In Sweden for example, two successful pilot experiences on asymmetric decentralisation were established at the end of the 1990s to transfer the responsibility of regional growth from regional state agencies (County Administrative Boards) to regional political bodies (elected regional councils). Since then, the responsibility has gradually been transferred from regional state agencies to regional political bodies in other counties as well (OECD, 2018[1]). Pilot experiences allow policymakers to experiment and learn while avoiding subnational governments with low capacities becoming overwhelmed with new responsibilities (OECD, 2018[1]). To build the capacities needed, the “learning-by-doing” process needs to go hand-in-hand with regular, differentiated and targeted capacity building activities and technical assistance.

Improving the regulatory environment is a precondition for Greece to successfully stimulate economic activity, create jobs and raise productivity. In addition to economic effects, improving the regulatory environment should also lead to better efficiency of public administration in Greece, reduced opportunities for corruption and maladministration in public service and, therefore, increased trust in state institutions and the government (OECD, 2014[78]). Over-regulation, overlapping or constantly changing regulations can lead to higher costs, which can be burdensome especially for subnational governments with low capacities, which in most cases are island or mountainous municipalities.

Since the crisis, a priority for Greece has been the improvement of the regulatory environment to ensure the quality of regulation for policymakers at all levels of government. This is reflected by OECD indicators that highlights the sharpest reduction in the rigidity of product market regulation between the end of 2007 and the end of 2012 among OECD countries (OECD, 2014[78]). These trends are echoed by World Bank data that shows the business regulatory environment improved more in 2012 than during the six preceding years (OECD, 2014[78]). In 2012, Greece enacted the Law on Better Regulation that states basic principles for regulation, such as efficiency and transparency. The law, for example, makes it compulsory to conduct a Regulatory Impact Assessment (RIA) for every primary law as well as an ex post impact assessment of the regulations’ costs, benefits and impacts (Box 4.32). Draft regulations are published on a portal (www.opengov.gr) to facilitate public consultation.

However, major challenges persist in fully implementing the Law on Better Regulation (OECD, 2015[107]). Public consultations, for example, are usually informal and it is unclear how comments received are considered. RIA quality is often poor due to the limited time to develop new drafts and ex post reviews of existing regulations, required by the law, have also rarely been used (OECD, 2018[5]). The OECD has also identified that a major challenge for implementing the Better Regulation Law is the lack of budget and appropriate skills within the Better Regulation Office of the General Secretariat of the Government (BRO), which is responsible for the co-ordination of regulatory policy and oversight of the quality of RIAs, amongst others (OECD, 2018[5]). To address this, the Ministry of Administrative Reconstruction is beginning an extensive evaluation of existing legislation, with a view to curtailing the large “stock” of regulations (OECD, 2018[5]).

Greece has also improved its public procurement regulation. Law 4412/2016 on public procurement intends to solve a longstanding problem of fragmented legal framework where procurement regulation was divided horizontally between sectors and vertically between levels of government (ICLG, 2019[109]). This law has codified in a single act numerous legal acts and its provisions apply to all type of contracts regardless of their estimated value and to all type of contracting authorities irrespective of their legal status. The law also implements EU Procurement Directives in one single legislative act. One of the key significant changes introduced by this law is the overhaul of rules regarding review proceedings as well as the execution and monitoring of public contracts (ICLG, 2019[109]). However, by the end of 2018 – two years after its introduction – the law had already been amended, modified or added to through specific articles and paragraphs more than 25 times (ICLG, 2019[109]). There is also a generalised criticism that the law has also made public tenders more rather than less complex. The limited capacity of local governments to respond to the requirements of the new legal framework for public procurement has impacted municipal public investment (Greek Government, 2019[28]).

While Law 4412/2016 has been an important further step, there is still some room for improvement and greater simplification, in particular merging stages of the bidding process (dead times), from the project’s announcement to its contracting. It is also important to identify the possibility of shortening the time requested for pre-approvals from the deconcentrated administration, which usually leads to a 1-2-month delay for technical projects (e.g. the process of approval of environmental licensing of projects and activities). For further simplification, when the law is amended, a transitional period could be given to correct the standard tender documents. Furthermore, legislation is still not geared towards the electronic monitoring of public contracts. A number of important issues that still need to be addressed include, among others: the electronic monitoring of awarded contracts as well as the electronic recording of onsite supervision results (“diary of works”), contract annulments, contract terminations and legal sanctions.

The Greek government has also put effort into improving regulations to attract businesses. Over the last decade, Greece undertook extensive legislative reforms to reduce administrative burdens on SMEs and improve the insolvency regime, currently in line with the OECD median level (OECD, 2019[110]). In addition, in 2018, the country established the general business registry’s electronic one-stop-shop that offers entrepreneurs the possibility to fast track their company registration upon presentation of the required data and documents. This has led to a 70% reduction in registration costs (OECD, 2019[110]).

Despite this progress, Greece’s legal framework is considered complicated and strict, with an overabundance of laws. Policymakers at all levels of government identify regulatory burden as one of the main obstacles to effective and efficient use of regional development funds. Greece, as well as all EU countries, needs to deal with administrative and regulatory burden arising from EU legislation as well as the one stemming from its own national legislation. While the EU has made administrative simplification a key priority for the next programming period, these efforts need to be echoed by the Greek national government.

The administrative burden is particularly challenging for subnational governments, especially small municipalities, which often lack the adequate capacities to cope with legal requirements. Regions and municipalities often face lengthy administrative and regulatory procedures for legal checks and project approval. All municipal and regional authority decisions must be legally vetted by the state decentralised authorities, which often are viewed as a source of considerable delays and bureaucratic impediments (Council of Europe, 2017[12]). Then, municipalities often need to wait 1-2 years after developing a proposal to receive the necessary licences for public works. For example, some projects require authorisation from the Ministry of Archaeology and the Ministry of Forestry, even in wetlands with no forest. Other examples include delays in managing streets, for which authorisation is often required from the municipal authorities, the regions and central government’s Ministry of the Environment (Council of Europe, 2017[12]). It has been documented that, in some cases, municipalities could not get building permits for a new hotel because of the burdensome and relatively unaccountable procedures (Council of Europe, 2017[12]). The municipality of Thessaloniki reports having to obtain 33 authorising signatures from the national government in order to install a sculpture that is 5 metres from the coastline.

Regulatory burden also affects Greek businesses, limiting the contribution of the private sector to stimulating economic activity, creating jobs and raising productivity. In 2014, an OECD project that measured and identified options for reducing administrative burdens in 13 areas ranging from company law to public procurement, tax law, and agriculture and fisheries, estimated that the cost to businesses of administrative burdens was about EUR 3.28 billion annually (OECD, 2014[78]). The study provides sector-specific concrete recommendations on the 13 areas to reduce administrative burden, as well as general recommendations focused on broader regulatory reforms. For example, for agriculture, information obligations represent a total administrative cost of EUR 315.85 million to operators in Greece. Of this, EUR 289.35 million (92%) were classified as administrative burdens. Some of the concrete recommendations to reduce administrative costs and burdens in agriculture include reducing the supporting documents required for Rural Development Programme applications or improving Rural Development Programme forms and templates by applying form design techniques to help applicants understand how to complete more of the form without expert help.

The Council of Europe has documented administrative and regulatory burdens and has provided specific recommendations that would help Greece in achieving a more efficient system. Among these, the council suggests that Greece could introduce more effective and better-defined time limits into legal bases that might be accompanied by “silent-is-consent” rules, implying that in the event of non-response by an authority, the applicant can assume the request was authorised. This specific recommendation might accelerate some procedures preventing subnational governments from waiting for responses and approvals from the central entities (Council of Europe, 2017[12]). Administrative simplification is also at the core of the OECD Council Recommendation on Regulatory Policy and Governance stating that countries should “conduct systematic programme reviews of the stock of significant regulation against clearly defined policy goals, including consideration of costs and benefits, to ensure that regulations remain up-to-date, cost-justified, cost-effective and consistent, and deliver the intended policy objectives”.

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Notes

← 1. Deconcentration refers to the delegation of central government tasks to non-elected central government units based in regions. Deconcentrated state services represent the central government at the territorial level and are responsible for implementing national policies at the regional and local levels, ensuring that they are in line with subnational government policies. Deconcentrated state services may also provide national public services at the territorial level.

← 2. Values from the Greek Tourism Organisation. Numbers can vary with size definition.

← 3. This has been set up in view of line ministries being responsible for sectoral policies and are represented vis à vis ROP MAs by the Executive Units (see ESF inclusion policies, culture, education infrastructure, health, etc.) but not regarding planning of specific regional policy.

← 4. In 2010, the EC, the European Central Bank (ECB) and the International Monetary Fund (IMF), colloquially called the European troika, agreed with the Greek government to a three-year financial aid programme that was outlined in an MoU. A second MoU was signed in 2012 and the third was signed in 2015. The third and last Economic Adjustment Programme expired in August 2018.

← 5. For midterm regional planning, a four-year operational programme is elaborated. The purpose of the four-year regional OPs is to monitor the implementation of the Spatial and Development Planning at the regional level and to contribute to planning feedback and revision, in the context of the existing conditions. The four-year plan is set out annually in an Annual Action Plan. The technical programme is part of the Annual Action Plan. The annual budget for each year as well as the annual technical programme must be in line with the guidelines and assumptions of the relevant Annual Action Plan, as well as with the four-year OP.

← 6. These are still under discussion at the time of drafting this report.

← 7. Civic engagement is one dimension of citizen well-being and is a composite indicator based on voter turnout and stakeholder engagement for developing regulations.

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