THE USE OF OPPORTUNITY DURING THE ECONOMIC CRISIS IN GREECE:
THE CASE OF OTE AND AEGEAN AIRLINES
A Thesis
Presented to
The Faculty of the Department of Public Administration
Economics and Governance
Leiden University
_____________
Degree of Masters of Science
_____________
by Christina Maravegia
s2237695
Abstract:
This study examines the opportunities that arose during the financial crisis and explores how the economic crisis in Greece affected the corporate sector, specifically the telecommunication and transport industries from 2010 until today. This is achieved by carrying out two comparative studies on the performance of two market leading, corporate entities: OTE Group and Aegean Airlines. The timeframe of the research for these two corporations is 2010-2017. In addition, this study investigates the country’s eventual exit from the three bailout programs as well as its economic prospects since entering an enhanced program fiscal oversight and monitoring in August 2018. Moreover, the predictions on how the country’s business landscape will respond to the slow, yet steady, positive macroeconomic economic changes are scrutinized by the examination of the two case studies. This provides a unique perspective as to why these two companies progressed positively during the economic crisis and gives an insight into understanding the progress that is taking place at the nexus of public policy and corporate strategy, as the fiscally devastated economy of Greece regains its political and economic stability and, in the opinions of some, also autonomy.
Table of Contents
Introduction, Aim and Outline of the Thesis ... 6
Introduction ... 6
The business environment in Greece ... 6
Chapter1: Literature Review ... 10
The Economic crisis as domestic fault mismanagement ... 13
The middle ground ... 14
Critical junctures and windows of opportunities during the crisis ... 16
Chapter 2: Methodology ... 20
Chapter 3: An Overview of the Greek Economy: 1995-2017 ... 24
3.1 The pre-crisis phase 2001-2009 ... 25
3.3 The post-program surveillance in Greece ... 32
3.4 Analysis of the Interview with the European Commissioner of Financial Affairs ... 41
Chapter 4: The Corporate Sector in Greece 2010-2017: An Overview ... 45
5.2 OTE Group and the Greek market for telecom services ... 58
5.3 The Interview with Mr. Michalis Tsamaz, President and CEO, OTE group ... 64
Chapter 6: Aegean Airline and the Air Transport Sector in Greece ... 69
6.1 The Greek Air Transport Sector ... 69
6.2 The Aegean Airline Group and the Greek market for Air Transport services . 73 6.3 The Interview with Mr. Eftychios, President of Aegean Airlines Group ... 79
Chapter 7: Analysis and Recommendations ... 83
Chapter 8 :Conclusion ... 91
References ... 94
Appendices ... 102
Appendix A: European Commissioner Interview Questions and Answers ... 102
Appendix B: OTE Interview Questions and Answers ... 107
Introduction, Aim and Outline of the Thesis
Introduction
Greece is slowly regaining its independence in political and economic control. After years of financial hardships the economy is slowly recovering and growing again. In 2010 Greece had to be saved from bankruptcy by the International Monetary Fund (IMF), the European Central Bank (ECB), the European Stability Mechanism (ESM) and the European Commission (EC).
As a result, Greece was part of three bailout programs which summed up to €288.7 billion. Since 2010 numerous negotiations took place between Greece, the IMF and the European authorities in search for what was the best solution for Greece. The eurozone was vulnerable due to the economic instabilities across the region which meant that the rescue of Greece was necessary in order to avoid a domino effect in the global markets. All three bailout programs that helped Greece cope with its
government-debt crisis have been concluded and since August 2018 Greece is under an enhanced program of surveillance also known as post program surveillance (PPS), which monitors its performance and makes sure that the country follows its agreed obligations.
Countries like Ireland, Portugal, Spain, Cyprus and recently Greece are all under the post program surveillance as they have exited their bailout programs that assisted them financially in order to cope with their debt. All countries however still need to continue to implement particular reforms. In particular, Greece needs to continue following its commitments in order to encourage investor trust, secure market access and most importantly secure its autonomy and independence.
The business environment in Greece
In regards to the business landscape, after a period of economic hardships which enhanced uncertainty due to economic and political mishandlings of the Greek government, the double deficit (fiscal and trade) and the decreased investments surrounding the country the Hellenic market is also re-emerging.
Overall, company officials, investors and government executives talk about an improved climate and believe that change is evident in an international level as Greece is seen again as an investment point. However, due to the continuous vulnerabilities and fragilities that are evident in the Greek economic and political environment, investors are still skeptical due to the “nation’s cumbersome public administration and the inefficiency of the legal system”1.
In 2009, the private sector was hit as decreases in investment were highly evident amidst the financial turmoil. This as a result, negatively impacted the expansion of new products in markets and tech integration. The major challenge that Greek companies had to face were linked to problems like bureaucracy, a complicated law system, high unit labor costs, escalated corporate tax, a severe lack of bank credit, a shortage of modern infrastructure, and a deterioration of the made in Greece brand which arose even more during the onset of the crisis where austerity measures took place in order to save the country. During this period many companies collapsed whereas others adapted to the situation and took advantage of the opportunities that arose, which as a result enabled them to achieve structural reforms that weren’t necessary prior to the economic turmoil.
Currently, the business landscape of Greece is more optimistic following the end of the third bailout program. In particular, labour costs have decreased; the country’s brand has improved while credit begins to flow again. As a result new windows of opportunities can arise for businesses as Greece’s credibility is earned and a more business friendly environment is created.
The purpose of this study is to identify to what extent large domestic enterprises have managed to profit from the window of opportunity during the Greek financial crisis. The research questions that this study aims to answer are the following:
• What were the effects of the emergency programs for Greece during 2010-2015 on the corporate sector?
• What form does the Enhanced Surveillance Program (ESP) procedure take in the post bailout period?
1Tony Barber, «Businesses in Greece await positive prospects», 2019(used in the whole section: The
• What do EU officials think about the impact of the bailouts and the enhanced surveillance program on the Greek corporate sector?
• Did “windows of opportunity” arise for Greek enterprises during the crisis?
• What are the prospects for Greek companies to exploit the increased opportunities, if any, during the Enhanced Surveillance period?
• In particular, how did two prominent corporations in the services sector of the economy, The Hellenic Organization for Telecommunications (OTE) and Aegean Airlines profit from possible windows of opportunity during the crisis?
• How do these two companies plan to exploit opportunities in the post-bailout period of enhanced surveillance of the Greek economy?
The main hypothesis that drives this research is that windows of entrepreneurial opportunities arose during the recent Greek economic crisis and chances for improvement are even greater now that the country is out of the bailouts but still under enhanced post-program surveillance. This is based on the examination of two case studies of two enterprises in Greece that managed to succeed amid the financial difficulties.
Towards examining the validity of my hypothesis, I first present in the next chapter (Chapter 2) a brief overview of the existing literature on the different views concerning the nature of the Greek crisis and illustrate how the crisis can open windows of opportunities for companies in order to proceed to structural reforms that weren’t possible before.
Chapter 3 is an overview of the Greek economy during 1995-2017. The analysis enables us to trace the devastating effects of the crisis on the economy that began in 2008 and culminated in 2010-2017 as well as discusses its possible causes. The chapter is concluded by an analysis of the answers provided by the EU Commissioner for Financial and Economic Affairs. In Chapter 4 the focus is on the performance of the corporate sector during 2010-2017. Their disappointing trend during this period sets the background on which the performance of two companies OTE and Aegean Airways participating in the telecommunications and air transport sectors are evaluated in the next two chapters. In Chapter 5 I examine the performance of the
telecommunications sector and eventually focus on OTE’s activity during the crisis. The chapter is concluded with the analysis of the questionnaire and phone interview provided by OTE’s CEO. Chapter 6 has the same structure as the previous one; the air travel sector and Aegean Airways are put under the microscope and the views of Aegean Air’s CEO are presented and analyzed. Chapter 7 contains the analysis and poses some questions for future research. Chapter 8 concludes.
I would like to thank my interviewees for their kind response to my request for an interview.
Chapter1: Literature Review
Greece has been going through an economic crisis after the financial turmoil of 2008. The state has lost the ability to manage its own fiscal policy by reverting to three bailout programs agreed with the Troika of EC, European Central Bank, and the International Monetary Fund. Taxation increased, pensions and salaries were cut, unemployment soared and GDP nosedived. In spite of all the hardships of the
financial crisis there were windows of opportunities that companies managed to profit from.
Firstly, the literature on the Greek sovereign debt and crisis is vast and perceived in different ways. In particular, various authors identify the crisis as a symptom of the deficient architecture of the EMU while others treat it as a case of purely domestic mismanagement. The two extreme perceptions correspond to two different views of the general public in terms of whose fault it really was. There is also a middle of the road approach that combines features of the two extremes and attempts to explain the phenomenon both in terms of the structure of the EMU and the institutional
weaknesses of the Greek economic and political system2.
Indicatively, research papers that attribute the crisis to the EMU are Copelovitch et al. (2016) and Woods (2014). Whereas, papers that argue that the Greek crisis is purely due to domestic governance and uncorrelated with the EMU are indicatively Lyrintzis (2011) and Papas (2010) . In addition, there is an intermediate point of view which compromises the two opposing arguments. For example, papers written by
Featherstone (2011) and Baltas (2013), argue that the financial crisis was the outcome of mismanagement by the Hellenic State as well as the EMU. The above literature can help us form a view about the nature of the crisis as well as to how the Greek
sovereign debt was perceived by academics.
2Featherston, K. (2011) ‘The Greek Sovereign Debt Crisis and EMU: A Failing State within a Sewed
Secondly, Capoccia analyzes the way crises can cause institutional change3. In particular, literature on how crises can create new windows of opportunities for
reform and developments will be discussed by taking into account the Moutos (2015), Skalkos (2018) and Vilpišauskas (2011) arguments . This can be linked to my thesis question that examines how two corporate companies in Greece managed to cope during the economic crisis and the window of opportunity that some companies managed to profit from. Lastly, a study carried by McKinsey Global Institute (MGI) in 2015 that presents the window of opportunity concept in the European region will be analyzed.
The economic crisis as a fault of the Economic and Monetary Union
Capelovitch et. al.4 argue that the Euro crisis didn’t occur due to global financial chaos that followed the demise of Lehman Brothers neither because of the profligacy of the state. They believe that the development of the economic crisis is due to the continuous problems piling up within EMU since 19995. In addition, it is clear
according to the author that the euro crisis has its “roots in features of the construction of the EMU-features that in turn are due to the difficult political economy of the creation of the single currency”6. Existing microeconomic divergence supports his arguments. Overall, the EU proceeded by implementing a single monetary policy aiming at price stability without trying to reconcile the imbalances of Northern and Southern eurozone members7.
Secondly, Capelovitch et.al. mention that the lack of fiscal policy coordination also plays a role as monetary policy can not on its own achieve convergence between the north and the South of the EU. The European authorities had such problems in mind and created the Stability and Growth Pact (SGP) established in 1998-99 by imposing ceilings of 3% for budget deficits and 60% for public debt to GDP ratios in order to
3 Capoccia G. (no date) ,Critical Junctures and Institutional Change.
4 Copelovitch, M., Frieden, J. and Walter, S. (2016) ‘The Political Economy of the Euro Crisis’,
Comparative Political Studies, 49(7), pp.811-840.
5 Capelovitch M., Frieden, J. and Walter, S. (2016) ‘The Political Economy of the Euro Crisis’,
Comparative Political Studies, p.817
6Copelovitch, M., Frieden, J. and Walter, S. (2016) ‘The Political Economy of the Euro Crisis’,
Comparative Political Studies, 49(7), p.817.
strengthen fiscal discipline but that was never actually followed by the member states. The above problems played a vital role in the development of the sovereign debt crisis in Greece.
The authors further argue that fragmentation in relation to financial regulation is another factor for the crisis to occur. Specifically, a fragmented banking environment caused uncertainty and regulators at a national level never tried to “centralize
financial regulation, because they feared that they would put their own domestic firms at a competitive disadvantage”8. A last factor is linked to the lack of credibility in regards to commitments. For example, if a financial difficulty would occur then it was believed the other member states would decide to intervene and bail out the troubled state, contrary to official rules and declarations this is a classical example of the moral hazard problem.
Furthermore, Woods shares similar arguments about the Greek sovereign debt crisis and suggests that polarization is evident among those “who want to see the EU succeed and those who want the Member States to retain power”9. In particular, the author argues that the convergence criteria weren’t applied correctly which created the opportunity for Greece to enter the Eurozone in a time the country wasn’t ready. Given this, following the weak economic convergence Greek governments from 2001 until 2008 didn’t proceed with any stable economic plans which caused the existing weaknesses to escalate even more.
In addition Woods also notes the German and French governments broke the rules of the stability growth pact by running public deficits with no sanctions. Given the above the weaknesses in the EMU contributed to the escalation of the Greek sovereign debt crisis .However, there is another branch in the literature that focuses on domestic aspects.
8 Capelovitch, M., Frieden, J. and Walter, S. (2016). ‘The Political Economy of the Euro Crisis’,
Comparative Political Studies, 49(7), 2016, p.821.
The Economic crisis as domestic fault mismanagement
Lyrintzis (2011)10 argues that the economic crisis in Greece occurred because of the domestic mismanagement by the political system, which was the key factor for the escalation of the economic crisis. In particular, the author argues that “political parties have been held responsible for all the problems” and adds that “patronage and
corruption, the inefficiency of the public sector, the weakness of civil society and eventually the huge foreign debt of the country are associated with the manner political parties performed and with their special relationship with the state aimed at satisfying their own interests”11. In political science there are three types of
institutionalism: Rational Choice institutionalism, Sociological and Historical Institutionalism. Rational Choice institutionalism is linked to the maximization of interests that are calculated before acting. Whereas Sociological institutionalism is linked to the cultural norms that shape behavior and society. Lastly, historical institutionalism is associated with the development of events linked to path
dependency and the stickiness that occurs as processes aren’t easily able to change. In the case of Greece rational behavior can be identified, a concept seen in new
institutionalism where “strategic interactions occur for the determination of political outcomes”12. Moreover, this is known as Prisoners’ dilemma where each actor at the end acts according to their personal interest.
Additionally, the inability to carry out domestic reforms seems to be another
important factor that led to economic crisis. This can be linked to the “stickiness” of structural reforms seen in historical institutionalism where change is hard to be achieved due to path dependency, where institutional change is impossible unless an exogenous shock occurs. Lyrintzis raises the question of why reforms fail in Greece and argues that the link among political parties and the state is the major reason why reforms aren’t successful in Greece. For example he identifies the failure to reform the public sector during the years when Pasok and New Democracy, the two big parties in the post-junta era, alternated in power. Overall he stresses, “the two major Greek parties both failed to take the necessary initiatives and proved inferior to the
10 Lyrintzis, C.Greek Politics in the Era of Economic Crisis: Reassessing Causes and Effects, 2011.
11 Ibid., p.7.
task they had promised to fulfill”13. The author stresses that the political elite has made the same mistakes throughout the course of 35 years and this is the main reason why he believes that “one can speak of a political crisis as well as of crisis of the political parties”14. Lastly, the author concludes by saying that the political parties have reached the end point as their views and decisions have only worsened the country’s situation.
Additionally, Papas supports Lyritzis argument that domestic reasons were the main reasons for the economic crisis and notes that “lack of political will of successive governments to cut fast-rising wages led to increased public debt. Combined with an inefficient tax system”15 were evident before the crisis emerged. Furthermore, political patronage was another reason according to the author that supported the economic downturn of the country. Political patronage played a role in the efficiency of the State and the costly corruption that was found once the economic crisis
emerged. Lastly ethnocentrism is another major factor that contributed to domestic mismanagement. Pappas refers to Greece as “a society dominated by pre-democratic values, such as clientelistic practices or the low respect to established institutions, pronounced statism in combination with a certain ambivalence towards capitalism and the market forces, strong influence in society of the Orthodox Church and,
consequently, a widespread, albeit latent, anti-Western feeling”16.
Given this, ethnocentrism has weakened Greece’s ability “for institutional and economic rationalization along the common European norm and is a chief cause of the current fiscal crisis”17.
The middle ground
My reference to the middle ground literature will indicatively refer to the work of Baltas (2013) and Featherstone (2011). Featherstone considers the conditions within Greece before the crisis and the existing formal/informal structures in order to explain
13 Christos Lyrintzis, «Greek Politics in the Era of Economic Crisis: Reassessing Causes and Effects”,
2011, p.10.
14 Ibid., p.16.
15 Pappas, 2010. 16 Pappas, 2010. 17 Pappas, 2010.
the various Greek, EU and international positions in the negotiation process that resulted in the bailout plan.
He argues that the Hellenic sovereign debt crisis of 2010 was partly because of existing Greek contradictions, like a prima facie powerful government with poor authority to implement its policies, a liberal democratic system coupled with high corruption, and statism, the prevalent reliance on the state in economic life. Overall, there were several cultural and veto structures as seen in historical institutionalism, that weakened the power of the government to demolish the above features. This strategic calculus “maximizes attainment of these preferences”18 where collective concerns decrease. This is also seen in Greece's admission requirements into the EMU where they were tweaked, as problems with the accuracy of information provided by the national statistical service were brought to light by the crisis. Thus, strategic interactions are vital in determining political outcomes,19 which can be crucial for understanding the nature of the crisis as well as why certain events took place. Given the above strategic interactions are a core part of politics and influence the economic situation of a country and usually be identified once a crisis occurs.
Given this, he continues by pointing that the financial turmoil also revealed the weaknesses within the European Union (EU). The Maastricht Treaty offered self-disciplinary guidelines, but there was no system for checking, interfering in, or removing member states if they failed.
Furthermore, Baltas argues that the economic crisis in Greece revealed the
weaknesses of the European Union as the “monetary and fiscal policy framework of the European Monetary Union was incomplete”20. Additionally, the European
Monetary Union didn’t have a plan before the crisis erupted. Moreover, the European Union responded to the crisis initially “by agreeing on stabilization for Greece and then by creating the European Financial Stability Facility (EFSF). However, these were developed in an ad-hoc manner and on a temporary basis only and do not
18 Hall, P. and Taylor, R. Political Science and the three new institutionalisms, 1996, p. 7. 19 Ibid., 1996, p. 18.
provide a sufficient basis for dealing with any possible future debt crises in the euro area”.21
Baltas stresses that the economic crisis is also linked to the weaknesses within the Greek government. In particular, he explains how the Greek governments “were buying votes and social peace by means of public vote and public spending”22. In addition, the high salariesw, increased pensions, the possibility of early retirement and public businesses with large deficits were crucial for escalation and eruption of the economic turmoil in Greece.
Following all the above literature in relation to the causes of the economic crisis, I will argue that even though perceptions may differ there is a relevant link to
institutions which in fact can influence or shape perceptions and behavior23 and, as a result, outcomes.
Critical junctures and windows of opportunities during the crisis
Following a historical institutionalist approach, opportunities can arise from
catastrophic events/exogenous shocks like the economic crisis. The Greek crisis was a period where major inefficiencies that were linked to the Greek government and the EU arose. Such deficiencies led to the implementation of structural reforms that were impossible before the shock of the economic crisis. Specifically, literature on the matter suggests that crises can cause institutional reforms and therefore opportunities for change are possible. Literature by Moutos (2015) gives emphasis on how a crisis can highlight economic inefficiencies of “clientalistic politics that have shaped economic policy”24. The author notes that the public has also supported the idea of reforms as change was necessary in order to eliminate existing problems like “tax evasion, public sector corruption, cases of under worked and overpaid public sector employees”25. Given this, austerity measures were the key as fiscal as well as external imbalances were addressed. Lastly, Moutos argues that austerity was the medicine for Greece in order for efficient structural reforms to take place in relation to fiscal
21 Baltas. 2013, p.3. 22 Baltas, 2013, p.6.
23 Hall, P. and Taylor, R. Political Science and the three new institutionalisms, 1996, p.5. 24 Moutos, 2015, p37.
structural reforms, labour and market liberalizations as well as privatizations to be implemented.
Skalkos (2018) also illustrates that opportunities are feasible following a crisis. In particular, he notes that reforms are easier to be implemented after an economic crisis as they can constitute political change. Furthermore, he uses the term “good crisis” to stress “how an economic downturn can be linked to the promotion of a series of structural reforms”26. He stresses that during the crisis economic conditions
deteriorate and introduction of reforms take place. This is due to the sense of urgency that occurs because of the economic collapse which further causes a process of reflection on the political leadership and social body which leads to change”27.The author also notes that the main problems are a fragmented societies, high veto interests that increase because of the rent seeking behavior also known as state capture. Therefore, such problems can change during periods of crises where
windows of opportunities can be taken advantage of due to the fact that there is fresh governmental mandate during such periods that enhance the possibility of reforms.28 In addition, in regards to Greece, Skalkos illustrates that the “reshuffling of the Greek economy as well as society and the lessons learned during the economic crisis would be useful for future shaping of reform policies”29.
Furthermore,Vilpišauskas (2011)30 argues that a crisis can provide a window of opportunity for changes to develop. The author uses a case study from Lithuania in order to illustrate how reforms took place in the public sector. Overall, the financial crisis has brought back to the agenda different issues. The author argues that turmoil “provides an opportunity for reforms by creating incentives to change the established institutions and practices, but the actual use of this opportunity depends on a number of factors. These factors include the political composition of the government, the presence of reformers with a clear reform program and external anchors and actors such as European Union (EU)”.31 The researcher has focused on reforms in public
26 Skalkos, 2018,p.165 27 Skalkos, 2018, p.166 28 Skalkos, 2018, p.176 29 Skalkos, 2018, 180
30 Ramûnas Vilpišauskas, Crisis as an opportunity for reform: only some windows open, 2011. 31Ibid., p.38.
administration, healthcare and education. The use of Lithuania is an interesting case study as the economic turmoil also caused political changes, which resulted to new opportunities for the country.
In addition, a report by the McKinsey Global Institute (MGI)32, introduces the institutional change can occur if the necessary reforms take place. In particular, the report explains the window of opportunity theory and suggests that there is a strong ground in Europe for entrepreneurial opportunities if the necessary reforms take place. Therefore, there is a base that businesses can exploit despite the economic strife.
MGI identified three areas of reform with eleven drivers showing potential growth. The three areas of reform include: investing for the future (innovation), boosting productivity (competitiveness in market services, trade, and digital openness) and mobilizing the workforce (developing a strategy for labor market flexibility). Given this, Europe has foundations which can be used to move forward towards more appealing conditions, by finding the window of opportunity. 33 Moreover the report stresses the importance of restructuring for positive results to develop and argues that there is a solid ground to unlock new opportunities implement reforms and generate employment. Subsequently, this makes the EU one of the biggest global economies.
Pierson notes from a historical institutionalist perspective that there may be periods in history known as conjunctures which focus on the “interaction effects between
distinct causal sequences that become joined in a particular point in time”34that constitute change. Such periods are crucial as they change the direction of history as “institutions aren’t easily scrapped as they have a high layered quality”35.
Capoccia supports the window of opportunity theory36. Particularly, Capoccia
explains how certain events known as critical junctures i.e a turning points in time can change the course of history. Capoccia argues that the choices made can further determine how events develop. The author states that “the concept of critical junctures has been applied to a striking variety of topics including, for example, national social
32 Mckinsey report, 2015. 33 Labaye, et al., 2015. 34 Pierson, p.8. 35 Pierson, p.8
welfare policies, U.S. constitutional law, EU law and budgetary policy, labor unions, agenda setting in policy-making, devolution in the U.K., regulation of competition in product markets and banking, regionalism in East Asia, foreign policy etc.”37. The author defines and states that “the critical juncture constitutes “a situation that is qualitatively different from the "normal" historical development of the institutional setting of interest”38. Furthermore the author argues that critical junctures can play a crucial role in politics and “steer outcomes towards a new equilibrium”39. In
particular, her theory focuses on how “critical junctures can shape development of institutions, broadly defined as organizations, formal rules, public policies, political regimes, and political economies”40. Lastly, the author mentions “how the critical junctures of the Great Depression and the economic downturn of the 1970s in Western democracies played a role in the new macroeconomic policies that emerged after economic crises”41.
Overall, I argue that the economic crisis can be seen as a turning point i.e. a critical juncture where certain decisions took place and altered history. This means that the economic crisis can be seen as an opportunity for change; a window of opportunity. Given this, Greece has experienced financial difficulties since 2010, which had a severe impact on the corporate sector. However despite the dramatic events there were cases that managed to take advantage of the crisis, remain stable and change their course of direction. Such cases are OTE and Aegean Airlines.
37 By Giovanni Capoccia and R. Daniel Kelemen,“The study of critical junctures, Theory, Narrative,
and Counterfactuals in Historical Institutionalism”, 2007, p.345.
38 Ibid, p.348.
39 Ibid,p. 354.
40 Giovanni Capoccia «Critical Junctures and Institutional Change», p.2.
Chapter 2: Methodology
I will test my hypothesis on the Greek crisis as a window of opportunity in two important service sub-sectors, namely Telecoms and Air Transport because they were presumably affected by the crisis differently. Telecom services in Greece are provided exclusively to the domestic market and are therefore expected to have been more adversely affected by the Great Recession than air transport that depends to a great extent on demand from abroad (tourism). The use of comparative studies is important for this research in order to trace certain patterns, similarities and differences. In particular, the use of case studies offers the possibility to closely examine data within a particular context. In various cases a particular region is selected in order to explore real life phenomena via ‘detailed contextual analysis of a limited number of events or conditions and their relationships’42. Furthermore, case studies are a useful tool for this research as it takes into accont a broad range of theories due to the various information in order t examine complex theories. Given this, this method can help explain social events that correspond to theoretical reflections across a period of time.43 Therefore, the economic crisis is an important element in time where windows of opportunities were able to arise and companies were able to take advantage of the opportunities that surfaced. Overall, the case study method also offers the possibility of replication through pattern matching sue to the fact that information is linked. This helps for robusteness and confidence of the method.44 The comparison of the two cases is vital in order to identify the recipe of success that the two companies followed during the economic crisis. The two case studies from the corporate sector the are used are OTE and Aegean Airlines. In addition other tools that I used for my research, include macroeconomic data of the Greek economy and microeconomic data from its corporate sector.
I chose these particular enterprises as they were effective and managed to survive amid the financial difficulties. From a theoretical point of view they function as ‘most likely cases’ to test my hypothesis. From a practical point of view, these two
42 Zainal 2007, p.2
43 Blatter, Haverland, 2012, p.8 44 Zainal 2007, p.2
companies can serve as examples in order for other companies to follow on a national and global level. In addition, the source of macroeconomic data was European
Commission’s AMECO database45 that helped me construct diagrams portraying the performance of the Greek economy before and during the crisis. For microeconomic information I utilized the annual online issues of Greece in Figures (editions 2010 to 2019) of ICAP’s46 financial directory that publish online financial data from balance sheets and income statements for years 2010 to 2017. ICAP’s data enabled me to generate appropriate graphs. Financial statement analysis is useful for looking and analyzing businesses through different time periods and facilitates us in order to understand the overall performance of an enterprise as well as a sector of the economy. This helps us see in what direction the company is going towards in the future which also is an asset for more efficient economic decision-making. I also resorted to financial information from the Greek and European financial press.
In order to obtain direct qualitative information interviews were carried out in order to see how the enhanced program surveillance is expected to impact the corporate sector and to understand how the two enterprises remained stable and succeeded during a time with numerous financial instabilities that resulted to the closure of numerous enterprises in the region. Interviews were chosen firstly because not a lot of information was available about the enhanced program surveillance and the corporate sector as it was recently implemented and secondly to gain a clear understanding of the corporate management style of the two companies. Interviews “facilitate in obtaining direct explanations for human actions through a comprehensive speech interaction”47. Given this, such a method allows researchers to find information that may not be easily accessible48. In addition, it offers the possibility to have information simplified thus more accuracy can be reached. Such a method is an important tool for research as they can “directly and deeply assess the roots of individual actions and attitudes”49. Through the aforementioned tool a solid base is created for “constructing more general theories or testing the accuracy of theories as causal mechanisms are
45.AMECO’s data for all EU countries and some other OECD economies go back to 1960. However, a
full list of macroeconomic variables concerning Greece is available from 1995 onwards.
46 ICAP is Greece’s leading business information provider. Its annual Greek Financial Directory dates
back to 1964. ICAP’s database is used extensively by corporations, government agencies, and academic researchers.
47 Alshenqeeti 2014, p.40 48 ibid, p.42
revealed”.50 Interviews are a vital component of my dissertation as I was interested in whether windows of opportunities can be created in the Hellenic corporate sector during the Greek economic crisis and whether the post programme surveillance will enhance existing opportunities.
Interviews in this case were semi structured. In semi-structured interviews there is higher flexibility from structured ones. Therefore, “the interviewer does not have to adhere to a detailed interview guide”51. In this case, semi-structured interviews allowed space for follow up questions and provided flexibility in regards to the interview direction. This method can trace rich data which can uncover general as well as more particular insights52. Overall, it can explain connections and establish a basis for further research.
In particular, I contacted the office of the European Commissioner of Economic and Financial Affairs Mr. Pierre Moscovici and the two CEOs of the two prominent Greek corporations, Mr. Michalis Tsamaz from the Hellenic Organization for Telecommunications (OTE) and Mr . Eftichios Vassilakis from Aegean Airlines. The purpose of my contact with the Commissioner was to extract the Commission’s view on the effects of the Greek crisis on the corporate sector and derive its assessment of its prospects during the period of enhanced surveillance expected to last until 2022. The interviewing of the CEOs attempted to register their experience during the crisis, the strategies they adopted to exploit opportunities while operating in a difficult economic terrain and their vision about the prospects of their companies’ fortunes in the post-bailout era. The major advantage with semi structured interviews like the ones that I conducted was that the interviewer could control the order of answers, in a relatively flexible way, and proceed to an in-depth analysis of the answers53. However, a major limitation is that there is a potential for subconscious bias as well for potential inconsistencies to occur. Such limitations were also evident in the questionnaires where answers can be shaped in order to protect their privacy. In
50 ibid
51 Kajornboon p.5
52 http://designresearchtechniques.com/casestudies/semi-structured-interviews/
addition there is no chance to follow up as there was during the semi-structured interview and emotions can not be fully understood as there is no way to observe reactions or body expressions. Nevertheless, as indicated by Blaxter et. al. (2006), it is advantageous taking interviews since it offers scientists the chance to reveal data that are "most likely not open utilizing procedures, for example, polls and perceptions"54. In addition, they argue that talking isn't simply an information gathering apparatus, it is fairly a characteristic method for cooperation that can happen in different circumstances55.Moreover, Dörnyei (2007) contends that with the nearness of the questionnaire, shared comprehension can be guaranteed, as the questioner may rethink or rearrange questions that were not comprehended by his/her interviewees. Thus, this research tool gives the flexibility to follow up on the given answers and extract additional information from the interviewee. Interviews were useful in extracting the information needed for my research as the post-program surveillance is a program that was recently implemented and literature on the subject is limited. My analysis of the telecoms market also benefited a lot from the annual reports of the Hellenic Communications and Post Commission56. As far as the air travel market is concerned, I found information provided by the Aerospace & Aviation sector profile- Greece report57 extremely useful.
Triangulation is used as an analytical method as both quantitative and interview analysis were taken into account, in order to validate the results from the interviews and check whether there is consistency between quantitative and qualitative evidence. This method allows for more than one research method to be used and enhances the reliability of the results.
54 Blaxter et. al., 2006. 55 ibid, 177.
56Ετήσια Επισκόπηση Αγορών από την ΕΕΤΤ, 2019 . 57 Aerospace and Aviation Sector Profile-Greece.
Chapter 3: An Overview of the Greek Economy: 1995-2017
A necessary background for my analysis is an overview of the basic trends in the Greek economy during the period that preceded its entrance to the EMU until 2017. The examination of the macroeconomic background is necessary in order to put the analysis related to the impact of the crisis on the corporate sector into perspective. The analysis is based on data provided by AMECO58 the European Commission’s database. Additionally, at the end of the chapter an analysis of the answers provided by the EU Commissioner for Financial and Economic Affairs will be presented in order to register the Commission’s view on the opportunities that exist after the completion of three bailout programs for enterprises in Greece.
Greece had entered the European Union (then European Community) in 1981 joined the euro zone in 2001 and was part of the first wave of countries that introduced the euro in daily transactions on the 1st of January 2002. Greece’s admission to the euro zone was preceded by a successful effort to tame inflation, bring down government deficits and the public debt as obliged by the Maastricht Treaty. In retrospect, revision of data of that period shows that Greece did not fully meet the Maastricht criteria for the public debt and deficit 59 . Despite achieving conversion to nominal macroeconomic magnitude one way or another, structural weaknesses persisted. They took the form of lack of international industrial competitiveness, a sclerotic labour market and an overweight tertiary sector comprising of oligopolistic private firms and inefficient public sector entities selling their services sheltered from foreign competition. The overview of the Greek economy that follows shows the devastating effects of the crisis on the economy that began in 2008 and culminated in 2010-2017 as well as its possible causes.
58 Ameco EU database.
3.1 The pre-crisis phase 2001-2009
Despite the structural problems of the Greek economy, the country’s GDP average rate of growth was 3.0% from the mid 90’s until 2009, higher than the average rates within the EU (See graphs 3.1 and 3.2). In particular, once Greece joined the eurozone in 2001, optimism about the country’s financial robustness prevailed and domestic growth continued to close the gap between Greece and the rest of the EU. As a result, the country was able to borrow money at lower interest costs.
However, during this period “growth was largely consumption-driven”60 .The savings rate of the private sector declined from 25.0% in 1994 to 15.8% in 2009. Additionally, government savings were non-existent through the mid 1990’s until 2009, with 2001and 2002 being the only exceptions. In particular, the annual average growth of “government consumption expenditures reached 4.7% compared to 1.9% in the rest of the eurozone”61. As a result the aggregate rate of savings fell from 19% in 1995 to 5.8% in 2009 (see Graph 3.3).
Gross capital formation during this period remained relatively stable around a satisfactory 25.0% of GDP and was financed by an inflow of international capital intended to fund the difference between domestic investment and domestic savings. Given this, Greece was running “both a fiscal deficit (FD) and current account deficit (CAD)”62 until 2009. Large public deficits also emerged, particularly in the pre-election time periods, coupled by current account deficits that reflected the weak and deteriorating competitiveness of the economy.
As a result public and private debt escalated. A large chunk of the public debt was held directly by German and French banks and indirectly by the European Central
60 Romei, Greece and The EU: A brief (economic ) history in charts ,2015. 61 Idem.
Bank. The ECB was accepting Greek sovereign bonds as collateral for providing liquidity to the domestic banking system. The bank institutions in Greece could then in turn buy more government debt and extend lending to the private sector. Apart from financing the deficits of the public sector, domestic banking funds were channeled to low productivity investments in other non-internationally traded
activities (housing, retail trade, etc.) as well as in consumer loans. The overheating of the economy combined with the low productivity of the investment mix resulted in wage and price inflation that further undermined competitiveness. Inflation remained at a rigid 3.5% between 2001 and 2008, higher than the eurozone average, and was the result of both nominal wage increases that exceeded gains in productivity and the oligopolistic structure of the economy (See Graph 3.4).
Indeed, net export deficits fluctuating around 9.0% of GDP until 2005, gradually rising to 12.6% percent in 2008. The existence of net exports is important for my analysis because they point to the willingness of foreign institutions such as the ECB to finance them by providing the necessary liquidity to the Hellenic banking system. The expansion of the country’s net export difference was primarily because of the dramatic rise in the import-to-GDP proportion from 22.7% in 1995 to 36.0% in 2008. By comparison, the proportion of exports to GDP hardly altered during the course of eight years of Greece’s membership in the euro zone and stayed constant at 20.0 % (see graphs 3.5 and 3.6). The decline of Greece's competitiveness is reflected by the appreciation of its effective exchange rate level between 2001 and 2009 that is shown in graph 3.7.
Therefore, Greek macroeconomic developments before the economic turmoil owed much to the expansion of its non-tradable sector, which comprises primarily of public facilities, home construction and retail trade. Overall, regardless of its reliance on foreign financing to fund its net export deficit, Greece has a comparatively less open economy relative to other nations in the euro zone, a reality that suggests that its non-tradable sector is comparatively big; its exports plus imports to the GDP proportion are around 55.0 %.
3.2 The phase of crisis: 2010-2018
The turmoil began in 2009 when the newly elected prime minister revealed that the “budget deficit to GDP, is nearly double the amount of the original estimates”63. The global financial difficulties at the onset of 2008 and the fact that Greece’s debt to GDP was much larger than previously announced by the former government resulted in concerns about a Greek default and caused a rise in interest rate spreads between Greek and German sovereign bonds. It was not the first time that newly elected governments accused the previous ones for fiddling with the data. As a matter of fact the previous government had engaged into a so-called “fiscal census” by inviting EUROSTAT, EU’s statistical agency, to scrutinize the macroeconomic data of the 1995-2004 period. What was different in 2009 was that accusations went hand in hand with the worldwide economic turmoil; moreover the size of the announced deficit was staggering.
Reacting to the above developments, the new government together with the ECB, the European Commission and the IMF, agreed in 2010 to follow a three-year bailout loan scheme of €110 billion in return for implementing severe austerity policies in order to downsize Greece's debt, save the banks, avert default and implement
structural changes to boost competitiveness. Overall, “Germany provides €22 billion of the EU’s €80 billion euro portion. In exchange, Prime Minister Papandreou commits to austerity measures, including €30 billion in spending cuts and tax increases”64.
Since then, in 2012 a second bailout program was approved for Greece “worth €130 billion ($172 billion). The deal included a 53.5% debt write-down—or “haircut"—for private bondholders. In exchange, Greece must reduce its debt-to-GDP ratio from 160 percent to 120.5 percent by 2020”65. Following the bailout program the Hellenic parliament approved the proposed austerity measures in order to receive the aforementioned loan amidst violent street protests.
63 Greece's Debt Crisis Timeline. 64 Idem.
During the implementation of the austerity program, Greece witnessed decreases in production between 2010 and 2014 that resulted in a cumulative 25.0% percent drop in GDP and a huge increase in unemployment that reached 27.5% in 2013 (Graph 8). According to Romei, 2015 Greece’s GDP drop was “the largest fall in modern history not linked to a war or social revolution”66. Investment's share of GDP fell to 9.8% in 2015 (see Graph 3.2) and has remained at this point in the next two years. Following the austerity measures the Greek population was faced with pension cuts in wages, tax increases and deflation. At the same time, the country’s net export gap was eliminated primarily because of the decline in imports caused by the recession and the abrupt halt in the accessibility of foreign loan resources connected with high concerns of default. The government’s accounts turned into primary surpluses which is relevant for the corporate sector because the creation of the surpluses via the creation of the recession that was caused by the austerity policies. These policies led to the closure of many small and medium size enterprises but on the other hand created slackness in the labor market that enhanced the bargaining power of employers. However the public debt to GDP ratio exceeded 180% due to the dramatic decline in output.
In 2015, a national election took place and for the first time both New Democracy and Pasok were defeated and Syriza (coalition of the radical left), a left wing party came into power. Syriza didn’t agree with the conditions of a “third package” and put
66Romei, Greece And The EU: A Brief (Economic) History In Charts | Financial
forward a referendum in which voters rejected the terms offered by the lenders. In the end Syriza capitulated in August 2015 and the final outcome was that Greece agreed to a third bailout programme of €86 billion with worse conditions than prior to the referendum. Capital controls took place in order to avoid flight out of Greece’s beleaguered banking sector, which had to be recapitalized once more.
“In exchange for the €86 billion bailout, which is to be distributed through 2018, EU creditors require Greece to implement tax reforms, cut public spending, privatize state assets, and reform labor laws, among other measures”67 which is another critical juncture i.e. turning point for Greece as certain behaviours are necessary in order to avoid further collapse. The IMF didn’t participate in the third bailout programme until creditors ensure that Greece debt is restructured.
To sum it up, Greece was the country mostly affected by the global economic crisis, which caused various instabilities across the international economy since 2008. The growth rates in the eurozone and EU dropped by half, and the financial institutions faced a strong shock. The crisis affected Greece’s citizens as unemployment soared; their incomes fell and it was impossible to get access to loans. Furthermore, their cost of living increased because of VAT and fuel price hikes. Therefore, the Great Recession in Greece brought to the surface all the previous structural difficulties that stem from both international and national issues, such the lack of coordination of fiscal policies in the eurozone, poor supervision and management of its banking sector, domestic tax evasion, and reckless governmental spending.
3.3 The post-program surveillance in Greece
Greece has entered into a new era as the third bailout program reached its end in August 2018 and a new procedure known as Enhanced Surveillance Program, or Post-Program Surveillance (PPS) was introduced. In particular, from July 2018 onwards the country could change direction and move towards a more prosperous path, as it was decided that the European Stability Mechanism support program reached its end on 20 August 2018.
This allows it to enter into a new period by continuing to implement all agreed necessary reforms that were adopted under the ESM agreement through close monitoring of the “economic, fiscal and financial situation”68. The post program surveillance was implemented in all countries that have experienced economic turmoil and bailouts during the financial crisis in the EU (Cyprus, Ireland and Portugal) but in the case of Greece surveillance is deemed to be “enhanced”.
In July 2018, the European Commission and Greece agreed that the state would be liable to proceed under enhanced surveillance69 that would begin in August 2018 and end in 2022 according to Article 2(1) of Regulation 472/2013.
Therefore, according to the above article Greece is obliged to proceed and conclude key changes in accordance with the responsibilities it had undertaken with the bailouts. The EC collaborates with the European Stability Mechanism, with regards to its early warning system in implementing the improved surveillance.
Enhanced surveillance is crucial for monitoring the financial developments of Greece and simultaneously pursuing policies that can contribute to the improvement of the country’s economic performance. Moreover, this program provides periodic evaluations of the latest economic and monetary trends in Greece, and simultaneously brings up to date the debt sustainability analysis. Monitoring will be carried by the Commission, the ECB, and with the IMF when necessary. The European Stability ESM will also engage in this procedure by carrying out its Early Warning System until all loans are fully repaid. This procedure also includes “an assessment of the country’s short-term liquidity, market access, and the medium- to long-term sustainability of public debt”70. This is quite important as it leads to normalization and the provisions of loans in the private sector where market confidence is boosted.
In fact, the creditors of Greece have stated that the reforms and implementations, the cutting of corporate taxes and social insurance contributions and the broadening of the personal income tax base, are vital for Greece’s fiscal recovery. The envisaged
68 Financial assistance to Greece, Enhanced surveillance programme for Greece. 69 The Guardian, 2018b.
70 How does the ESM Early Warning System work with regard to Greece? | European Stability
reforms also include the lowering of entry barriers in the service sector, (including pharmacies, taxis, notaries etc.), the introduction of flexibility in labour markets, the privatization of state assets, the rolling back of pensions and the reformation of the tax administration. Even more importantly, the Greek government is obliged to adhere to primary budget surpluses in order to reduce the public debt. Overall, the ultimate aim is to achieve economic success by spurring investments and economic growth. In detail, according to the Commission, the supervision framework includes quarterly assessments of early identification of risks so that measures can be taken to deal with them at an early stage. The above reforms were implemented due to the window of opportunity which arose during the economic crisis where such reforms were obligatory in order to survive the economic turmoil that Greece was facing.
Ultimately the process will trigger the much desired debt relief measures, which will be conditional on the implementation of specific policies and agreed at the Eurogroup meetings on the positive reports to be drawn up under enhanced surveillance.
As stated in the relevant Commission Communication, the decision for enhanced surveillance "facilitate Greece's return to a normal situation in which it sets its own policy objectives, while at the same time allowing for a prudent policy path well beyond the program horizon. As per the Eurogroup agreement, this policy path should preserve the objectives of the key reforms taken up under the ESM program. It does not entail any new reform elements or commitments, and therefore marks a clear end to years of financial assistance programs”71.
Waltz Dobrobowski, Vice-President of the European Commission and Commissioner for the Euro and Social Dialogue, as well as on Financial Stability, Financial Services, and the Capital Markets Union, stated in 2018 that: "From August 20th, Greece will rely on its own forces. It is important that Greece pursues prudent fiscal and macroeconomic policies as well as the completion of the agreed reforms. Enhanced supervision aims to help Greece gain the confidence of markets, investors, businesses and entrepreneurs who want stability and predictability72. This is the most appropriate
71 Idem. 72 Idem.
way to attract more investment and ensure sustainable development, creating new jobs and improving the living standards and social conditions for Greek citizens”73. The program makes sure that all agreed commitments are followed until mid 2022 in six major areas: “(i) fiscal and fiscal-structural policies; (ii) social welfare; (iii) financial stability; (iv) labour and product markets;(v) privatization;(vi) the modernization of public administration”74.
So far the Commission has issued three enhanced surveillance reports. In particular,
the first report issued in November 2018, discusses the slow, yet steady, positive
development of the Greek economy, while informing about the specific ‘risks and challenges’ that the nation is likely to face during this period of ‘steady growth’75. Initially, it is argued in the report that the enhanced program surveillance constitutes an effective measure by providing evidence of expected increase in the GDP of Greece by 2019. More specifically, it is estimated that the GDP will experience a growth of 2.3% in 2020. Furthermore, according to the report, “domestic demand, and in particular private investment”76 will serve in the upcoming years as the main driving force leading to growth and development. Additionally, “the reforms adopted in the program along with the increased economic activity that will begin to take place, are predicted to allow for the continuation of, and in fact facilitate, the recovery of the labor market. The argument that the Greek economy is experiencing a ‘steady growth’ is further strengthened by the fact that since the EMS program started in 2015, the unemployment rate has decreased by 5.6 percentage points. This ‘positive trend’ indeed shows improvement and aspires hope. However, it should not be a distraction from the unfortunate fact the unemployment rate is still very high. “The economic disaster which caused unemployment rates to rise above unprecedented numbers has had a severe impact particularly on the youth, as 38% of the jobless in Greece are under p.50”77. It is therefore clear, that despite ”Greece's successful exit from the ESM program” and the fact that Greece's sovereign
73 Idem.
74 Enhanced Programme Surveillance, Greece, November, 2018, p.4.
75 Idem. 76 Idem. 77 Ibid., p.50.
credit ratings became better the financial situation still remains very difficult. The biggest and most dangerous challenge is the recovery of the private sector.
In response to the potential and existing economic challenges related to this end, the program attempts to continuously aim at the improvement in the business environment in order to “underpin investment activity and non-price competitiveness”. To achieve the main objective of the program, significant actions have been taken. Such actions range from the “rationalization of licensing, inspecting and exporting procedures”78, and improving the “regulation of network industries such as energy and water”79. Additionally, the program has already, or is in process of, implementing a ‘wide range’ of actions targeting each sector specifically; so as remove the barriers that hinder the efficiency of competition as well simplify the ‘licensing procedures’. It is important to note that significant support for the enactment of such actions is being provided by “Organization for Economic Cooperation and Development (detailed Competition Toolkits) and the World Bank (investment licensing and inspections) through the Structural Reform Support Service (SRSS) of the European Commission”80. According to the report, the positive influence of the reforms is starting to be noticeable, because of the expansion in exports. This is demonstrated by the data showing that “exports grew as a share of GDP from less than 20% in 2009 (EUR 45.1 billion) to more than 30% in 2017 (EUR 59.5 billion)”81. This indicates that the target set by the authorities, “for exports-to GDP of at least 50% by 2025’ is likely to be successfully achieved. Hence ‘The regulatory improvements are reflected in the good performance of the "starting a business" and "trading across borders" components of the World Bank Ease of Doing Business Index (20)”82.
However, when examining the overall picture, it is unfortunately evident that ‘Greece has fallen behind. To tackle the issue, authorities decided to adopt in July 2018 a more ambitious Growth Strategy, which contains additional policy obligations. For example, they have determinatively shifted focus on additional reforms that can help
78 Ibid., p.51. 79 Ibid., p.51. 80 Ibid., p.62. 81 Ibid., p. 51. 82 Ibid., p.51.
“strengthen the business environment, promote social inclusion and regional cohesion, and improve environmental performance”83. Furthermore, in order to combat the enduring structural fragility in the processes of reporting property and imposing contracts, the authorities have defined “steady progress towards completion of the cadastre as a key stepping stone, which will importantly enhance the protection offered to investors and their assets”84. Despite the progress already made, it should be noted that “investments as a share of GDP”85 are still very low in comparison to other countries as well as ‘historical trends’ in Greece. Hence, it is essential that progress take place throughout the post programs phase so as to “signal the persistence and enforceability of the reforms”86.
With regards to the business environment, the principal purpose of the authorities in to carry out various “key reforms in the area of product markets and competitiveness, as well as to continue and uphold the key program reforms more generally”87. More precisely, Greece has introduced various reforms, which specifically aim to “open up the relevant markets, boost competition and remove unnecessary barriers to entry”88. Overall, during the duration of the program most essential primary legislation has been passed. In parallel, the authorities are focused on preparing a thorough action program, which is to serve as a transitioning step, which will take the nation a step closer to finalizing the “simplification of investment licensing procedures in the agreed remaining sectors by mid 2020”89. The most important aspects of the plan included the projects concerning the ‘export promotion and trade facilitation’, which are currently being reviewed. The projects are particularly focused on Key Performance Indicators in addition to “benchmarking of best practices across the Union, to help achieve the Growth Strategy target of 50% exports-to-GDP ratio by 2025”90.
The second report was issued in February 2019.The Commission expected GDP to record growth by 2% in 2018 and to further increase at 2.2% in 2019 and 2.9% in
83 Ibid., p.51. 84 Idem. 85 Ibid., p.52. 86 Idem. 87 Idem. 88 Idem. 89 Idem. 90 Idem.
2020. It is evident that labour market conditions are becoming better which as a result decreased unemployment rates from 27.9% (2013) to 18.5 %percent (2018). The second report stated, “ long-term unemployment (13.5% in the third quarter of 2018) and youth unemployment (39.1% in November 2018) remain high and wage
developments so far have been subdued”. 91
Overall, progress was evident in product market reformations and in various legal activities in regards to legislation, which create a more flexible environment and decrease previous administrative processes for businesses as licensing has become simplified and more coherent. For example, licensing procedures for environmental infrastructures has been carried out and will continue to be further simplified for 24 sectors92. In particular, due to this simplification processes, the average time for registration of a new business has been decreased. Now with “business registration procedures achieved though One-Stop-Shops (OSS) and electronic One-Stop-Shops (eOSS), over 50% of a total of 5214 start-up registrations were finalized within 90 minutes and 70% within 180, as opposed to 28% within 90 minutes and 47% within 180 under the previous systems. In addition, for online registrations through the eOSS, the Greek authorities report that 1,178 private company (IKE) registrations have been completed, with an average time for the finalization of the process of about 18 hours, and a minimum of 8 minutes”93. In addition, cadastral mapping reforms have also begun. The report states, “that progress of the implementation of the project has been mixed in recent months. The Greek authorities have adopted a comprehensive road map with the objective to complete the reform of the cadastre agency (Hellenic Cadastre) by mid- 2020 and the cadastral mapping by mid-2021”94.
Lastly, in regard to the Special Spatial Framework “the tourism framework is on-going; the one on mineral resources is in the tendering phase and the one on renewables is ready to be tendered. The Special Spatial Framework on industry is in the tender preparation phase and is expected to be tendered by mid-2019. Finally, a Special Spatial Framework for aquaculture is planned for 2020”95.
91 Enhanced Programme Surveillance, Greece, February. p.4.
92 Ibid., p.63. 93Idem. 94 Ibid., p.62. 95 Ibid., p.64.
