Growth of 8.3% and 400,000 new jobs will be brought by the Hellenic Recovery and Resilience Plan (Recovery Fund). according to the annual report of the National Productivity Council of KEPE.
This development means an increase in GDP by 13.7 billion euros and employment by 400,000 jobs, according to KEPE.
According to the same report, the Greek economy has fully recovered from the effects of the COVID-19 pandemic. In addition, the initial inflationary pressures, which were caused by a number of internal and external factors, have subsided. Therefore, Greece is now poised, not only for growth, but possibly for takeoff, provided the investments come, after more than a decade of crisis and slow growth.
During 2022, the total factor productivity (TFP) of the Greek economy increased by 2.9% (based on working hours) and by 3.8% (based on employment). The TFP growth of the Greek economy reached the corresponding growth of EA19 and EU27, as between the year before the pandemic (2019) and the current year (2023), it increased about three times more than the average of EA19 and EU27 .
In addition, labor productivity per hour worked increased by 0.3% and labor productivity per employee increased by 2.0%.
However, the difference in labor productivity between the Greek economy and the European economy, both in terms of employees and working hours, remained essentially unchanged during the period 2019-2023. That is, the Greek labor productivity per employed person is approximately 61% of the EU27 average and 55% of the EA19 average.
Accordingly, Greek labor productivity in working hours is around 49% of the EU27 average and 43% of the EA19 average. In terms of competitiveness, recent developments underline the improvement of the cost/price competitive position of the Greek economy compared to EA19.
Specifically, the real effective exchange rate (REER) based on the consumer price index declined slightly in 2022 for the fourth year in a row. Economy-wide unit labor cost (ULCT) REER declined in turn in 2022 for the second consecutive year, reaching its lowest point in the 2010-2022 period. Unit labor costs (ULC) also fell in 2022 for the second consecutive year, while they rose in EA19 and EU27. Relative ULC decreased by 1.7 p.m. in 2022, compared to 2021.
However, the war in Ukraine and the Middle East, soaring energy prices, persistent inflation, increased borrowing costs for businesses and households, a worsening current account balance (a deficit of 9.7% of GDP in 2022 ), demographic changes, technological backwardness and more frequent natural disasters due to climate change create uncertainty for the future and additional challenges for the Greek economy.
After all, as reflected by the Regional Competitiveness Index (RCI), all Greek regions are at the bottom of the scale, with the gap between Attica and the rest of the regions maintained.
In addition, labor productivity per hour worked increased by 0.3% and labor productivity per employee increased by 2.0%.
However, the persistent labor productivity gap between the Greek economy and the European economy, both in terms of employees and working hours, remained essentially the same during the period 2019-2023.
Accordingly, Greek labor productivity in working hours is approximately 49% of As regards the Greek Recovery and Resilience Plan (RRP), its impact is expected to yield a significant increase in GDP (€13.7 billion) and employment (approx. 400,000 jobs), that is, an increase in terms of GDP by 8.3% and employment by 10.5%, compared to the levels of GDP and employment of Greece in 2020.
However, our analysis suggests that the RRP may not be fully aligned with Greece’s long-term strategic goals, due to its over-reliance on specific sectors, notably Construction, which cannot adequately support the broader goals of equitable growth, reducing dependence on imports and limiting CO2 emissions. It is noted that Construction was the sector that showed the highest increase in labor productivity in the Greek economy during the period 2020-2022.
Finally, according to newsit, the report emphasizes that Greek businesses must accelerate their efforts for digital transformation, with particular emphasis on the technologies of the so-called 4th Industrial Revolution (Industry 4.0), while they must, at the same time, undertake actions for the management of the environmental footprint associated with the use of Information and Communication Technologies and to strengthen the circular economy.
We should, of course, not overlook the need to consider a wide range of policies to reduce inequalities that will go hand in hand with increasing productivity. Such policies may include skills acquisition and development, labor market reforms, strong social protection measures, affordable financing for small-scale entrepreneurship, and support for technology transfer and business-to-business linkages to promote exports.
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