SEV makes economic policy proposals

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In the run-up to Greece's general elections in April 2000, the Federation of Greek Industries (SEV) drew up a set of proposals on economic policy priorities - including tackling unemployment and reforming social security - which were sent in a memorandum to the Prime Minister, the leader of the main opposition party and the leaders of the other political parties.

In the framework of the Third Panhellenic Industrial Conference which was held on 20-21 January 2000, the Federation of Greek Industries (SEV) drew up proposals relating to economic policy priorities after the general elections of 9 April. Below we summarise these proposals as set out in a memorandum sent on 20 March to the Socialist (PASOK) Prime Minister, the leader of the main opposition party (the conservative New Democracy) and the leaders of the other political parties.

Macroeconomic policy

For SEV, the first important issue is that of macroeconomic policy, which must seek to preserve monetary stability, bring about the smooth transition to the European single currency, proceed with fiscal adjustment, speed up growth and address the problem of unemployment. These objectives may be furthered simultaneously if the mix of economic policies being conducted lays much greater emphasis on fiscal adjustment and structural changes.

Fiscal adjustment

Fiscal adjustment, which requires that fiscal deficits be eliminated or kept at low levels, can no longer be based solely on an increase in revenue, says SEV. There is a need on the one hand for a clear political choice to reduce spending and on the other hand for a radical reform of the system of taxation, which must acquire stable laws of operation and lighten the burden on present taxpayers. This necessitates, inter alia, heightened competitiveness with regard to taxation elsewhere in Europe, in order to attract direct foreign productive investments.

Combating unemployment

For the employers' organisation, the problem of unemployment can be addressed in an effective, viable manner only if the economic growth rate is stepped up, and if this growth is translated into new jobs compatible with the conditions created by the "knowledge society". Therefore, employment policy should include measures that create the conditions for accelerating private sector growth and fresh business initiatives, modernising the labour market and continuing to improve workers' level of knowledge. The labour market must be seen in a new light and policies must be focused on voluntary adoption of measures to allow the use of new forms of work and working time arrangements. Finally, the radical restructuring of the Manpower Employment Organisation (OAED), which must proceed soon with the participation of the social partners, will play an important role in the harmonious and efficient functioning of the labour market.

Development

Development policy is expressed through the array of policies being conducted in all sectors, states SEV. There is a need for constantly increasing "synergy" among all decision-making centres to avoid measures adverse to competitiveness and development. This is why SEV has adopted a proposal to create an independent, autonomous "National Competitiveness Council". Development will be based on private sector investment activity and attracting direct foreign investments. Two "exogenous" factors, the EU's Third Community Support Framework (CSF) and the 2004 Olympic Games to be held in Athens, can make positive contributions to this. Both these factors must be seen as opportunities to speed up economic growth. With particular regard to the Third CSF, the perceived errors and delays of the past must be avoided, and the successful interventions of the Second CSF must be continued and enriched with actions facilitating the speedier introduction of new technologies.

Structural changes and modernisation of the state

In the area of structural changes, modernisation of the state has immediate and absolute priority. According to SEV, any efforts made by the private sector will meet with serious obstacles created by the unrestricted expansion of the public sector. The first step in modernising the state is to clear out the legal framework and radically limit the multiplicity of laws. This will enable bureaucratic procedures which place obstacles on investments, create unjustified delays in production activities, put burdens on production costs and reduce the competitiveness of Greek products, to be eliminated.

Reform of public administration

The second, equally important step is the restructuring of public administration, says SEV. A change in public administration requires quantitative cutbacks and the drastic improvement of its effectiveness, by the widespread introduction of new technologies and innovations. Equally important, however, is the exploitation of human resources in public administration. Here increased individual responsibility, greater transparency and "meritocracy" are required.

Market liberalisation

For SEV, a basic condition for modernising the state remains its withdrawal from business activity, with the ultimate aim of complete liberalisation of all markets. This means an extension of denationalisation by opening up to competition sectors which are lagging behind, such as energy, transport and communications. The partial denationalisation which has been attempted to date in the form of capital sell-offs cannot solve the problem, as long as the administrations of such partly denationalised organisations remain tied to the state which appoints them. Effective cost reductions and improved services will be achieved by creating conditions of free competition for all services provided at present by public utilities and services and the state, the employers believe. In particular it is noted that energy plays an important role in shaping costs and therefore in creating competitiveness. This is because, as the system works today, enterprises in Greece are faced with more unfavourable conditions of supply and prices of energy (electric, crude oil and natural gas) than their competitors. That is why priority must be given to creating the conditions which will allow true liberalisation of the electricity and natural gas markets on the basis of the timetable in force for the rest of the EU and not through extensions and postponements.

Modernisation of the social insurance system

It is obvious to SEV that the issue of modernisation of the social insurance system must be dealt with in due course, overall and in a viable manner. Putting off solutions for later only makes the problem worse, and the cost of not dealing with it multiplies the cost of dealing with it in the short term. Proposals for reforming the insurance system must include the introduction of elements of competition through institutional reforms and a fresh approach to taxation which will allow the resources of the social insurance system to be used for the good of the insured. The problem is a familiar one, and feasible solutions were put forward long ago. What is missing, states SEV, is the political will to address the problem. In this context, a bold political decision is needed, which can be taken by a government with a recent popular mandate. The cooperation of the political forces, principally the active participation of those enterprises and workers which lend economic support to the insurance system, will contribute to the smooth implementation of the reforms.

Commentary

Every four years, SEV holds a Panhellenic Industrial Conference aimed at monitoring developments in the economy both on the national and international levels and at elaborating positions and proposals which will meet the requirements of the present period and ensure the competitiveness of Greek enterprises. Participating in the conference are the country's political leadership, representatives of the political parties, economic actors, the business community, research centres and economic policy-makers. The conference's conclusions and proposals have been publicised and communicated to the competent bodies. (Anastassia Koutsivitou, SEV)