SGI 2022 | Greece | Key Challenges

Key Challenges

Recent Governments Experts

SGI experts on Greece

Dimitri A. Sotiropoulos

Dimitri A. Sotiropoulos is associate professor of political science at the Department of Political Science and Public Administration of the University of Athens and senior research fellow at the Athens-based think tank ELIAMEP. Mr. Sotiropoulos has studied law, sociology and political science in Athens, London and New Haven, CT (Yale PhD 1991). His publications include the volumes Is South-Eastern Europe Doomed to Instability?, (co-edited with Thanos Veremis), London: Frank Cass , 2002, and Democracy and the State in the New Southern Europe (co-edited with Richard Gunther and P. Nikiforos Diamandouros), Oxford: Oxford University Press, 2006. In 2003 he was senior research fellow at the Hellenic Observatory of the London School of Econoics and in 2009–2010 visiting fellow in South East European Studies at the Centre for European Studies, St. Antony’s College, Oxford. He has also published articles on democratization, civil society, public administration and social policy in Greece, Southern Europe and the Balkans in international journals (European Journal of Social Policy, Social Policy and Administration, West European Politics, South European Society and Politics, Europe-Asia Studies, South East European and Black Sea Studies).

Nikolaos Zahariadis

Nikolaos Zahariadis is the Mertie Buckman Chair and Professor of International Studies at Rhodes College in Memphis, TN, USA. He researches comparative policymaking at the intersection of domestic and international affairs with substantive emphasis on European political economy. He has published widely in the top publishing houses and journals in his fields and has been, among others, a Fulbright Scholar in Germany, Italy, and Greece respectively, Policy Studies Organization Fellow, National Bank of Greece Senior Research Fellow, Economic and Social Research Council (UK) - Social Science Research Council (USA) Fellow, adjunct scholar at the Woodrow Wilson International Center for Scholars, Vice President of the International Public Policy Association, and President of the International Studies Association-South.

César Colino (Coordinator)

César Colino is associate professor at the Department of Political Science and Public Administration at the Spanish National Distance-Learning University (UNED) in Madrid. He has taught at the University of Salamanca and the Autonomous University of Madrid and has been visiting researcher at the Max-Planck Institute for the Study of Society (MPIfG) in Cologne and Research Officer at the Institute for Research in Public Administration (FöV) in Speyer, Germany. His recent research and publications have addressed issues of comparative public policy and administration, comparative federalism, and constitutional reform in federations with a focus on the Spanish, German and Canadian federal systems. He has published in journals such as Policy & Politics; Comparative European Politics; Public Administration; Regional & Federal Studies; and Publius: The Journal of Federalism. He has recently published a book on comparative administration (in Spanish) Gobiernos y administraciones públicas en perspectiva comparada, Valencia: 2013 (with S. Parrado y J. Olmeda), and is the author of the forthcoming chapter “National and European patterns of public administration and governance,” in the Handbook of European Politics, José M. Magone ed. London: Routledge (with Eloísa del Pino).

Greece has resumed its economic recovery following the twin crises of the economy and the COVID-19 pandemic. This resurgence has been supported by rising tourism revenues, which constitute a significant portion of the country’s GDP, the strategic use of the European Union’s Recovery and Resilience Facility funds, directed toward infrastructure and regional development projects, and increasing domestic demand for goods and services.

However, sustaining this economic momentum while managing macroeconomic and fiscal vulnerabilities presents a considerable challenge. Greece faces substantial public debt, the highest in the EU, and although unemployment has declined, it remains among the highest in the Union. Inflation, driven by international factors beyond the government’s control, continues to affect energy and food prices. Additionally, the current account deficit has worsened over time, and while private investment is on the rise, it still lags behind other EU member states.

Addressing these vulnerabilities, particularly the public debt, remains crucial in the medium term. Greece has a window of opportunity to better manage its debt until 2032, when EU institutions will review the country’s Gross Financing Needs. Simultaneously, policies aimed at boosting exports are necessary to reduce the current account deficit, which has been exacerbated by high domestic consumption of imported goods.

To meet these challenges, Greece must enhance its economic competitiveness, which hinges on addressing two chronic issues: low labor productivity and below-average investment compared to the EU. Upskilling the labor force and increasing private sector research and development are essential for boosting productivity. Although EU funds have helped narrow Greece’s investment gap, attracting more foreign direct investment is crucial. To achieve this, the government must lift remaining restrictions on access to certain business sectors and overcome bureaucratic obstacles that are hampered by a slow-responding public administration.

In the short term, the government must also implement additional measures to mitigate the impact of soaring energy and food prices on the most vulnerable households. Long-standing regional inequalities require attention as well, particularly in the northwest and northeast, where some of the poorest regions in the EU are located.

These economic challenges are interlinked with the persistent issues of poverty, unemployment, and income inequality in Greece. A significant proportion of Greeks remain at risk of poverty or social exclusion, and unemployment among the youth is still high. Income disparities are also stark, particularly between salaried workers and business owners or professionals who evade taxes. No Greek government will be able to adequately fund social policies to combat poverty and economic inequality without first addressing the issue of untaxed income and wealth. The ongoing digitalization of economic transactions, which the government is actively promoting, is a step in the right direction.

To tackle low labor productivity, unemployment, and poverty, it is crucial to align employment needs with education and training trends. The Greek labor market demands unskilled workers for agriculture and construction, as well as skilled technicians for the industrial and IT sectors. However, educational institutions primarily train students for traditional professions, such as civil service and the liberal professions (lawyers, doctors, civil engineers, and architects).

While Greece has made strides in environmental sustainability, significant challenges remain. Meeting the UN’s Sustainable Development Goals for 2030 will be difficult. Despite the economic and environmental costs, oil and natural gas continue to be widely used for transportation and heating. Nevertheless, Greece has significantly reduced greenhouse gas emissions compared to previous decades. Further progress requires a stronger shift toward renewable energy sources and the provision of affordable, green energy to the population.

Achieving these economic, fiscal, labor, social, and environmental goals will necessitate substantial improvements in Greece’s public administration, which currently falls short in steering the economy and society. The recent digitalization of numerous public services has improved citizen-administration relations, but more needs to be done. Short-term priorities include further integrating IT into government work processes, upskilling and ensuring accountability among civil servants, conducting meaningful performance reviews, and providing incentives for productive employees while addressing inefficiencies, particularly in regional and local governments.

To address public administration challenges, the government must pursue reforms planned with EU assistance. These include the digital transformation of the public sector and the establishment of a comprehensive Human Resources Management system, both of which are underway but require close monitoring. The strategy to disseminate digital and modern management skills among civil servants must be intensified, and greater care must be taken to ensure the interoperability of digital systems within public administration.

Additionally, there is a misallocation of tasks among central, regional, and local public administrations, and an uneven use of evidence-based policymaking. These issues are still in the planning stage and require streamlining.

In the long term, challenges in the justice and education systems continue to hinder economic performance and public administration reforms. Although new judicial personnel have been hired and digital systems introduced, case processing remains slow, the rule of law is inconsistently applied, and anti-corruption measures are less effective than necessary. Improving the efficiency of the justice system and the transparency of government and public administration structures will require further training for court personnel and expanded digitalization of court procedures. Education also needs urgent reform, as reflected in Greece’s subpar performance in PISA assessments. Without structural changes in education, Greece’s economic progress may be impeded.

A final significant long-term challenge is the need to diversify the economy and reduce its heavy reliance on tourism. Although plans are in place, their implementation has been slow and uncertain.

Despite these challenges, Greece enters the 2020s with two critical advantages that were absent in the previous decade: the country has overcome its most severe economic crisis of the last century, and political stability has been achieved. These factors provide a foundation for optimism that, in the short to medium term, Greece can successfully address its challenges.