COMMISSION STAFF WORKING DOCUMENT Assessment of the 2012 national reform programme and stability programme for GREECE Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on Greece's 2012 national reform programme
Date: 2012-05-30
Institutions: European Commission
Subjects: Greece, anti-crisis plan, budgetary control, debt reduction, financial aid, monetary crisis, public debt, reflation, structural adjustment

EUROPEAN COMMISSION 

Brussels, 30.5.2012  
SWD(2012) 307 final 

COMMISSION STAFF WORKING DOCUMENT 

Assessment of the 2012 national reform programme and stability programme for 
GREECE 

Accompanying the document 

Recommendation for a  

COUNCIL RECOMMENDATION 

on Greece's 2012 national reform programme  

{COM(2012) 307 final} 

EN 

   EN 

 
 
 
 
  
 
 
CONTENTS 

INTRODUCTION  

EXECUTIVE SUMMARY .............................................................................................................. 3 
1. 
...................................................................................... 4 
2.  ECONOMIC SITUATION AND OUTLOOK ............................................................................. 5 
3.  PROGRAMME IMPLEMENTATION ...................................................................................... 5 
4.  CONCLUSION  
.................................................................................. 14 
............................................................................. 15 
5.  ANNEX  

2 

 
 
 
EXECUTIVE SUMMARY 

The  Greek  economy  continues  to  contract  and  short-term  growth  rates  have  been  further 
revised  downwards.  It  is  estimated  that  the  economy  contracted  by  6.9 %  in  2011.  The 
recovery previously announced for next year will be further delayed with, at best, a stagnation 
of activity in 2013. It is only in 2014 that positive annual growth rates are expected to return. 

Following  a  request  from  Greece  in  April  2010  and  negotiations  with  the  European 
Commission, the ECB and the IMF the European Council on 2 May 2010 agreed an economic 
adjustment  programme  for  Greece  covering  the  period  2010–13.  A  second  economic 
adjustment programme was agreed by the European Council on 13 March 2012 covering the 
period 2012–14.  The overarching objective  of  that  second  programme is to durably restore 
Greece’s  credibility  for  private  investors  by  ensuring  fiscal  sustainability,  safeguarding  the 
stability of the financial system, and boosting growth and competitiveness.  

Greece  made  mixed  progress  towards  achieving  the  ambitious  objectives  of  the  first 
adjustment  programme  and  important  fiscal  targets  were  not  met.  Several  factors  hampered 
implementation:  political  instability,  social  unrest,  issues  related  to  administrative  capacity 
and  a  recession  that  was  much  more  severe  than  previously  projected.  Additional 
consolidation measures were therefore adopted throughout 2010 and 2011. However, Greece 
substantially reduced the general government deficit between 2009 and 2011. The adjustment 
is  much  bigger  than  most  other  cases  of  fiscal  consolidation  in  EU  countries  in  the  past. 
Large-scale  financial  assistance  from  the  international  community  compensates  for  the  fact 
that Greece is not expected to be able to return to market financing over the next three years. 
Greece  will  need  to  use  that  time  to  underpin  its  fiscal  consolidation  measures  by 
implementing structural fiscal reforms to generate expenditure savings on a durable basis and 
structural reforms to boost growth will need to be accelerated to improve competitiveness. 

3 

 
 
1. 

INTRODUCTION 

Following a request from Greece in April 2010, the Troika consisting  of  the European 
Commission,  the  ECB  and  the  IMF  negotiated  an  economic  adjustment  programme 
with the Greek authorities, which was agreed by the European Council on 2 May 2010 
and  by  the  IMF  board  on  9  May  2010.  The  programme  covers  the  period  2010–13.  In 
December  2011  and  January/February  2012,  the  Troika  negotiated  the  second  economic 
adjustment programme with the Greek authorities, which was agreed by the European Council 
on 13 March 2012 and by the IMF board on 15 March 2012. The second programme covers 
the  period  2012–14.  The  combined  financial  package  of  both  programmes  amounts  to  EUR 
240  billion,  consisting  of  EUR  110  billion  from  the  first  programme  and  EUR  130  billion 
from the second one. The international assistance loans disbursed so far to Greece amount to 
EUR 73 billion. Of this amount, the euro area Member States have paid EUR 52.9 billion and 
the  IMF  has  paid  EUR  19.9  billion.  In  the  second  programme,  the  European  Financial 
Stability Fund (EFSF) and the IMF commit the undisbursed amounts of the first programme 
plus  an  additional  EUR  130  billion  for  the  years  2012–14.  During  this  period,  the  EFSF 
commits an overall amount of EUR 144.7 billion (including the amounts already committed 
or disbursed for Private Sector Involvement (PSI) and bank recapitalisation), while the IMF 
will contribute EUR 28 billion over 4 years. 

The  overarching  objective  of  the  programme  is  to  durably  restore Greece’s  credibility 
for  private  investors  by  ensuring  fiscal  sustainability,  safeguarding  the  stability  of  the 
financial  system,  and  boosting  growth  and  competitiveness.  To  this  end,  the  programme 
consists of a comprehensive set of ambitious policies that reinforce each other: 

(1)  

(2)  

(3) 

The  fiscal  part  of  the  adjustment  programme  aims  to  maximise  credibility  and 
enforceability by applying prudent macroeconomic assumptions, strong frontloading, 
implementing difficult measures upfront and making legislation with regard to such 
measures, by fully specifying measures over the programme period and by selecting 
structural measures. Fiscal targets for 2012 and subsequent years have been revised 
to take into account the unfavourable macroeconomic developments, while ensuring 
that, during the programme period, sufficient progress is made towards the objective 
of a debt-to-GDP ratio of 120 % by 2020. The programme is focused on the objective 
of reaching a primary deficit of 1 % of GDP in 2012 and a primary surplus of 4.5 % 
of GDP in 2014. 

The financial sector policies of the programme aim to restore confidence and ensure 
the  long-term  viability  of  the  banking  sector.  To  this  end,  the  programme  includes 
bank  liquidity  support  in  the  short  term,  measures  to  recapitalise  banks  without 
infringing  competition  rules,  the  establishment  of  the  Hellenic  Financial  Stability 
Fund (HFSF) and a restructuring plan for the banking sector. An important aspect of 
this  part  of  the  programme  is  improving  monitoring  of  liquidity  and  asset  quality 
(including non-performing loans), with a view to preventing problems in individual 
banks. 

The  medium-term  programme  objective  is  to  improve  competitiveness  and  change 
the  economy’s  structure  in  favour  of  a  more  investment-  and  export-led  growth 
model. In this respect, in parallel with fiscal measures, the programme provides for 
the preparation and implementation of an ambitious agenda of structural reforms to 
strengthen external competitiveness, accelerate the reallocation of resources from the 
non-tradable to the tradable sector, and foster growth. The reforms focus in particular 
on modernising the public sector, making product and labour markets more efficient 
and  flexible,  and  creating  a  more  open  and  accessible  business  environment  for 

4 

 
domestic and foreign investors, including by reducing the direct participation of the 
state in domestic industries. 

As for all Member States benefiting from a financial assistance programme, progress in 
implementing the accompanying policy programme is monitored in a dedicated, regular 
and specific manner, in line with the provisions of the Memorandum of Understanding. 
Given the reporting requirements under financial assistance programmes, as well as the much 
more  complicated  monitoring  and  enforcement  procedures,  programme  countries  have  been 
exempted  from  the  obligation  to  submit  national  reform  programmes  and  stability  or 
convergence  programmes  in  2012.  Nonetheless,  Greece  submitted  a  national  reform 
programme  and  fiscal  tables  in  April  2012.  The  Staff  Working  Document  under  the  2012 
European  Semester  provides  a  synthesis  of  recent  progress  in  implementation.  More  details 
can  be  found  in  the  reports  on  the  state  of  implementation  that  the  European  Commission 
publishes after each programme review mission1. 

2. 

ECONOMIC SITUATION AND OUTLOOK 

The  economy  continues  to  contract  and  short-term  growth  rates  have  been  further 
revised downwards. It is estimated that the economy contracted by 6.9 % in 2011. Negative 
reactions  from  businesses  and  households,  delays  and  problems  with  the  implementation  of 
growth-enhancing  reforms,  difficulties  in  accessing  credit,  higher  unemployment  levels  and 
heightened  political  uncertainty  in  the  autumn  —  when  Greece’s  participation  in  monetary 
union  was  openly  discussed  —  contributed  to  low  private  consumption  and  an  additional 
contraction  in  investment.  Moreover,  the  deceleration  of  demand  in  European  economies 
slowed  down  Greek  exports,  which  had  shown  dynamic  growth  in  previous  quarters. 
Although  the  second  financing  programme  and  the  completion  of  sovereign  debt  exchange 
will help to reduce the uncertainties of the last few months, the recession will remain severe 
throughout  2012.  Contraction  in  domestic  output  is  currently  estimated  at  4¾ %,  with 
downside risks. The recovery previously announced for next year will be further delayed with, 
at best, a stagnation of activity in 2013. It is only in 2014 that positive annual growth rates are 
expected to return. 

3. 

PROGRAMME IMPLEMENTATION 

Greece  made  mixed  progress  towards  achieving  the  ambitious  objectives  of  the  first 
adjustment  programme  and  important  fiscal  targets  were  not  met.  Several  factors 
hampered implementation: political instability, social unrest, issues related to administrative 
capacity  and  a  recession  that  was  much  more  severe  than  previously  projected.  Additional 
consolidation measures were therefore adopted throughout 2010 and 2011. However, Greece 
substantially reduced the general government deficit from 15¾ % of GDP in 2009 to 9¼ % in 
2011.  This  fiscal  adjustment  was  necessary  given  the  extremely  high  deficit  in  2009.  The 
adjustment is much bigger than most other cases of fiscal consolidation in EU countries in the 
past.  This  fiscal  consolidation  had  to  be  achieved  over  a  period  in  which  the  economy 
contracted  by  more  than  11 %,  which  was  unavoidable  given  the  substantial  positive  output 
gap that had built up due to the unsustainable policies implemented until 2009. 

The programme strategy has been adjusted. Through large-scale assistance to Greece, the 
international  community  provides  Greece  with  financing  at  low  interest  rates,  thereby 
compensating for the fact that Greece is not expected to be able to return to market financing 
over the next three years. Greece will need to use that time to underpin its fiscal consolidation 

1  These  reports,  along  with  other  information  related  to  the  financial  assistance  programme  to  Greece,  can  be 
found on http://ec.europa.eu/economy_finance/eu_borrower/greek_loan_facility/index_en.htm. 

5 

 
                                                 
measures  by  implementing  structural  fiscal  reforms  to  generate  expenditure  savings  on  a 
durable basis. In a similar vein, structural reforms to boost growth will need to be accelerated 
to improve competitiveness, and financial stability will need to be preserved. These objectives 
are the same as those under the first programme. Nonetheless, in the second programme, the 
implementation  of  the  growth-enhancing  structural  reform  agenda  gains  prominence  in  the 
overall  implementation  of  the  programme,  while  debt  restructuring  and  higher  official 
financing allows for a slower fiscal adjustment and a more gradual privatisation process. 

Greece’s  medium-term  economic  performance  will  very  much  depend  on  the 
implementation  of  structural  reforms.  These  reforms,  particularly  those  in  the  labour 
market, the liberalisation of several sectors and a number of measures to improve the business 
environment,  should  help  promote  competition,  spur  productivity,  increase  employment  and 
reduce production costs. Without these reforms, improvements in competitiveness may take a 
long  time  to  materialise,  or  may  be  achieved  only  by  reducing  imports  and  by  means  of  an 
unemployment-driven reduction in labour costs. The medium-term projections on which the 
second financing programme is based assume that the ambitious labour market reforms will 
be  followed  by  equally  important  structural  reforms  in  goods  and  services  markets.  If  this 
does  not  happen,  the  reduction  in  wage  and  non-wage  costs  will  translate  into  higher  profit 
margins and the medium-term growth projections of between 2½ and 3 % from 2015–20 may 
prove too optimistic. 

In  the  short  term,  there  is  some  tension  between  internal  devaluation  and  fiscal 
consolidation.  Greece  has  had  unsustainable  imbalances  in  both  its  external  and  fiscal 
accounts  and  progress  on  both  accounts  has  so  far  been  insufficient.  In  the  coming  years, 
progress  must  be  made  on  both  fronts.  Greece  has  to  restore  competitiveness  through 
ambitious  internal  devaluation,  i.e.  a  reduction  in  prices  and  production  costs  relative  to  its 
competitors, as well as a shift from a consumption-led economy to an export-led economy. As 
it  takes  time  to  bring  about  a  big  increase  in  productivity,  an  upfront  reduction  in  nominal 
wage  and  non-wage  costs  is  necessary.  This  is  unavoidable,  but  it  complicates  fiscal 
adjustment due to the impact internal devaluation has on nominal GDP and, concomitantly, on 
tax bases. Moreover, when recovery begins, the composition of growth is expected to be less 
tax-rich than in previous upswings. 

Fiscal  targets  for  2012  and  subsequent  years  have  been  revised.  Targets  have  been 
adjusted to take into account the unfavourable macroeconomic developments, while ensuring 
that,  during  the  programme  period,  sufficient  progress  is  made  towards  the  objective  of  a 
debt-to-GDP  ratio  of  120 %  by  2020.  Taking  into  account  the  savings  that  result  from  debt 
restructuring, this fiscal path is calibrated to be consistent with the correction of the excessive 
deficit  in  2014,  as  envisaged  at  the  beginning  of  the  first  programme.  The  2014  primary 
surplus will have to be kept at such a high level for several years. The experience of other EU 
countries  shows,  however,  that  such  a  high  primary  surplus  is  not  disproportionate  and  is 
socially  bearable.  In  any  case,  these  targets  are  lower  than  the  targets  set  under  the  first 
programme. 

In  early  2012,  the  government  adopted  a  new  package  of  fiscal  measures.  These 
measures, which account for 1.5 % of GDP, all relate to the expenditure side of the budget. It 
is  the  first  time  since  May  2010  that  a  recalibration  of  the  fiscal  strategy  has  not  been 
accompanied by an increase in taxes, although from the outset the programme had envisaged 
a  consolidation  path  heavily  based  on  expenditure.  If  fully  implemented,  the  new  package 
should enable Greece to meet the 2012 primary deficit target. 

However,  current  projections  point  to  wide  fiscal  gaps  in  2013–14.  They  point  to  a 
cumulated  fiscal  gap  in  2013–14  of  5½ %  of  GDP.  Greece  will  therefore  have  to  make 
substantial additional expenditure cuts in the coming months, in particular when it updates its 

6 

 
medium-term  budget  (medium-term  fiscal  strategy  or  MTFS)  in  May  2012.  In  order  to 
prepare  these  measures,  the  government  has  launched  a  review  of  public  spending 
programmes.  The  additional  measures  need  to  be  expenditure-based  to  limit  their  negative 
impact on potential growth. The review is expected to focus on and contribute to savings in 
social  transfers,  while  preserving  basic  social  protection,  defence  and  the  restructuring  of 
central  and  local  administration.  The  reduction  in  public  employment  through  redundancies 
and the recruitment rule of one entry for five exits will also contribute to reducing government 
expenditure. 

The  government  has  adopted  an  ambitious  set  of  labour  market  measures  that 
complement the reforms passed in 2010 and 2011. As the social dialogue between and with 
representatives  of  private  sector  employers  and  employees  did  not  deliver  a  satisfactory 
outcome, the government made legislation to reduce minimum wages in the private sector and 
modify  a  number  of  wage-setting  procedures,  including  rules  on  the  expiry  of  collective 
agreements  and  the  arbitration  of  wage  disputes.  This  is  part  of  a  strategy  to  reduce  labour 
costs in the business economy by 15 % in three years, thereby accelerating the cuts in labour 
costs  already  made  in  the  course  of  2011.  Besides  being  achieved  through  cuts  in  nominal 
wages,  this  objective  is  also  expected  to  be  achieved  by  reducing  non-wage  labour  costs, 
through  the  elimination  of  non-core  social  benefits  and  the  corresponding  reduction  in 
employers’  social  contributions.  Moreover,  the  government  has  committed  to  taking 
additional  corrective  measures  to  facilitate  collective  bargaining  and  ensure  wage  flexibility 
and higher employment. 

Greece  is  taking  part  in  the  Youth  Action  programme.  However,  the  operational 
assessment shows that EUR 1.26 billion of total resources have still not been allocated to all 
European Social Fund (ESF) programmes. These are resources that have not been committed 
to  approved  projects.  There  are  also  EUR  2.5  billion  under  the  European  Regional 
Development Fund (ERDF) from sleeping projects, where a budget has been committed but 
implementation  measures  are  lacking.  Expansion  and/or  reinforcement  of  certain  existing 
initiatives co-funded by ESF operational programmes (OPs) was recommended, based on an 
evaluation  of  results.  Taking  into  account  the  slow  pace  of  implementation  of  certain  ESF 
OPs (in particular the National Contingency Reserve and to a lesser extent the Administrative 
Reform  OP),  specific  re-programming  was  also  considered  to  allow  the  allocation  of 
resources to OPs which have better absorption potential in support of youth-related measures. 
In  the  case  of  the  ERDF,  up  to  the  end  of  2015,  the  total  available  credits  injected/to  be 
injected into SMEs amount to about EUR 4 352 billion (including expected leverage).  Greece 
is  faced  with  a  double  challenge  to  maintain  and  further  reinforce  the  recently  accelerated 
pace of absorption as well as to improve the effective implementation of ESF. This requires as 
a matter of priority a stronger coordination and enhanced political steer in the management of 
the  Fund  operations,  a  commitment  to  safeguarding  the  continuity  and  stability  of 
experienced/competent staff in Managing authorities and beneficiaries and the fostering of the 
synergies  between  all  three  Structural  Funds.  With  a  view  to  tackling  the  extremely  high 
youth unemployment, the Commission is currently working closely with the Greek authorities 
on  the  finalisation  of  an  action  plan  which  envisages  on  one  hand  the  expansion  and 
reinforcement  of  existing  ESF  co-funded  initiatives  targeting  young  people  as  well  as  a 
focused re-allocation of ESF resources (amounting to EUR 200-250 mln) to support measures 
which can deliver immediate results for young people who are unable to find work.  

Greece has made insufficient progress with regard to the reform of public procurement, 
both in terms of the general overhaul of legislation and institutional coordination. The Single 
Public Procurement Authority has been established but is still not operational and the powers 
it  was  originally  given  have  been  significantly  weakened  in  the  process  of  adoption  of  the 
law. No progress has been made with regard to e-procurement. 

7 

 
Greece  has  undertaken  a  number  of  important  commitments  to  reform  its  judicial 
system.  These  include,  inter  alia,  clearing  the  backlog  of  court  cases,  improving  the 
processing of judicial cases, designing a performance and accountability framework for courts 
and reviewing the Greek Code of Civil Procedure to bring it into line with international best 
practice. Steps have been taken to reduce the backlog of tax cases in accordance with a work 
plan  extending  until  July  2013.  Two  newly  established  task  forces  will  oversee  the 
compilation  and  publication  of  statistical  information  on  court  cases  and  the  review  of  the 
Code of Civil Procedure. The judicial reform measures set out in the second programme can 
make  an  important  contribution  to  economic  recovery  by  stimulating  private  consumption, 
foreign investment and domestic entrepreneurship. 

In  Greece  insufficient  progress  has  been  achieved  in  tax  policy  and  tax  administration 
reforms.  The  tax  policy  reform,  whose  adoption  by  Parliament  was  initially  planned  for 
September  2011  has  been  postponed  The  reform  ought  to  make  the  tax  system  simpler, 
lowering compliance costs, and improving its growth-friendliness. The reform should concern 
personal  income,  corporate,  VAT  and  property  taxes,  as  well  as  the  employers'  social 
contributions. Strengthening revenue administration and fighting tax evasion are amongst the 
top priorities of the programme. This is not only because of the need to increase revenue and 
reduce the government deficit without further increases in tax rates. It is also important for the 
social acceptability of the adjustment programme, as the reduction in tax evasion will lead to 
a  fairer  sharing  of  the  adjustment  burden.  The  government  has  adopted  legislation  and 
administrative reforms that aim at enhancing the efficiency of tax administration and controls, 
putting in place effective project management, and devising an anti-evasion strategy to restore 
tax  discipline  and  improve  compliance.  The  focus  has  now  shifted  towards  implementation 
and  the  increase  in  the  number  of  tax  audits.  Despite  some  progress,  the  implementation  of 
those reforms has been slow. 

Progress  in  privatisation  has  been  slower  than  planned,  on  account  of  adverse  market 
conditions  and  technical  and  legal  hurdles  in  preparing  assets  for  sale.  In  the  months 
preceding  the  PSI  deal,  the  markets  had  a  particularly  low  appetite  for  Greek  assets. 
Assuming  that  the  launch  of  the  second  financing  programme  will  help  overcome  this 
negative  market  sentiment,  the  privatisation  fund  should  be  able  to  deliver  a  continuous 
stream  of  assets  for  privatisation  for  several  years.  While  the  objective  of  privatising  assets 
worth EUR 50 billion is maintained, this target will only be achieved well beyond 2015, while 
the  recapitalisation  of  banks  will  add  to  the  pool  of  assets  that  can  be  privatised.  Besides 
helping  to  cover  financial  needs,  privatisation  remains  crucial  for  relaunching  growth, 
modernising the economy and attracting foreign direct investment. 

Greece  has  begun  to  implement  a  comprehensive  strategy  to  recapitalise  banks  and  to 
restructure  the  banking  sector,  involving  a  number  of  supervisory  and  regulatory 
measures.  Greek  banks  are  severely  affected  by  sovereign  debt  restructuring,  against  the 
background  of  a  continuing  recession,  leading  to  substantial  capital  shortfalls  for  all  banks. 
Viable banks will be identified and adequately recapitalised, on the basis of recommendations 
from the supervisors and taking into account the effects of PSI. The new programme includes 
sufficient  resources  to  recapitalise  banks,  should  private  shareholders  prove  unable  or 
unwilling to provide the necessary capital. 

The  governance  structure  of  the  recapitalisation  and  resolution  processes  will  be 
significantly  improved.  This  is  necessary  on  account  of  the  substantial  amount  of  official 
financing  that  will  be  channelled  through  Greek  institutions,  in  particular  the  Hellenic 
Financial  Stability  Fund.  The  recapitalisation  strategy  aims  to  maximise  private  sector 
participation while preserving the state’s interests. The holders of banks’ shares acquired by 
the state in the recapitalisation process will have limited voting rights, but this may still mean 

8 

 
that  upside  returns  can  be  shared  between  the  state  and  private  shareholders.  Whenever 
possible, the private management of banks will be safeguarded. 

The scaled-up official financing and the exchange of debt held by the private sector will 
improve  debt  sustainability  prospects.  In  a  moderately  optimistic  but  realistic  scenario,  if 
Greece meets the programme targets, the debt-to-GDP ratio will fall to about 117 % in 2020. 
However, it will remain high for many years and therefore be susceptible to adverse domestic 
and  global  developments.  In  particular,  relatively  small  setbacks  in  terms  of  growth,  due  to 
slow  implementation  of  structural  reforms  or  unfavourable  external  circumstances,  may 
adversely impact debt dynamics. Moreover, the high level and share of official debt, as well 
as the de facto senior status of the bonds resulting from the co-financing structure agreed in 
the  context  of  the  debt  restructuring  measures, complicate Greece’s  return to the markets at 
the  end  of  the  second  programme.  Should  market  access  not  be  restored  when  the  second 
programme ends, additional official sector financing could be necessary. 

The  economic  crisis  and  subsequent  fiscal  consolidation  measures  have  had  an  impact 
on the ability of Greece to achieve the Europe 2020 goals, especially the employment and 
poverty targets. Nevertheless, it is expected that the structural reforms, particularly those in 
the labour market, the liberalisation of several sectors and a number of measures to improve 
the  business  environment,  should  help  promote  competition,  spur  productivity,  increase 
employment and reduce production costs, thus contributing to an increase in employment and 
limiting  poverty  and  social  exclusion  in  the  medium  term.  On  the  other  hand,  it  has  to  be 
noted that despite the economic crisis, Greece has continued to work towards achieving the 
environmental goals of Europe 2020. 

Current situation2 
0.6 % (2007) 

R&D 
investment  
(percentage of 
GDP) 

Employment 
rate (%) 

59.9 % (2011) 

Development over the last year3 

In order to reach this target, gross 
domestic expenditure on R&D will have 
to increase from EUR 1.3 billion in 2007 
to EUR 4.9 billion (current prices) by 
2020. Due to the adverse economic 
environment and the fact that the 
recession is worse than expected, R&D is 
unavoidably affected. Private sector 
investments in R&D are decreasing and 
the reduction in public expenditure will 
have an impact on the ability of public 
authorities to provide financing for R&D. 
Consequently, the aim of investing 2 % of 
GDP in R&D by 2020 seems too 
ambitious at the moment and probably 
needs to be revised in order to be more 
consistent with current trends and the 
economic outlook. 

- 4.1  

Even before the crisis, this target was 
challenging and is out of reach under the 
current context marked by negative job 
growth 

Europe 2020 targets 
2 %  

70 % 

2 Eurostat figures for 2010, unless otherwise indicated. 
3 Based on the 2012–15 national reform programme for Greece. 

9 

 
 
 
                                                 
Current situation2 
13.7% 

While a pilot scheme of 
Education Priority Zones 
started in 2010-2011, an 
explicit strategy to tackle 
ESL with clear targets, 
time-frames for 
implementation and tools 
to monitor progress at 
national level does not yet 
seem to be in place. 

28.4 % 
The share of young adults 
with tertiary education 
attainment has grown 
only moderately since 
2000 and was below the 
EU average in 2010. 
In 2011 Greece had the 
highest number (%) of 
women with a Maths, 
Science and Technology 
degree in the EU. 

619 000 

Early school 
leaving (%) 

Tertiary 
education 
attainment (%) 

Reduction in 
the number of 
people at risk of 
poverty or 
exclusion 

Energy 
efficiency — 
reduction in 
energy 
consumption in 
million tonnes 
of oil 
equivalent 
(Mtoe) 

n.a. 

The energy efficiency 
objectives are set 
according to national 
circumstances and 
national formulations. As 
the methodology to 
express the 2020 energy 
consumption impact of 
these objectives in the 
same format was agreed 
only recently, the 
Commission is not yet 

Europe 2020 targets 
The national target is  
9.7% 

The national target is  
32% 

Reduce by 450 000 the number 
of people at risk of poverty or 
social exclusion. 

2.7 Mtoe 

Development over the last year3 
Indications suggest that ESL is increasing 
as a growing number of school-age 
children are obliged to work. 
Children from single-parent households 
and other low-income and disadvantaged 
groups are now more vulnerable to ESL 
than before. 
Further cuts to what in early 2011 was 
one of the lowest education budgets in the 
EU make convergence towards the 2020 
target more difficult. 
Despite constitutional protection, the 
number of underage children (12-15) who 
work during the day and attend evening 
school is growing. They are very 
vulnerable to ESL. 
More tertiary students in Greece are now 
obliged to work. As a result: a. they will 
need longer time to complete their 
studies; and b. more of them are likely to 
drop-out as universities do not yet 
provide sufficient flexibility. 
The number of tertiary education places 
for the next 3 years is set to remain at 
September 2011 levels (10.250 less 
compared to 2010); this is a net reduction 
rather than increase. Meeting the 2020 
target may therefore constitute a major 
challenge. 
On the basis of available statistical data, 
no major changes are observed for the 
period 2008–10. Nevertheless, the factors 
that increase poverty and social exclusion 
have certainly been exacerbated in 
Greece. This is reflected in the continuous 
sharp decrease in GDP and the 
unemployment rate. All the fiscal 
consolidation measures are likely to have 
an adverse impact on poverty indexes and 
aggravate the risk of poverty among the 
population, even if current data do not yet 
reflect this. However, Greece has put a 
number of countermeasures in motion to 
limit the social consequences of the crisis 
for the most vulnerable. These are, inter 
alia: 
- promotion of the social economy with 
the implementation of new legislation 
enabling the establishment of the registry 
for social enterprises; 
- employment programmes for socially 
vulnerable groups implemented by the 
Greek Manpower Organisation (OAED); 
- social work programmes. 
In the last two years, Greece has focused 
on improving its energy efficiency. The 
main instruments for the reduction of 
energy use and improvements in energy 
efficiency are Law 3855/2010, and 
resources from the EU Structural Funds 
available to Greece for the period 2007–
13 through the revamping of the energy 
and environment sections of the National 
Strategic Reference Framework for use of 
the funds. 
Law 3855/2010 calls for the 
establishment of an energy audit system 

10 

 
 
 
Current situation2 

able to present this 
overview. 

- 9.2 % (2009)4 

The reduction 
of greenhouse 
gas (GHG) 
emissions in 
sectors that are 
not covered by 
the Emission 
Trading System 
(compared to 
2005 levels) 

Europe 2020 targets 

- 4 %5 

Development over the last year3 
in the residential and tertiary sectors and 
for rules to be laid down with regard to 
the founding and operation of energy 
service providers (energy service 
companies — ESCOs). Both measures 
are already in place through the 
establishment of the accreditation of 
energy auditors, the mandatory use of 
energy certification cards for the sale or 
rental of buildings and the publication of 
rules and regulations regarding ESCOs, 
including rules on their registration. In 
addition, in the last two years a number of 
support schemes to upgrade the existing 
building stock have come into operation. 
These include the following programmes: 
- ‘Energy Efficiency at Household 
Buildings’; 
- ‘Exoikonomo’, an energy efficiency 
programme; 
- ‘Building the Future — Large Scale 
Interventions’; 
- ‘Green Pilot Urban Neighbourhood’; 
- ‘Bioclimatic Renewal of Urban Spaces’; 
- ‘Green agricultural and island 
communities — New development 
model’; 
- Pilot bioclimatic school buildings and 
Pilot Renewable Energy Sources (RES) 
and Energy Efficiency (EE) projects to 
improve the energy efficiency of existing 
public school buildings. 
National GHG emissions are on track to 
meet the national target in line with the 
Kyoto Protocol (125 % of base emissions, 
namely 134 megatonnes (Mtonnes) of 
CO2eq or 668 Mtonnes of CO2eq for the 
five years 2008–12). The latest emission 
inventory, submitted in April 2011 for the 
year 2010, records 116.1 Mtonnes of 
CO2eq (excluding Land Use, Land-Use 
Change and Forestry — LULUCF). It 
also shows a continuously declining trend 
from a high of 134.7 Mtonnes of CO2eq 
in 2005. This trend is expected to 
continue in 2011. 
All current estimates, based on modelling 
work in the context of the National 
Renewable Energy Action Plan (NREAP) 
submission, show that Greece will reach 
the target of a 4 % reduction in the 2005 
GHG emissions of non-ETS sectors by 
2020, as set out in the Effort Sharing 
Decision (Decision 406/2009/EC). 

4 This quantity corresponds to the changes from 2005–09 in emissions not covered by the Emissions Trading 
 System. As the scope of the Emissions Trading System changed between 2005 and 2009, these emissions are 
estimated on the basis of the main relevant source categories of the United Nations Framework Convention on 
Climate Change (as opposed to the difference between total emissions and ETS verified emissions). 
5 The national emissions limitation target defined in Decision 2009/406/EC (or the Effort Sharing Decision) 
concerns emissions not covered by the Emissions Trading System. It is expressed as the minimum 
relative decrease (if negative) or the maximum relative increase (if positive) compared to 2005 levels. 

11 

 
 
                                                 
Development over the last year3 
1.3 

Renewable 
energy 
(percentage of 
total energy 
use) 

Current situation2 

As at 2009 (latest 
available data), the share 
of RES in Greece was 
8.2% and Greece should 
take further effort to reach 
its 2011/2012 interim 
target.   Greece's 
achievement of its 2020 
target should generate 83 
000 renewable energy 
jobs, compared to 59 000 
if the EU were to abandon 
its support for renewables. 

Europe 2020 targets 
Under Directive 2009/28/EC on 
the promotion of use of energy 
from renewable sources, Greece 
has committed to reach its 18% 
target of renewable energy 
sources in final energy 
consumption and a 10% share 
of renewable energy in the 
transport sector by 2020. 
Indeed, in Greece's National 
Renewable Energy Action Plan 
the commitment is made to 
achieve a 20% target, rather 
than 18%. Greece should 
implement this plan and 
complete the transposition of 
the Directive. In particular, it 
should speed up the removal of 
non-cost barriers, especially in 
the planning regime, and ensure 
that it applies the most cost 
effective means of developing 
RES, to maximise the sector's 
contribution to job creation and 
economic growth. 
Further, Greece should submit 
its RES progress report which 
was due December 2011 
following the requirements of 
the RES Directive. 

Despite  the  major  economic  downturn,  Greece  has  committed  itself  to  fulfilling  the 
obligations  stemming  from  the  Euro  Plus  Pact.  They  are  broadly  in  line  with  the 
the  economic  adjustment  programme  for  Greece.  Greek  national 
assumptions  of 
commitments,  along  with  the  progress  made  on  these  commitments,  are  summarised  in  the 
table below. 

Euro Plus Pact (national commitments and progress)  
1. Foster competitiveness 

• 

• 

reform of wage-setting 
agreements/mechanisms 
reform of wage settlements in 
the public sector 
•  measures to increase 

productivity: 
- opening up sheltered sectors 
- improving the education 
system and promoting R&D, 
innovation and infrastructure 
- improving the business 
environment 
- other reforms (e.g. the 
judicial system) 

So far, commitments regarding competitiveness have been partially 
implemented. The most important wage-setting measure was the reduction of 
minimum wages in the private sector. The government is implementing 
measures to ensure that wage settlements in the public sector, including the 
direct reduction of public sector wages and allowances and additional 
measures to reduce the public wage bill, are in line with the medium-term 
fiscal strategy for 2012–2015. Greece is also implementing a comprehensive 
reform to open up restricted professions and remove restrictions that hinder 
competition and dampen productivity. With regard to the education system, 
the government will implement an overall reform programme aimed at 
improving its effectiveness and efficiency, taking into account the measures 
recommended by an independent task force. With respect to the promotion of 
R&D and innovation, the government is carrying out an up-to-date and in-
depth evaluation of all R&D and ongoing innovation actions. Moreover, it has 
adopted measures to simplify procedures for business start-ups through the 
operation of the e-Commerce General Registry (GEMI) as a ‘one-stop-shop’. 
This will significantly contribute to reducing the administrative burden and red 
tape. 

12 

 
 
 
 
 
  
Euro Plus Pact (national commitments and progress)  
2. Foster employment 

• 
• 

• 

• 
• 

promotion of flexicurity 
increase participation in the 
labour market 
reduction of the amount of 
undeclared work 
lifelong learning 
participation of second 
earners 

3. Improve the sustainability of 
public finances 

• 
• 
• 
• 

• 

pensions reform 
healthcare sector reform 
national fiscal rules 
reform of public 
administration 
privatisation programme 

4. Reinforce financial stability 

• 

national legislation for 
banking resolution or other 
measures 

Commitments with regard to fostering employment have been partially 
implemented. Inter alia, the government is implementing a wide range of 
reforms, such as legislation on fixed-term contracts (including specific fixed-
term contracts for young people at subminimal wages), on the management of 
working time and rules related to working arrangements in general (including 
changes in the regulatory framework for flexible forms of employment, such 
as rotating employment, part-time work, teleworking and work through 
temporary employment agencies). The extension of the probation period for 
new jobs to one year will also help promote flexicurity. In order to tackle the 
issue of undeclared work, the Greek government has adopted legislation to 
strengthen the role of the Labour Inspectorate. To promote lifelong learning, 
the government will launch an integrated programme for the upgrading of the 
National Centre of Vocational Orientation. 

Commitments regarding the sustainability of public finances have been 
partially implemented. The government will continue fully implementing the 
ambitious pension reform adopted in July 2010. It will also continue reforming 
the healthcare sector to further improve the sustainability of public finances. 
Most institutional reforms are enacted by virtue of Law 3918/2011, which was 
adopted in March 2011. EU fiscal rules set out in the Stability and Growth 
Pact will be transposed into national legislation in the form of a framework 
law. In order to reinforce their binding and durable nature, fiscal rules will 
outlast the parliamentary cycle. Law 3871/2010, adopted in July 2010, already 
provides for the adoption of fiscal rules. With respect to the reform of public 
administration, the government has launched independent reviews of central 
administration and of existing social programmes. Based on the assessment of 
these reviews, legislation will be adopted to implement the operational 
recommendations aimed at increasing the efficiency of public administration 
and improving the effectiveness of social programmes. Finally, the 
government has adopted a privatisation programme with the aim of collecting 
EUR 50 billion by the end of 2015. Proceeds from privatisation will be used to 
redeem outstanding debt and will significantly improve fiscal sustainability. 
Commitments regarding the sustainability of public finances have been 
partially implemented. Following ongoing initiatives at EU level, the 
government will improve the legislation on financial institutions to allow 
timely and effective intervention and resolution consistent with international 
best practice. The establishment of the Financial Stability Fund, endowed with 
EUR 10 billion, is intended to preserve the financial sector’s soundness and its 
capacity to support the Greek economy, by providing equity support to banks 
as needed. Moreover, to preserve sufficient system liquidity, the government 
has adopted a new set of guarantees for uncovered bank bonds. It continues to 
support the efforts of banks to restructure in an orderly manner and is taking 
steps towards removing barriers to state bank restructuring. In addition, Greek 
banks will submit to the ECB and the Bank of Greece institution-specific 
medium-term funding plans aimed at reducing their reliance on Eurosystem 
refinancing operations and state guarantees over the medium term. Steps are 
also being taken to strengthen the supervision of the banking and insurance 
sector. To this end, the Bank of Greece will undertake a diagnostic assessment 
of insurance firms and review the adequacy of existing protection schemes. 
Moreover, a major bank recapitalisation plan is being carried out on the basis 
of the assumptions of the second economic adjustment programme for Greece. 

13 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
4. 

CONCLUSION 

Implementation  risks  will  remain  very  high.  The  success  of  the  second  programme 
depends  chiefly  on  Greece.  It  hinges  on  the  full  and  timely  implementation  of  fiscal 
consolidation  and  growth-enhancing  structural  reforms  agreed  under  the  programme.  The 
success of debt exchange should help strengthen the reform momentum and build a consensus 
in  favour  of  the  difficult  reforms  that  lie  ahead.  Comprehensive  international  financial 
assistance  can  continue  to  be  provided  only  if  policy  implementation  improves.  The 
determination  of  the  Greek  authorities  to  stick  to  the  agreed  policies  will  be  tested  in  the 
coming months when deficit-reducing measures to close the large gap for 2013–14 need to be 
identified. In a similar vein, generating sustained growth and employment will require greater 
efforts  and  targeted  measures.  The  implementation  of  structural  measures  will  have  to 
overcome  bureaucratic  delays,  the  resistance  of  lobbies  and  vested  interests  and  break 
longstanding  policy  taboos.  This  requires  determination  on  the  government’s  part,  better 
political coordination, and the acceptance of all of Greek society. 

In the latest compliance report published on 16 March 2012, Commission departments 
recommend  the  first  disbursement  of  the  second  programme  take  place  as  soon  as 
possible.  On  19  March,  the  EFSF  paid  the  first  instalment  (EUR 5.9  billion)  of  the  first 
tranche (EUR 14.5 billion) of the new programme to Greece. Greece also received EUR 1.6 
billion from the IMF. The remaining part of the first tranche was divided into sub-tranches to 
be paid in April and May. The payment of these sub-tranches will not have to be decided by 
the Eurogroup or the Eurogroup Working Group (EWG), although the EFSF is discussing the 
specific  timing  of  the  payment  of  the  sub-tranches  with  Greece.  The  timing  has  to  be 
coordinated with the Troika. 

The  date  of  the  next  review  mission  of  the  second  economic  adjustment  programme 
depends  on  the  political  outcome  of  the  repeated  elections  on  17  June.  The  mission  is 
provisionally scheduled to take place in late June/early July 2012, but the date may be 
revised in the course of the following weeks. 

14 

 
5. 

ANNEX 

Table I. Taxation 

Total tax revenues (incl. actual compulsory social contributions, % of GDP)

2001

33.2

2005

32.2

2007

32.6

2008

32.2

2009

30.5

2010

31.0

1
Breakdown by economic function (% of GDP)
     Consumption

              of which:

              - VAT

             - excise duties on tobacco and alcohol

             - energy

             - other (residual)

     Labour employed

     Labour non-employed

     Capital and business income

     Stocks of capital/wealth
     p.m.  Environmental taxes 2
3
VAT efficiency
     Actual VAT revenues as % of theoretical revenues at standard rate

12.7

11.3

11.9

11.6

10.8

12.1

7.5

1.5

1.5

2.1

6.9

1.4

1.2

1.7

7.5

1.3

1.2

1.8

7.3

1.2

1.2

2.0

6.4

1.4

1.2

1.8

7.2

1.5

1.8

1.7

11.3

12.1

11.9

11.9

11.1

11.3

0.9

6.4

2.0

2.5

1.0

6.4

1.4

2.1

1.0

5.9

1.9

2.1

1.0

5.8

2.0

2.0

1.1

5.7

1.7

2.0

1.1

5.4

1.2

2.4

50.4

45.1

48.9

46.1

39.1

36.5

Note: 
1 T ax revenues are broken down by economic function, i.e. according to whether taxes are raised on consumption, labour or capital. See European Commission (2012), 

T axation trends in the European Union, for a more detailed explanation.

2 T his category comprises taxes on energy, transport and pollution and resources included in taxes on consumption and capital.

3 T he VAT  efficiency is measured via the VAT  revenue ratio. T he VAT  revenue ratio is defined as the ratio between the actual VAT  revenue collected and the revenue 

that would theoretically be raised if VAT  was applied at the standard rate to all final consumption. A low ratio can indicate a reduction of the tax base due to large 

exemptions or the application of reduced rates to a wide range of goods and services ('policy gap') or a failure to collect all tax due to e.g. fraud ('collection gap'). See 

European Commission (2011), T ax reforms in EU Member States, European Economy 5/2011, for a more detailed explanation.

Source: Commission

15 

 
 
Table II. Financial market indicators 

2007

2008

2009

2010

2011

199.5
69.5
22.2

175.7
67.7
23.2

212.7
69.2
21.1

226.6
70.6
…

5.0
9.4
3.1
9.2
2.4
86.2
9.3
7.0
94.7

4.5
11.2
14.8
18.7
21.5
90.9
2.4
4.9
88.4

7.7
11.7
-1.7
-2.3
3.9
79.6
11.0
7.5
92.7

Total assets of the banking sector (% of GDP)
Share of assets of the five largest banks (% of total assets)
Foreign ownership of banking system (% of total assets)
Financial soundness indicators:
              - non-performing loans (% of total loans) 1)
              - capital adequacy ratio (%) 1) 2)
              - return on equity (%) 1), 3)
Bank loans to the private sector (year-on-year % change)
Lending for house purchase (year-on-year % change)
Loan to deposit ratio
CB liquidity as % of liabilities
Banks' exposure to countries receiving official financial assistance  (% of GDP)4)
Private debt (% of GDP)
Gross external debt (% of GDP) 5)
            - Public
            - Private
Long term interest rates spread versus Bund (basis points)*
Credit default swap spreads for sovereign securities (5-year)*
Notes: 
1) Latest available September 2011. 
2) The capital adequacy ratio is defined as total capital divided by risk weighted assets.   
3) Net income to equity ratio. After extraordinary items and taxes.
4) Covered countries are IE, EL, PT, RO, LV and HU.
5) Latest data 2011Q3.
* M easured in basis points.
Source :
Bank for International Settlements and Eurostat (exposure to macro-financially vulnerable countries), IMF (financial soundness indicators), 
Commission (long-term interest rates), World Bank (gross external debt) and ECB (all other indicators).

9.1
12.3
-8.7
3.0
4.9
119.6
21.1
7.4
113.7

78.7
9.3
634.8
697.8

92.4
11.1
195.2
171.7

87.0
10.9
81.8
114.5

80.8
10.6
28.3
…

218.9
…
…

13.4
10.3
-21.5
-3.3
-2.9
138.3
18.2
6.4
114.7

77.1
9.0
1314.1
3052.7

16 

 
 
 
Table III. Labour market and social indicators  

Labour market indicators
Employment rate 
(% of population aged 20-64)
Employment growth 
(% change from previous year)
Employment rate of women 
(% of female population aged 20-64)
Employment rate of men 
(% of male population aged 20-64)
Employment rate of older workers 
(% of population aged 55-64)
Part-time employment 
(% of total employment)
Part-time employment of women  
(% of women employment)
Part-time employment of men  
(% of men employment)
Fixed term employment 
(% of employees with a fixed term contract)
Unemployment rate1 (% of labour force)
Long-term unemployment2  (% of labour force)
Youth unemployment rate 
(% of youth labour force aged 15-24)

2006

2007

2008

2009

2010

2011

65.7

66.0

66.5

65.8

64.0

59.9

1.9

1.3

1.1

-1.1

-2.7

-6.8

51.2

51.6

52.5

52.7

51.7

48.6

80.3

80.4

80.4

78.8

76.2

71.1

42.3

42.4

42.8

42.2

42.3

39.4

5.8

5.7

5.7

6.2

6.5

6.9

10.3

10.2

10.1

10.5

10.6

10.3

3.0

2.8

2.9

3.3

3.8

4.6

10.7

10.9

11.5

12.1

8.9

4.8

8.3

4.2

7.7

3.6

9.5

3.9

25.1

22.9

22.0

25.7

12.4

12.6

5.7

32.8

Youth NEET3 rate (% of population aged 15-24)

12.2

11.5

11.7

12.6

14.9

Early leavers from education and training (% of 
pop. 18-24 with at most lower sec. educ. and not 
in further education or training)
Tertiary educational attainment (% of population 
30-34 having successfully completed tertiary 
education)
Labour productivity per person employed 
(annual % change )
Hours worked per person employed  (annual % 
change)
Labour productivity per hour worked (annual % 
change; constant prices)
Compensation per employee (annual % change; 
constant prices)
Nominal unit labour cost growth (annual % 
change)

15.5

14.6

14.8

14.5

13.7

26.2

27.1

27.5

28.7

30.4

3.6

1.4

-1.4

-1.4

5.1

-1.1

-2.1

2.8

1.4

3.6

0.0

-0.9

0.6

-1.5

1.3

7.1

2.2

-3.0

-2.7

-0.3

1.1

7.2

4.3

-1.7

-0.2

1.1

-2.7

-5.0

-1.7

-3.4

0.7

-0.9

-4.7

-3.0

-4.5

11.6

17.7

8.8

44.4

:

:

:

Real unit labour cost growth (annual % change)

-4.6

Notes:

1 According to ILO definition, age group 15-74)
2 Share of persons in the labour force who have been unemployed for at least 12 months.
3 NEET are persons that are neither in employment nor in any education or training.

Sources: 
Commission (EU Labour Force Survey and European National Accounts) 

17 

 
 
Table III. Labour market and social indicators (continued) 

Expenditure on social protection 
benefits (% of GDP)
Sickness/Health care
Invalidity
Old age and survivors
Family/Children
Unemployment
Housing and Social exclusion n.e.c.
Total
of which:  Means tested benefits
Social inclusion indicators
Risk-of-poverty or exclusion1 (% of total 
population)
Risk-of-poverty or exclusion of children (% of 
people aged 0-17)
Risk-of-poverty or exclusion of elderly (% of 
people aged 65+)
At-risk-of-poverty rate2 (% of total population)
Value of relative poverty threshold (single 
household per year) - in PPS
Severe material deprivation3  (% of total 
population)
Share of people living in low work intensity 
households 4 (% of people aged 0-59 not 
student)
In-work at-risk-of poverty rate (% of persons 
employed)

Notes:

2005

2006

2007

2008

2009

6.72
1.19
11.55
1.55
1.24
0.54
24.9
1.88

2006

6.90
1.14
10.41
1.48
1.11
0.53
24.7
1.83

2007

6.80
1.19
10.54
1.49
1.09
0.49
24.8
1.81

2008

7.38
1.19
10.79
1.59
1.28
0.52
26.3
1.91

2009

7.95
1.29
11.29
1.83
1.61
0.50
28.0
1.95

2010

29.5

27.7

28.1

27.6

27.7

27.9

27.2

28.7

30.0

28.7

33.8

20.5

29.9

20.3

28.1

20.1

26.8

19.7

26.7

20.1

6697

6873

7219

7575

7559

11.5

11.5

11.2

11.0

11.6

8.1

8.1

7.4

6.5

7.5

13.9

14.3

14.3

13.8

13.8

1 People at risk of poverty or social exclusion (AROPE): individuals who are at risk of poverty (AROP) 
and/or suffering from severe material deprivation (SM D) and/or living in households with zero or very low 
work intensity (LWI).

2 At-risk-of poverty rate: share of people with an equivalised disposable income below 60% of the national 
equivalised median income. 

3 Share of people who experience at least 4 out of 9 deprivations: people cannot afford to i) pay their rent or 
utility bills, ii) keep their home adequately warm, iii) face unexpected expenses, iv) eat meat, fish, or a protein 
equivalent every second day, v) enjoy a week of holiday away from home once a year, vi) have a car, vii) have 
a washing machine, viii) have a colour TV, or ix) have a telephone.

4 People living in households with very low work intensity: share of people aged 0-59 living in households 
where the adults work less than 20% of their total work-time potential during the previous 12 months.

Sources: 
For expenditure on social protection benefits ESSPROS; for social inclusion EU-SILC.

18 

 
 
Table IV. Product market performance and policy indicators 

2002-
2006

2.1

1.4

8.4

0.4

0.5

2002-
2006

n.a.

n.a.
0.6

Performance indicators

Labour productivity1 total economy (annual 
growth in %)
Labour productivity1 in manufacturing (annual 
growth in %)
Labour productivity1 in electricity, gas, water 
(annual growth in %)
Labour productivity1 in the construction sector 
(annual growth in %)
Patent intensity in manufacturing2 (patents of the 
EPO divided by gross value added of the sector)

Policy indicators

Enforcing contracts 3 (days)
Time to start a business 3 (days)
R&D expenditure (% of GDP)
Tertiary educational attainment 
(% of 30-34 years old population)
Total public expenditure on education 
(% of GDP)

Product market regulation4, Overall
(Index; 0=not regulated; 6=most regulated)
Product market regulation4, Retail
(Index; 0=not regulated; 6=most regulated)
Product market regulation4, Network Industries 5
(Index; 0=not regulated; 6=most regulated)

2007

2008

2009

2010

2011

1.4

-1.0

-3.0

-1.7

-0.9

-0.2

4.2

6.2

-7.4

n.a.

-2.0

-16.9

-10.6

n.a.

n.a.

-1.9

-12.8

-9.2

8.4

n.a.

0.5

0.4

n.a.

n.a.

n.a.

2007

2008

2009

2010

2011

819

38
0.6

819

19
n.a.

819

19
n.a.

819

19
n.a.

24.6

26.2

25.6

26.5

28.4

819

10
n.a.

n.a.

3.7

n.a.

n.a.

n.a.

n.a.

n.a.

2005

2006

2008

2009

2010

2011

n.a.

n.a.

n.a.

n.a.

2.4

3.5

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

3.5

3.4

3.1*

n.a.

n.a.

n.a.

Notes:
1Labour productivity is defined as gross value added (in constant prices) divided by the number of persons employed.
2 Patent data refer to applications to the European Patent Office (EPO). They are counted according to the year in which 
they were filed at the EPO. They are broken down according to the inventor's place of residence, using fractional counting if 
multiple inventors or IPC classes are provided to avoid double counting. 
3 The methodologies, including the assumptions, for this indicator are presented in detail on the website 
http://www.doingbusiness.org/methodology. 
4 The methodologies for the product market regulation indicators are presented in detail on the website 
http://www.oecd.org/document/1/0,3746,en_2649_34323_2367297_1_1_1_1,00.html. The latest available product market 
regulation indicators refer to 2003 and 2008, except for Network Industries.

5 Aggregate ET CR.

*figure for 2007.

Source :

Commission, World Bank - Doing Business  (for enforcing contracts and time to start a business) and OECD (for the 
product market regulation indicators). 

19 

 
 
Table V. Green Growth performance indicators 

Macroeconomic
Energy intensity 
Carbon intensity 
Resource intensity (reciprocal of resource productivity)
Waste intensity 
Energy balance of trade 
Energy weight in HICP
Difference between change energy price and inflation 
Environmental taxes over labour taxes
Environmental taxes over total taxes

Sectoral 

Industry energy intensity 
Share of energy-intensive industries in the economy
Electricity prices for medium-sized industrial users 
Public R&D for energy 
Public R&D for the environment
Recycling rate of municipal waste
Share of GHG emissions covered by ETS
Transport energy intensity
Transport carbon intensity
Change in the ratio of passenger transport and GDP

Security of energy supply
Energy import dependency
Diversification of oil import sources 
Diversification of energy mix
Share of renewable energy in energy mix

kgoe / €
kg / €
kg / €
kg / €
% GDP
%
%
ratio
ratio

kgoe / € 
% GDP
€ / kWh
% GDP
% GDP
ratio
%
kgoe / €
kg / €
%

%
HHI
HHI
%

2001-
2005

0.19
0.83
1.13
n.a.
-2.7%
7
2.66
17.6%
6.9%

0.22
6.8
0.06
n.a.
n.a.
9.5%
n.a.
0.58
1.60
0.4%

69.8%
n.a.
0.43
4.9%

2006

2007

2008

2009

2010

0.18
0.74
1.03
0.29
-3.6%
8
9.6
16.0%
6.4%

0.18
6.8
0.07
0.01%
0.01%
12.8%
53.5%
0.45
1.23
0.1%

71.8%
0.24
0.42
5.6%

0.17
0.73
1.02
0.33
-3.4%
7
-2.9
15.9%
6.4%

0.19
6.9
0.07
0.01%
0.01%
20.1%
54.5%
0.40
1.09
0.6%

71.3%
0.25
0.39
5.5%

0.17
0.70
1.06
0.38
-4.8%
7
14.4
14.9%
6.1%

0.15
6.9
0.09
n.a.
n.a.
17.7%
54.3%
0.37
0.98
1.2%

73.3%
0.24
0.40
5.4%

0.17
0.69
0.93
n.a.
-3.0%
7
-17.3
15.8%
6.5%

0.12
6.9
0.09
n.a.
n.a.
18.9%
52.0%
0.46
1.29
n.a.

67.8%
0.21
0.40
6.1%

0.17
n.a.
n.a.
n.a.
-4.2%
7
15.9
n.a.
n.a.

n.a.

n.a.
0.09
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

Country-specific notes: 
The year 2011 is not included in the table due to lack of data.
General explanation of the table items:
Source: Eurostat unless indicated otherwise; ECFIN explanations given below
All macro intensity indicators are expressed as a ratio of a physical quantity to GDP (in 2000 prices)
          Energy intensity: gross inland energy consumption (in kgoe) divided by GDP (in EUR)
          Carbon intensity: Greenhouse gas emissions (in kg CO2 equivalents) divided by GDP (in EUR)
          Resource intensity: Domestic M aterial Consumption (in kg) divided by GDP (in EUR)
          Waste intensity: waste (in kg) divided by GDP (in EUR)
Energy balance of trade: the balance of energy exports and imports, expressed as % of GDP  
Energy weight in HICP: the share of the "energy" items in the consumption basket used in the construction of the HICP
Difference between energy price change and inflation: energy component of HICP, and total HICP inflation (annual %-change)
Environmental taxes over labour or total taxes: from DG TAXUD's database "Taxation trends in the European Union"
Industry energy intensity: final energy consumption of industry (in kgoe) divided by gross value added of industry (in EUR) 
Share of energy-intensive industries in the economy: share of gross value added of the energy-intensive industries in GDP
Recycling rate of municipal waste: ratio of municipal waste recycled over total municipal waste
Public R&D for energy or for the environment: government spending on R&D (GBAORD) for these categories as % of GDP
Share of GHG emissions covered by ETS: based on greenhouse gas emissions as reported by M ember States to EEA (excl LULUCF)
Transport energy intensity: final energy consumption of transport (in kgoe) divided by gross value added of industry (in EUR) 
Transport carbon intensity:  greenhouse gas emissions in transport divided by gross value added of the transport sector
Passenger transport growth : measured in %-change in passenger kilometres
Energy import dependency: net energy imports divided by gross inland energy consumption incl. of international bunkers

Diversification of oil import sources: Herfindahl index (HHI), calculated as the sum of the squared market shares of countries of origin 

Diversification of the energy mix: Herfindahl Index over natural gas, total petrol products, nuclear heat, renewable energies and solid fuels

Share of renewable energy in energy mix: percentage-share in  gross inland energy consumption, expressed in tonne oil equivalents

20