nicholas c garganas : the greek experience speech by mr nicholas c garganas, governor of the bank of greece, at the economist conference on " social security reform in greece ", athens, 14 february 2008. * * * i would like to thank the organisers of the economist conference on " social security reform in greece " for their invitation and for this opportunity to speak on the subject of the implications of ageing populations – a subject of great importance for many countries, especially for greece. a main accomplishment of social policies in the second half of the last century – at least in the case of advanced countries – is that being old is no longer considered synonymous with a low quality of life. that accomplishment has been made possible through the provision of public pensions. in greece, of course, a significant proportion of pensions are still very low, but this can be considered a consequence of inefficiencies and weaknesses in the social security system as it stands at present. yet, as europe ’ s population ages, a demographic shift will take place in the next forty to fifty years that will pose significant challenges to the pension systems of our countries. the ageing of society will make it increasingly difficult to maintain an adequate level of public pensions for our older citizens. to provide an idea of the demographic changes that are expected to take place in the next forty to fifty years, consider the following projections with respect to greece, issued by the european union ’ s economic policy committee. these projections cover the period from 2005 to 2050. • projection number 1 : here is some good news – people will live longer, so that the population comprised of ages 65 or above will increase by some 60 per cent. • projection number 2 : low fertility rates will contribute to a decline of some 20 per cent in the working - age population, defined as ages 15 to 64. • putting these two projections together means that the ratio of the elderly population to the working age population – what is known as the old - age dependency ratio – is expected to more than double between 2005 and 2050, reaching more than 60 per cent. this would mean that while there are currently more than three workers for each pensioner, in 2050 there would be only 1. 6 workers per pensioner. thus, greece, like many other european countries, will be confronted with a sharp rise in the old age dependency ratio. this situation, in and of itself, however, need not put pressure on the financing of the country ’ s

##d, the world bank and the world economic forum. third, external adjustment has been significant. the current account in 2014 was in surplus for the second year in a row ( 0. 9 % of gdp ) with exports of both goods and services increasing at a faster rate than that of the previous year. this development marks a significant turnaround of the current account balance of about 15 percentage points of gdp since 2008. adjustment came primarily through a decline in imports of goods, particularly in 2009, when world trade collapsed due to the global recession. however, after 2009, adjustment was nearly equally shared between exports and imports. it is worth highlighting that, during the last four years, exports of goods have rebounded, with growth rates of real exports outpacing those of the euro area average. moreover, the share of goods exports in extra - eu trade has nearly doubled and the share in world trade has increased by about 30 % since 2010. these developments have occurred despite the adverse liquidity and financial conditions faced by greek exporters. bis central bankers ’ speeches by contrast, exports of services underperformed until recently largely as a result of uncertainty, which had a negative impact on tourism, and global factors, which affected the performance of the shipping industry. nevertheless, exports of services rebounded in 2013 and 2014 after years of underperformance, reflecting both a strong tourism season and, more recently, a rebound of the global shipping sector. fourth, the policy agenda has included structural reforms. a series of structural reforms have been implemented in labour and product markets as well as in public administration. in the labour market significant changes were adopted aiming at : – better aligning wage developments with firm performance ; and – enhancing labour mobility across sectors. – more specifically, reforms involved measures to decentralise wage bargaining to firm level, reduce minimum wages and increase flexibility. progress with structural reforms in product and services markets, by contrast, was markedly slower than in the labour market. nevertheless, according to the oecd, greece ranks first in the responsiveness to structural reform recommendations made by the organisation. moreover, according to the euro plus monitor 2014, greece ranks first in the adjustment progress among twenty - one european economies, based on indicators capturing fiscal and external adjustment, labour costs and structural reforms. this period also witnessed significant institutional changes geared towards streamlining the public administration and downsizing the public sector. in the period 2010 – 2013, public sector employment fell by more than 20 % or 180, 000 employees.