Quarterly Report for the Greek Economy

03-2015

October 15th, 2015

ΙΔΡΥΜΑ ΟΙΚΟΝΟΜΙΚΩΝ & ΒΙΟΜΗΧΑΝΙΚΩΝ ΕΡΕΥΝΩΝ

FOUNDATION FOR ECONOMIC & INDUSTRIAL RESEARCH

A very positive latest development:

• Government and major Opposition are in favour of the agreement with partners - programme implementation

– Significant reduction of political risk Weakening of uncertainty, that mainly deterred investments

• Carry-over effect of previous year’s stabilization continues – Small recovery in the first half of 2015 – Improved consumer and investor expectation from balanced “twin” deficits

– Extended in 2015, affecting positively many sectors of the economy

Greek economy influenced by various dynamics

Greek economy influenced by various dynamics

Some main conclusions: 1) A significant part of the required dynamics stabilises expectations and

reduces uncertainty 2) Some structural changes in labour and product markets gradually have a

positive effect

On the negative side: • Intense uncertainty from prolonged negotiations with Partners • Bank Holiday – Capital Controls An economy operating with banks

actually not practicing their main activities (e.g. investment financing) • High growth expectations in 2015 and 2016 have eroded

Trends in the coming period

Recession expected, but of relatively limited depth – probably will last longer

− Bank Holiday had been predicted by many households - firms

− Significant reduction in the level of investments

− Milder recession due to improved external balance. Capital controls expected to have an adverse effect mainly on imports

Main macroeconomic forecasts of State Budget Draft:

Feasible targets

At levels described in IOBE’s previous Quarterly Report

Need to avoid possible misunderstandings

1st possible misunderstanding:

Difficult next months for households and firms Programme in dead end Actual and particularly painful adjustment for many households and firms (recession – fiscal measures)

Mainly corresponding to cost due to failure to reach a favorable agreement and because of prolonged pendency with the Partners

2nd possible misunderstanding:

Is future positive performance secured or is independent from current choices? The opposite is true. Next few months are critical.

With the recent agreement, Greece was given a final chance for economic adjustment

There remain two useful years

Need to avoid possible misunderstandings

Dilatory practices cannot succeed and have a positive economic and social effect

Even if these are adopted from authorities implementing economic policy

Any ambiguity or delay implied in the past a real cost to the economy and households

Same result from a shift to policies of extreme, inconsistent and ambiguous taxation or other similar policies which will continue discouraging investments – job creation.

Quarterly Report Overview

7

Global Economy

• Positive, though worst, growth prospects for 2015:

– Global growth of 3.1% and world trade increase by 3.2%

• Mixed trends

– Gradual recovery of developed economies • Factors contributing to growth: favorable financing conditions,

neutral fiscal policy in the Eurozone, low oil price, improved consumer confidence and labour market conditions

– Deceleration of rapid growth of emerging and developing economies • Factors deterring economic activity: reduction in commodities

prices, financial instability

– Usual uncertainties (relations with Russia, tensions etc.) but also new, such as immigration and refugees issues

Growth acceleration in 2Q/2015

• GDP growth (April-June 2015): 1.6%, against 0.6% in 1Q/2015 and

0.2% in 2Q/2014

Growth of 1.1% in the first half of 2015, instead of stabilisation in the

corresponding period of 2014

• Slight decline of GDP, at current prices (-0.15%) Rise due to

deflator reduction (-1.25%), broadly compatible with price trends

(e.g. Producer Price Index)

• Difficult to interpret deflators’ variation: e.g. reduction of

inventories in the first half of 2015 by €2.3 billion at current prices,

€60 at constant prices

Growth acceleration in 2Q/2015

Acceleration came from:

• Increase in domestic consumption expenditure (+2.2%, from 1.1% in 1Q/2015)

o New expansion of household consumption (+2.5%, from 1.7% in 1Q/2015)

− Absence of new fiscal measures, extra purchases due to concerns from current developments?

o Increase of public consumption after one year (+2.3%, from -1.2% in 1Q/2015)

− “Freezing” of reforms during negotiations, 7,500 reuptake

On the other hand:

• Strong turnaround in investments: -15%, from +29.7% in 1Q/2015 (-2.4% in 2Q/2014)

o Investors anticipate the results of negotiations / Suspension of Public Investment Programme (only €1.1 billion) for liquidity reasons / “Freezing” of concessions – privatizations

Growth acceleration in 2Q/2015

• Reduced exports after 1 ½ year (-1.8%, from +1.1% in 1Q/2015 and +9.2% in 2Q/2014)

o Exclusively due to fewer exports of goods (-4.2%), as exports of services increased by only 1.6% (against a 14.3% increase last year)

− However, significant increase of exports excluding ships – petroleum products

o Small reduction in exports in first half of 2015, after four years of growth

• Imports are also in downward trend: -3.5%, from +9.7% in 1Q/2015 and +9.2% in 2Q/2014

o Increased consumption was covered from inventories – domestically produced?

State Draft Budget 2016

Revision of 2015 Government’s Budget targets:

• Deficit of €2.2 bn. , against initial target of €103 mil.

• Primary surplus of €3.6 bn. , against a €5.8 bn. target

o Revenues of €30.4 bn. during period January-August 2015 Required revenues of

€22 bn. during the last four months of 2015 to achieve target (€52.4 bn.)

o Primary expenditure realisations during the same period of €25.4 bn. €18 bn. to

achieve target

• Significant gap between achievements and targets, for both revenues

and expenditure

• Achievement of new objectives is doubtful, but there is room for fiscal

“maneuver” (e.g. restraint of expenditure during the rest of the year)

State Draft Budget 2016

• Stagnation of fiscal performance in 2016 regarding

State Budget:

o Projected deficit of €2.34 bn., from €2.2 bn. this year

o Unchanged primary surplus target: €3.6 bn. (2.1% of GDP)

• Reduction of General Government deficit to 2.3% of

GDP, from 3.2% in 2015, due to national accounts

adjustments:

o Few armament expenditure (-€604 mil.)

o Increase of legal entities surplus (except SOEs): +€688 mil.

No change in Manufacturing product during period January-

August 2015

14

Production Index in Manufacturing

January-August 2015: -0.1% against +2.4% (January-August 2014)

July 2015: -1.5%. August 2015: +4.5% Conjectural increase probably related to Capital Controls complications

Sources: ELSTAT, Eurostat

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Q1

20

05

Q2

20

05

Q3

20

05

Q4

20

05

Q1

20

06

Q2

20

06

Q3

20

06

Q4

20

06

Q1

20

07

Q2

20

07

Q3

20

07

Q4

20

07

Q1

20

08

Q2

20

08

Q3

20

08

Q4

20

08

Q1

20

09

Q2

20

09

Q3

20

09

Q4

20

09

Q1

20

10

Q2

20

10

Q3

20

10

Q4

20

10

Q1

20

11

Q2

20

11

Q3

20

11

Q4

20

11

Q1

20

12

Q2

20

12

Q3

20

12

Q4

20

12

Q1

20

13

Q2

20

13

Q3

20

13

Q4

20

13

Q1

20

14

Q2

20

14

Q3

20

14

Q4

20

14

Q1

20

15

Q2

20

15

July

- A

ug.

20

15

Eurozone-18 Greece

Decline at almost the same rate in Retail Trade in the first seven months

of 2015 – Significant turnover losses in July

15

January-July 2015: 0.6% against -1.1% (January-July 2014)

July 2015: -7.3% vs. July 2014: +1.5% Volume Index: -29.0% in comparison to 2005 (reference year)

Sources: IOBE, ELSTAT

Volume Index in Retail Trade (2005=100) and Business Climate Index in Retail Trade (1996-2006=100)

40

50

60

70

80

90

100

110

120

130

40

50

60

70

80

90

100

110

120

130

Volume Index in Retail Trade(left scale) Business Expectation Index (right scale)

Improvement in Services in the first half of 2015

Turnover Index in Tourism (Accommodation and Food Service Activity)

Evident decline in expectations in the first nine months of 2015 – intense pessimism in all sub-sectors

Sources: IOBE, ELSTAT

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

2008 2009 2010 2011 2012 2013 2014 2015

Indicator 74 115 175 92 59 109 171 75 61 98 158 63 48 96 157 51 39 80 146 42 32 84 148 58 47 90 159 70 49 102

0

20

40

60

80

100

120

140

160

180

200

Recovery of Construction Production Index in the first half of 2015

εννεάμηνο εννεάμηνο

Production Index in Construction and Building Activity Indicator (quarterly changes)

Sources: ELSTAT, Eurostat

1H/2015: +18.1% but +43% in 1Q/2015 1H/2014: -7.9%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

-80

-60

-40

-20

0

20

40

60

80

Q1

20

06

Q2

20

06

Q3

20

06

Q4

20

06

Q1

20

07

Q2

20

07

Q3

20

07

Q4

20

07

Q1

20

08

Q2

20

08

Q3

20

08

Q4

20

08

Q1

20

09

Q2

20

09

Q3

20

09

Q4

20

09

Q1

20

10

Q2

20

10

Q3

20

10

Q4

20

10

Q1

20

11

Q2

20

11

Q3

20

11

Q4

20

11

Q1

20

12

Q2

20

12

Q3

20

12

Q4

20

12

Q1

20

13

Q2

20

13

Q3

20

13

Q4

20

13

Q1

20

14

Q2

20

14

Q3

20

14

Q4

20

14

Q1

20

15

Q2

20

15

Q3

20

15

Building Activity Indicator (Greece) Production Index (Greece) Production Index (Eurozone)

18

Deterioration of economic sentiment in 3Q/2015 – Still, at a lower level than a year ago

Sources: IOBE, European Commission

Economic Sentiment Indicator

50

60

70

80

90

100

110

120

Sep

/02

Mar

/03

Sep

/03

Mar

/04

Sep

/04

Mar

/05

Sep

/05

Mar

/06

Sep

/06

Mar

/07

Sep

/07

Mar

/08

Sep

/08

Mar

/09

Sep

/09

Mar

/10

Sep

/10

Mar

/11

Sep

/11

Mar

/12

Sep

/12

Mar

/13

Sep

/13

Mar

/14

Sep

/14

Mar

/15

Sep

/15

European Union Eurozone Greece Average, Greece (2001-2014)

Significant weakening in expectations in 3Q/2015 in all sectors, stronger in Retail Trade.

On the other hand, change of trend after the shock of Capital Controls

Source: IOBE

Construction Industry

Retail Trade Services

50

60

70

80

90

100

110

120

Sep

/02

M

ar/0

3

Sep

/03

M

ar/0

4

Sep

/04

M

ar/0

5

Sep

/05

M

ar/0

6

Sep

/06

M

ar/0

7

Sep

/07

M

ar/0

8

Sep

/08

M

ar/0

9

Sep

/09

M

ar/1

0

Sep

/10

M

ar/1

1

Sep

/11

M

ar/1

2

Sep

/12

M

ar/1

3

Sep

/13

M

ar/1

4

Sep

/14

M

ar/1

5

Sep

/15

Industry Overall Average (2001-2014)

20

40

60

80

100

120

140

Sep

/02

M

ar/0

3

Sep

/03

M

ar/0

4

Sep

/04

M

ar/0

5

Sep

/05

M

ar/0

6

Sep

/06

M

ar/0

7

Sep

/07

M

ar/0

8

Sep

/08

M

ar/0

9

Sep

/09

M

ar/1

0

Sep

/10

M

ar/1

1

Sep

/11

M

ar/1

2

Sep

/12

M

ar/1

3

Sep

/13

M

ar/1

4

Sep

/14

M

ar/1

5

Sep

/15

Constructions Overall Average (2001-2014)

40

50

60

70

80

90

100

110

120

130

Sep

/02

M

ar/0

3

Sep

/03

M

ar/0

4

Sep

/04

M

ar/0

5

Sep

/05

M

ar/0

6

Sep

/06

M

ar/0

7

Sep

/07

M

ar/0

8

Sep

/08

M

ar/0

9

Sep

/09

M

ar/1

0

Sep

/10

M

ar/1

1

Sep

/11

M

ar/1

2

Sep

/12

M

ar/1

3

Sep

/13

M

ar/1

4

Sep

/14

M

ar/1

5

Sep

/15

Retail Trade Overall Average (2001-2014)

40

50

60

70

80

90

100

110

120

Sep

/02

M

ar/0

3

Sep

/03

M

ar/0

4

Sep

/04

M

ar/0

5

Sep

/05

M

ar/0

6

Sep

/06

M

ar/0

7

Sep

/07

M

ar/0

8

Sep

/08

M

ar/0

9

Sep

/09

M

ar/1

0

Sep

/10

M

ar/1

1

Sep

/11

M

ar/1

2

Sep

/12

M

ar/1

3

Sep

/13

M

ar/1

4

Sep

/14

M

ar/1

5

Sep

/15

Sevices Overall Average (2002-2014)

Sources: IOBE, European Commission

Intense worsening of Consumer Confidence in 3Q/2015-Steady decline of index from March

onwards.

Slight deterioration of corresponding indices in Europe

Consumer Confidence

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

Sep

/02

Mar

/03

Sep

/03

Mar

/04

Sep

/04

Mar

/05

Sep

/05

Mar

/06

Sep

/06

Mar

/07

Sep

/07

Mar

/08

Sep

/08

Mar

/09

Sep

/09

Mar

/10

Sep

/10

Mar

/11

Sep

/11

Mar

/12

Sep

/12

Mar

/13

Sep

/13

Mar

/14

Sep

/14

Mar

/15

Sep

/15

European Union Eurozone Greece Average, Greece (2001-2014)

Μείωση της ανεργίας και το δεύτερο τρίμηνο του 2015

Number of unemployed in Greece, 1Q/2008-2Q/21015

Source: ELSTAT

Unemployment reached 24.6% in 2Q/2015 (26.6% in 2Q/2014, as well as in 1Q/2015) Employment increased in 10 sectors: Indicatively: Tourism (+10.4%), Retail and Wholesale Trade (+5.3%),

Manufacturing (+4.2%), Construction (+0.8%) In contrast, unemployment decreased in 11 sectors: Indicatively: Financial and Insurance Activities (-8.5%)

418,6 366,7 364,0

402,2

476,7 455,6 477,9

528,6

600,2 604,6 631,9

720,8

799,6 815,6

883,5

1.028,6

1.119,1 1.163,0

1.218,4

1.279,9

1.336,0 1.327,9 1.320,3 1.337,2 1.342,3

1.280,1 1.229,4 1.245,9

1.272,5

1.180,1

0

200

400

600

800

1.000

1.200

1.400

1.600

1Q

/20

08

2Q

/20

08

3Q

/20

08

4Q

/20

08

1Q

/20

09

2Q

/20

09

3Q

/20

09

4Q

/20

09

1Q

/20

10

2Q

/20

10

3Q

/20

10

4Q

/20

10

1Q

/20

11

2Q

/20

11

3Q

/20

11

4Q

/20

11

1Q

/20

12

2Q

/20

12

3Q

/20

12

4Q

/20

12

1Q

/20

13

2Q

/20

13

3Q

/20

13

4Q

/20

13

1Q

/20

14

2Q

/20

14

3Q

/20

14

4Q

/20

14

1Q

/20

15

2Q

/20

15

tho

us

an

d

Decline of unemployment continues in 2Q/2015

Since 4Q/2013 long-term unemployment is above 70%, although in 2Q/2015 it is 1.3 percentage points lower than in 2Q/2014

Long-term unemployed (number and percent with respect to the number of total unemployed)

Source: ELSTAT

However long-term unemployment persists

611 664

737

813 850 865

914 943 959 952

927 909 911 863

55 57

61 64 64

65

69 71 71 74 75

73 72 73

0

10

20

30

40

50

60

70

80

0

200

400

600

800

1.000

1.200

1Q/2012 2Q/2012 3Q/2012 4Q/2012 1Q/2013 2Q/2013 3Q/2013 4Q/2013 1Q/2014 2Q/2014 3Q/2014 4Q/2014 1Q/2015 2Q/2015

%

tho

usa

nd

Number of longterm unemployed Percentage of longterm unemployed

January-June 2015:

Exports:

-2.2% (€12.8 bn., incl. fuels)

+13.3% (€8.9 bn., excl. fuels)

Imports: -6.9% (€21.7 bn.)

Goods account deficit: -12.9%

Intense decline: Fuels (-26.1%)

Increase: Agricultural Goods (18%), Industrial Goods (12.2%) and Raw Materials (5.6%)

Markets:

Losses: Turkey (73.9%), Spain (1.7%), Austria (2.5%), Bulgaria (1.4%), Russia (39.5%), Israel (26.1%), U.A.E. (44.8%), Libya (39.8%), China (30.7%)

Increases: E.Z. (15.4%), E.U.-28 (13.3%), N. America (58.5%), Cyprus (11.2%), Italia (23.1%), U.K. (15.9%), Egypt (17.6%), Lebanon (79.1%), S. Arabia (5.4%), Romania (19.1%), The Netherlands (18.8%)

Decrease in the deficit in the goods and trade account in the first half of 2015 (January-June) by 12.9%

Value of Greek exports and imports during first half of years 2008-2015

January-June 2015 (ELSTAT estimations) Exports: -1.7% (€13 bn.) Imports: -6% (€22.3 bn.)

Trade Deficit: -11.4%

Source: ELSTAT

0 €

5.000 €

10.000 €

15.000 €

20.000 €

25.000 €

30.000 €

35.000 €

2008 2009 2010 2011 2012 2013 2014 2015

DEFICIT IMPORTS EXPORTS

Current Account Balance surplus of €357 mil. in period January-July 2015, due

to extreme conjuncture in July

Source: Bank of Greece

€1.8 bn. inflows from profits of Securities Market Programme return Decrease of imports due to Capital Controls, while exports increased slightly

Current Account Balance, January-July 2009-2015

-15.683

-14.698

-13.566

-5.334

-2.536 -2.657

357

-6,3% -7,7%

-60,7%

-52,5%

4,8%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

-18.000

-16.000

-14.000

-12.000

-10.000

-8.000

-6.000

-4.000

-2.000

0

2.000

2009 2010 2011 2012 2013 2014 2015

% c

han

ge

mil.

€

Current Account Balance P.C. %

(*) July 2nd tranche S.M.P.

Capital Controls

Weak contribution of exports to GDP in period 2010-2014, compared to the rest

of EU countries

Source: Eurostat Data Processing: IOBE

9,600

8,900

7,800 7,400

5,100 4,900 4,900 4,700 4,100 4,00 3,900 3,800 3,600 3,400

2,900 2,600 2,400

2,100 2,00 2,00

2,00

1,400 1,300

1,300 1,200

1,100 ,900 ,800 ,700 ,600

-8,500

-9,200

-6,900

-5,500

-3,300

-4,200 -3,900

-3,500

-4,400

-2,800

-3,700

-2,800 -2,600

-1,700

-2,400 -1,900 -1,900

-1,400

-,500

-2,100

-1,400

-,300 -,300

-1,300 -1,200

-,200

1,100

-1,00 -1,100

,700

3,500

4,200 3,700

2,600 2,200

1,00 1,300

2,800 2,400

1,00 1,200 1,400

,500 ,200

3,100

2,00

1,100 ,700

-,900

2,400

1,00

-,800 -1,100

,600 1,00

-,600

-4,800

1,800

,600

-1,700

-10,0

-8,0

-6,0

-4,0

-2,0

,0

2,0

4,0

6,0

8,0

10,0

Contribution of exports in GDP 2010-2014 Contribution of imports in GDP 2010-2014 % Change GDP (2010-2014)

Persistent deflation

• Uncertainty and Capital Controls hold total demand and are possibly linked to persistent deflationary pressures during the peak of tourist season

• Greater all-time negative change in C.P.I. during the first nine months of 2015 (-2.1%, against -1.1% in 2014)

• The largest price decrease is observed in housing (-7.2%)

• Decrease of total Producer Price Index (Domestic - Foreign Market) by 6.3% from the beginning of 2015

-3

-2

-1

0

1

2

3

4

5

6

7 Fe

b/1

0

Ap

r/1

0

Jun

/10

Au

g/1

0

Oct

/10

De

c/1

0

Feb

/11

Ap

r/1

1

Jun

/11

Au

g/1

1

Oct

/11

De

c/1

1

Feb

/12

Ap

r/1

2

Jun

/12

Au

g/1

2

Oct

/12

De

c/1

2

Feb

/13

Ap

r/1

3

Jun

/13

Au

g/1

3

Oct

/13

De

c/1

3

Feb

/14

Ap

r/1

4

Jun

/14

Au

g/1

4

Oct

/14

De

c/1

4

Feb

/15

Ap

r/1

5

Jun

/15

Au

g/1

5

%

Eurozone Greece

Sources: ELSTAT, Eurostat

• Gradually lift of uncertainty for bankruptcy since the «bridge» Agreement of July 13th and the Third Memorandum

But also bending of households’ expectations due to the 3-year extension of fiscal adjustment

• Critical Steps to restore confidence: Successful completion of current and next evaluation

Recapitalisation of banks

Re-access to ECB’s main liquidity mechanism facilitation of lifting of Capital Controls

Possible new debt settlement with extension of ‘grace’ - repayment period but without an impairment of its nominal value

o Possible juxtaposition between the E.C. and the I.M.F.

o New definition of sustainability: Annual gross financing needs?

Significant though milder than expected consequences of Capital Controls

Liquidity squeeze of firms - households also due to stress tests

Difficulties in imports of raw materials - fixed capital (equipment)

Also delays in exports

Medium-term developments

Medium-term developments

Negative effects of further fiscal adjustment

• Decrease of disposable income due to higher social solidarity contribution, health contribution imposed on pensions and change in the pension calculation methodology e.tc.

Decrease of households purchasing power demand fall especially in Retail - Wholesale Trade, a key sector for retaining unemployment in H1/2015

• Pressures on firms from falling demand due to increased V.A.T. additional difficulties in covering regular expenses and implementing investment plans

• Additional mitigatory fiscal factors:

Changes in debt towards State settlement regulation Reduction of State overdue debt from 2016

Medium-term developments

Tourism endurance: a counterweight to Capital Controls and fiscal adjustment

• Increase of international tourist arrivals – revenues continues in July (+4.4% and +3.5%)

• Smoothing of slowdown in the coming months – stabilisation

• Several H1/2015 job positions secured along the whole tourist period

Stimulation of investments from Public Investment Programme escalation

• Very low implementation up to August (€1.56 bn.<24%)

• Early disbursement of the last €500 mil. from ESPA 2007-2013 (July 13th “bridge” - Agreement)

• Target: full implementation of P.I.P. according to 2016 State Budget Draft (€6.4 bn.), although reflation of investments can be achieved with less capital

• Decline of private consumption in the second half of 2015 and on a year basis (≈ -2.0%)

Cautiousness due to Capital Controls postponement of not necessary consumer expenses

Accumulation of taxes at year end (although this is the case in the last years) Loss of purchasing power from new fiscal measures Base effect from high private consumption in H2/2014

• Small increase of government consumption in 2015 Small increase in H1/2015 despite strong pressures in State’s liquidity Postponement of Public Sector reforms during negotiations and up to second

elections – new government formation Less than expected retirements, unanticipated maturities of special payrolls (State

Budget Draft 2016)

• New extensive fall of investments (≈ -15.0%) Very low investor confidence Stand-by for the results of current and next

Programme evaluation Very cautious bank credit policy due to Capital Controls – Stress Test Difficulties in fixed capital imports Back-loaded implementation of ESPA, with positive effects mainly in the first half of

2016

Forecasts 2015

Forecasts 2015

Revision of 2015 recession forecast:

-1.5% to -2.0%

Small decline of exports (-2.5%) • Halting of exports growth (excl. ships-petroleum products) in the current

half of 2015, that curbed the decline in exports in H1/2015

• Possible slight decline of services exports in the H2/2015, due to base effect from their high level in H2/2014

Significant shrinkage of export demand (-5.5%)

• Mainly from the decline in consumption, which was the main source of GDP rise at the beginning of the year

• Difficulties in fixed capital imports

• Funds of importers moved abroad gradually exhausted

Unemployment upturn in the second half of 2015

• Consumption reduction in sectors that have contributed to the deceleration of unemployment (Retail – Wholesale Trade, Food Services)

• Non-implementation of the planned 15,000 persons recruitment in the Public Sector for 2015 offset by 7,500 reuptake – fewer retirements

• Fewer programmes for unemployed than in 2014?

Unemployment will reach 26.0% in 2015, 0.5 percentage points lower than in 2014

Increase of deflation, despite mitigation of prices fall from V.A.T.

• Small halting effect in the reduction of C.P.I. from V.A.T. increase firms absorb part of the resulting increase in prices

• Completion of downward pressure in C.P.I. from low oil price in 4Q/2015

Deflation of 1.8% in 2015 (from 1.3% in 2014), the highest ever

Forecasts 2015

EVALUATION OF PUBLIC WORK EMPLOYMENT PROGRAMMES

FUNDED FROM EU STRUCTURAL FUNDS

Presentation of IOBE study

Public Work Employment Programmes

• First Programme Cycle – No target groups

– Beneficiaries: unemployed, self-employed (farmers) with specific individual/family income

– Five accreditation criteria: unemployed status, family status, income, health status, locality

– Employment duration: five months

– Employment institutions:

• Non-profit organisations (unions, professional associations, foundations e.tc.).

• First and Second Degree Local Authorities and their legal entities, Public Law Legal Entities, Private Law Legal Entities that offer public benefit services according to their statute.

• Second Programme Cycle – Five target groups: a) unemployed

members of jobless families b) unemployed members of single parent families, c) young unemployed persons (18-29 years old), d) long-term unemployed, e) unemployed persons holding a level 6 ISCED 2011 degree (bachelor or equivalent)

– Five accreditation criteria: duration of continuous registered unemployment of husband/wife, age, individual/family income, number of children

– Employment duration: five or six months

– Employment institutions:

• Municipalities, Regions, Ministries, other public authorities etc.

90.1 thousand beneficiaries in both cycles of the programmes (against a target of 108.7

thousand)

Total expenditure amounted to €360 mil.

• In both programme cycles implementation of the public benefit objective was assessed as satisfactory

• Especially for the second cycle of programmes:

– Beneficiaries considered that programme objectives did not improve their economic condition – covered satisfactorily their social needs

– Not all the most socially and economically vulnerable groups of people were included in programme tagret-groups (e.g. families with very low income, aged unemployed persons)

– Scale and minimum level of accreditation in every criterion should be sufficiently justified and linked to target groups

– Redesign of programmes should not aim at covering permanent needs of employers

Design evaluation

Also regarding Second cycle of programmes:

• Low attractiveness to long-term unemployed, more appealing to young unemployed persons and university graduates

• Moderate effectiveness with respect to accession in programmes of their target groups: – Moderate accession of long-term unemployed, high incorporation of single

parent family members and members of families, both without employed persons

– Low accession of the target group of young unemployed persons. Achieved due to their high qualifications (higher education graduates)

– Middle-aged persons (30-54 years old) were enrolled in the programmes due to accreditation from characteristics other than unemployment (children, unemployed wife/husband, members of single parent family)

• Programmes did not function efficiently with respect to income support of families mostly in need of such support

Implementation evaluation

• Almost moderate support of beneficiaries: – Small improvement of their economic condition

– Programmes partially contributed to acquiring work experience, enhancement of skills/qualifications an social needs coverage

• Small contribution in improving employment status of beneficiaries: – Heterogeneous target-groups with different problems, seeking to solve

them through their participation to the programmes

• Efficient implementation procedures: – Satisfactory coordination of stakeholders

– High matching between participants’ skills and job requirements

Implementation evaluation

37

• Main objective of future programmes: income support to reduce poverty • The most socially and economically vulnerable groups should be included in

beneficiaries (welfare scope of programmes) – Implementation of a distinct act of Public Work Programmes for

unemployed university graduates, in order to avoid crowding-out of elderly with usually lower educational level

• Accreditation criteria

– With respect to age, priority should be given to age groups of 30-54 and 55+ years old, who hold a large share in total unemployment and have greater difficulty in finding a job than young people (especially 55+)

– Maintenance of income accreditation criterion; review of its scale and connection of maximum accreditation with an objective income “threshold”, e.g. minimum wage, poverty level

– Distinct accreditation of individual and family income – Diversification of applicant’s accreditation scale

Suggestions

38

• Programme employment duration should be increased to seven months • Use of fixed-term contracts for programme participants

– Their labour rights should not differ from those of other employees with the same type of contracts or in similar jobs

• Preserve beneficiaries’ salary for full time employment (8 hours χ 25 days per month), at the level of salary in the Second cycle of programmes (€490 and €427, for persons of at least 25 years of age and younger persons respectively)

• Greater specialisation of the terms of invitations

Suggestions

The entire evaluation is posted on the website of the European Social Fund (E.S.F.) in Greece, on its webpage for the Evaluation of the E.S.F., under the 2013-2015 Evaluation section http://www.esfhellas.gr/el/Pages/EvalESPAsxedio.aspx