Prime Minister Costas Simitis announced at the Thessaloniki International Trade Fair in the beginning of September that Greece, which is set to join the eurozone in January 2001, must focus on structural reforms that will allow it to enjoy a truly modern economy.
"We have entered EMU (economic and monetary union) on our merits. The 2001 budget will run on a small surplus. For the first time in the creation of the modern Greek state, public finances have been brought under control," he said.
"We want to achieve convergence in the economy, social convergence in every sector of life," the Prime Minister added. He said macroeconomic stability had fostered a sense of confidence in Greece and would continue to be the focus of the governments economic planning. Greece is committed over the next four years to introducing structural changes in the labour market, education, public administration and bringing the quality of life for Greeks up to European Union standards.
Funds from the EU's Third Community Support Framework amounting to 17.5 trillion drachmas will be the basic lever for growth over the next eight years, while structural changes can increase economic effectiveness.
Deregulation, privatisation, promotion of entrepreneurship and innovation, the transition to a new digital economy, the reduction of red tape are all directly connected to the competitiveness of the economy, the premier said. Two trillion drachmas from the EU funding programme have been allocated to fostering business and technological innovation and research.
To boost job growth in small and medium size enterprises, the government plans to reduce tax rates for non-listed companies from 40 to 35 per cent.
To achieve real convergence, we need investments. We need dynamic high-technology companies which produce competitive products and services, he said.
To ensure equality of growth, 80 per cent of EU Community Support funds are destined for the Greek countryside for infrastructure works in transport, energy and telecommunications systems to ensure equal development.
The Premier said the government aimed in particular to secure the social, productive and environmental cohesion of northern Greece. This is a region that is increasingly playing a leading role in the development of relations with Greece's Balkan neighbours, through a series of initiatives in transport and communications networks, energy, technology and banking. Simitis is determined that the government will push ahead with plans to reform the labour market and has said that a social dialogue under way with unions and employer groups has to bear fruit. However, he has said he will forge ahead with changes to the labour market even if negotiations with unions fail.
"There's one thing we cannot do and that is say we will stop here, were not going ahead. This country must proceed," the Prime Minister pledged.
Greece has said it wants to boost employment by placing caps on the amount of overtime worked, giving employers a freer hand in planning working hours and easing restrictions on the number of mass lay-offs employers can make.
Structural programme for 2000-2006 to create new jobs
National Economy and Finance Minister Yiannos Papantoniou said in August that the government's structural programme for 2000-2006 will total 17.5 trillion drachmas, with the participation of the private sector estimated at 4 trillion drachmas.
Papantoniou said that 80 percent of total funds would be earmarked for regional projects in the country, with the structural programme, and the Third Community Support Framework in particular, expected to create 150,000 net new jobs in the country.
"With our EMU entry we achieved nominal convergence. We created a strong base for stability and growth. The Third Community Support Framework is a growth tool to achieve real convergence with the EU," he added.
The minister said the government's plan aims to achieve a balanced convergence across the country, with the participation of all regions.
"We are completing productive infrastructures, the basic productive factor of the economy. These include road and rail networks, both improving the country's access to big European markets. Our products will have speedier access with lower cost, they will become more competitive. Tourism will also benefit and we expect the private sector to participate in full force not only in the construction but in the funding of such projects as well," he said.
Greece's structural programme also envisages measures to improve the country's competitiveness, restructuring of the farm sector, supporting the country's transition into the new economy and ensuring the improvement of living standards.
The programme also includes measures to upgrade the country's workforce and supporting regional Greece through the implementation of integrated regional programmes.
The government plans to raise funds from other Community sources, including the Cohesion Fund and the Community Initiatives (Urban, Interreg, Leader, Equal).
A new economy development fund, called "TANEO", will aim to fund investments in new economy sectors, grant scholarships in information, biotechnology education and award innovative programmes in new technology.
We will achieve growth rates of 5.0 percent annually. We will reach 80 percent of the EU's average income by the end of 2006 and we will be equal by the end of the decade. Employment will significantly increase with more than 300,000 new jobs expected to be created," Papantoniou said.
Structural reforms will be key post-EMU
Bank of Greece governor Lucas Papademos has said that structural reforms must be the main tool to achieve Greece's key goals of low inflation and unemployment, along with high growth rates after the country joins the eurozone.
The central bank governor says the challenge of low inflation must be met with a fiscal policy and structural adjustment measures that will seek to contain the growth of aggregate demand and boost competitiveness, while a sustainable high growth rate will gradually lead to living standard convergence with the EU average. It is hoped that the lower cost of financing with the convergence of interest rates, coupled with price stability, will strengthen investment and economic activity.
