EU criticizes ‘inadequate’ reform effort

The European Commission is critical of Greece’s efforts to reform social security and public finances, a report will reveal today. The Commission’s annual report on the member states’ economic policies says that the social security reform enacted last year is inadequate. It also calls on Greece to take more efficient measures to combat inflation, cut spending and reduce its debt level. Greece is not the only country criticized. Indeed, at a time where economic growth in Europe has slowed down dramatically, almost every country gets its dose of harsh criticism. Greece lies somewhere in the middle. Tt is not the target of heaviest criticism, but it is only faintly praised. Greece will also face criticism over inflation, where it is among the three or four members with the highest inflation rate. But it is the social security reform which draws most of the Commission’s attention. The enacted reforms were considerably more timid than the original proposals, unveiled in spring 2001. Those had been fiercely criticized by unions, and left and right opposition parties as too harsh, and the government had quickly backed down. The Commission considers that the final result is not a sustainable reform and that financing the system will become very hard in the medium term. The rapid increase in the percentage of pensioners, a demographic problem shared, with varying intensity, by all EU members, does not help; but Greece has failed, according to the Commission, to discourage early retirement. More criticism will focus on the rigid labor market and the failure to open up certain sectors to competition. In the electricity market, especially, Greece, along with France, is considered the EU’s laggard in adopting EU guidelines on competition and the integrated internal market. On the positive side, the Commission’s report mentions measures to encourage young businessmen and promote the use of information technology. It calls for a greater effort on employee training in order to create an adaptable workforce. The Commission estimates that the Greek economy grew 3.5 percent in 2002, diverging from the government’s estimate of 3.8-percent growth. In any case, this is the largest growth rate in the EU for 2002, the first time Greece has achieved this.

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