Greece will have to restructure its production model after the coronavirus crisis has eased so that it does not depend on tourism and small and medium-sized enterprises to such a great extent, the Hellenic Federation of Enterprises (SEV) argues in its monthly bulletin.
It adds that, in that regard, the government ought to proceed with reforms and reduce energy and non-salary costs.
SEV argues that “if things evolve the way the European Commission forecasts” – more than doubling the consumption reduction rate that Athens estimates – “the government will need to take measures compatible with a far greater recession than it expects.
As fiscal policy is unable to carry the burden of offsetting such a deep recession, the economic strategy should become more flexible in its quest to protect employment with the smallest income losses possible.”
Therefore industrialists are highlighting the word “flexibility” for maintaining employment, as they acknowledge that the leeway of the state budget is limited compared to other countries.
The government is already heading in this direction with the measure of supporting the income of any employees who drop to a reduced employment status due to the crisis. This is a measure to be funded by the European Union’s SURE program and discussed at today’s Eurogroup.
SEV also wants to see flexibility and reforms in the policy to be followed after the coronavirus crisis regarding changes to the Greek production model: “Greece, strengthened by its very positive image created on the front of the health crisis and its unprecedented flexibility in adjusting to the new conditions, can make a serious effort to restructure its production model toward a multidimensional and sustainable growth, and attract the respective investments.”
It adds that “this effort requires reductions in energy and non-salary costs, but above all it requires systematic reforms so that we obtain a modernized and flexible administration, as well as public investments that will strengthen the infrastructure and skills we need in the digital age.”
Notably, the government is undecided over when the reduction of social security contributions should proceed given the large fiscal pressure.