Greece’s lagging competitiveness compared to its EU partners is primarily due to market dysfunctions and structural problems in the economy, a think-tank report says. The second annual study on competitiveness, carried out by the semi-independent Center for Economic Planning and Research’s (KEPE), was presented by Development Minister Dimitris Sioufas at a session of the National Competitiveness Council, whose proposals are included in the report. KEPE recommends keeping labor cost increases in both private and public sectors on a par with increases in productivity, instituting new, laxer work-time regulations, reducing the cost of overtime, deregulating «closed shops» and fully privatizing all banks. The proposals drew a strong reaction from representatives of labor and small manufacturers’ unions (GSEE and GSEVEE). GSEE noted that the report does not include indicators of social cohesion (unemployment, social insurance, labor market) or environmental protection, and that labor cost comparisons are made with the countries of the former Soviet Union. Sioufas stressed that the government was not involved in preparing the report, and said its recommendations were not political decisions but formed the basis for discussion. He invited interested parties to submit their comprehensive positions within the next month. In a statement later yesterday, GSEE returned to the subject, expressing full opposition to the council’s proposals, which, it said, were «simply a corrected version of the KEPE report, that is, the neo-liberal manifesto,» adding, «The report leads to super-profits instead of growth and employment.» The civil servants’ union (ADEDY) also expressed its opposition to imposing a lid on real incomes. The KEPE report said that despite significant progress in competitiveness and deregulation, basic structural problems and market dysfunctions remain. It noted improvements in telecommunications, postal services and in the financial sector. «Nevertheless, there are sectors where no progress has been made, and which are marked by the presence of strong administrative barriers to entry. Tertiary education, public transport and many self-employed professional categories are the main examples of such sectors,» the report said. KEPE further noted that the dominant position of state-controlled enterprises prevents the entry of competitors into the domains of water supply, health, rail and air transport, petroleum products and electricity. It specifically cites the professions of notary publics, attorneys, engineers, the dominant positions of Hellenic Petroleum and the Public Power Corporation, and pharmacies’ regulated operating times. The report notes that the economically active Greek population remains steady at 57.8 percent, against an EU 15 average of 64.4 percent and 70 percent targeted by the Lisbon agenda for 2010. The Federation of Greek Industries (SEV) said it was in full agreement with the KEPE report and urged its immediate fulfillment.