Athens News Agency: News in English, 11-05-20

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From: The Athens News Agency at <http://www.ana.gr/>

CONTENTS

[01] PM chairs meeting in Nafplio

[02] ND on consensus; privatizations; public administration

[03] Shadow economy expert Schneider warns against further tax increases in ANA-MPA interview

[04] ASE ends below 1,300 level 

[01] PM chairs meeting in Nafplio

Papandreou stressed that everyone, including the opposition parties, local government, healthy private enterprise and each and every citizen must contribute to Greek society's demand to save the country. He also stressed that the country had to learn to rely on its own strength in order to defend its sovereign rights.

"When the issue of our country's sovereign rights is raise, there is a wall. And this is why we repeat whenever needed that we have to rely on our own powers," he emphasised.

Among issues stressed by the prime minister was the need to change attitudes toward the handling of local issues. He underlined that the central state should provide support but not directly manage local problems.

Citizens often identified ministers with public administration and even ministers were not immune from falling into this trap, whereas the government's was to be a friend and ally of the people against a public administration that had to be changed, he said.

Concerning banks, Papandreou said the government wanted to support the Greek character of banks.

Replying to questions on unemployment and a shift toward more flexible labour relations, the prime minister expressed the opinion that flexible forms of employment or part-time work were not a problems in themselves. According to Papandreou, the problem actually lay with Greece's very inflexible labour laws that actually led to lawlessness.

He said the government was making a great effort to support employment, even in the form of part-time work, on condition that everything was done legally and above board, referring to ideas such as subsidising insurance contributions. The prime minister pointed out that Greece could not compete with countries like China and India in terms of low labour costs, nor compress Greek wages to that level in order to make the Greek economy more competitive.

Papandreou repeated his position that the competitiveness of the Greek economy will be based, in large part, on the quality of its products.

The prime minister led a government team that included Culture and Tourism Minister Pavlos Geroulanos, Deputy Interior Minister George Dolios, Deputy Environment Minister Yiannis Maniatis, Deputy Health Minister Christos Aidonis and Deputy Agricultural Development Minister Yiannis Koutsoukos.

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[02] ND on consensus; privatizations; public administration

"By hiding behind the word consensus, the government is trying to conceal its ineffectiveness," he added.

He accused the government of not proceeding with privatizations and characterized the different opinions expressed by government officials on the issue of public sector layoffs as a major blow to government effectiveness and coordination.

ND leader Antonis Samaras� advisor Hrissanthos Lazaridis, who was present at the press briefing, clarified that ND says "no" to layoffs and suggested "freezing" of hirings for a period of 3 years, coupled with the implementation of the option of "reserve labour" for public organizations that will be abolished or merged. He warned of social problems atop of adverse economic consequences, resulting from reduced state revenues combined with increased spending.

The ND spokesman referred to Samaras� trips abroad, announcing that he will visit Paris on June 7 and meet with French Prime Minister Francois Fillon. On June 22, he will meet with European Commission President Jose Manuel Barroso in Brussels ahead of the European People�s Party (EPP) Summit.

ND�s programme aimed at leading the country out of the crisis, which was presented earlier in the month, has already been forwarded to EU officials.

The ND spokesman also announced that Samaras had a telephone communication with Greek Police (EL.AS) Chief Lefteris Economou to congratulate him on recent police successes.

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[03] Shadow economy expert Schneider warns against further tax increases in ANA-MPA interview

In an interview with the ANA-MPA released on Friday, during his visit to Thessaloniki, Scheider said that any tax increase would drive an even greater proportion of the population into the informal economy and decimate its real purchasing power, ultimately reducing public revenues.

"Based on my calculations, the informal economy in Greece is forecast to reach 25.8 percent of the official GDP this year from 25.4 percent or 62.8 billion euro last year. This is the largest percentage among the 21 countries of the Organisation for Economic Cooperation and Development (OECD). If the recession continues, meanwhile, the informal economy will increase in size, especially if the Greek government is forced by the IMF and EU to proceed with another round of tax increases," Schneider warned.

The Austrian academic cited the results of 12 studies showing that the effect of raising taxes and social insurance contributions on the informal economy reached up to 35-38 percent.

"I think Greece has reached the point where there is no point in increasing taxes. If you increase taxes any more, people will start going to Skopje where taxation is much lower. From where we are, the Balkans are next door. In my opinion, all tax increases must stop," he added.

In fact, he asserted that a reduction of some taxes would actually bring in higher revenues for the government by increasing the purchasing power of Greeks.

According to Schneider, a return to growth could be achieved through privatisations, tax incentives and developing tourism.

He appeared upbeat about Greece's prospects of emerging from the crisis, noting that Greek people were creative, hard-working and that labour productivity in several areas was at the right level, such as in tourism, though a series of benefits in the public sector were not sustainable.

Based on his own research, Greece will be the only OECD country that will see its informal economy grow in 2011 compared with the previous year. The average size of the informal economy in OECD countries is not expected to exceed 13.4 percent this year.

In 2010, Greece shared 10th place with Poland among 31 European countries for the size of its informal economy relative to GDP (25.4 percent). Topping the list were Bulgaria (32.6 percent), with Romania and Croatia sharing second place (29.8 percent) and Lithuania third (29.7 percent).

Hotel, restaurant and catering services accounted for 13.8 billion euro of Greece's informal economy in 2009-2010, or 22 percent of the total, followed by construction (20 percent), vehicles/machinery trade (19 percent) and various services (18 percent).

Surprisingly, he suggested that the large shadow economy might even be acting as a stabilising factor for the Greek economy at present, since it was the only alternative for a large section of the population. He also played down the government's losses of revenue due to the shadow economy, since two thirds of the 'black' economy funds returned to the official economy through consumption.

Another thing stressed by the economist was the need to make a more precise calculation of the shadow economy's size in order to discover how much added value the Greek economy generates.

Macedonia University economists deplored a decision on Thursday to decline funding for precisely such a survey, supervised by Schneider, which would have had a budget of 450,000 euro over three years.

The Austrian academic has researched the phenomenon of the informal economy for over 30 years in 145 countries, acting as an advisor to the International Monetary Fund, the World Bank and the European Commission.

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[04] ASE ends below 1,300 level

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