Overseas Business Risk – Greece
Political and Economic
Greece is a parliamentary republic, and a member of the EU, Eurozone, OECD, WTO, UN and NATO. The President, who has limited political power, is elected by Parliament every five years, and is Head of State. The Prime Minister is Head of Government. General elections are held every four years unless Parliament is dissolved earlier. The last general elections were held in June 2012 and produced a 3-party coalition government. In June 2013, one of the coalition’s junior members broke away, leaving the centre-right/centre-left coalition with a slim parliamentary majority. The next general elections are due in 2016; local elections in May 2014. Greece assumes the EU Presidency on 1st January 2014.
Greece has been a member of the EU since 1981 and joined EMU on 1 January 2001. Its resident population is 10.8 million and its main economic sectors are tourism, agriculture and shipping. About 15% of the labour force is employed in agriculture, 23% in industry and 62% in the services sector. Unemployment has risen sharply since 2010, reaching 27.6% in July 2013, with youth unemployment at 65%. The monthly minimum wage was cut by 22% in 2012 to 586 Euros (and the minimum wage for under-25’s to 511 Euros) and is not allowed to rise until the unemployment rate falls below 10%. Between 2012 and 2014, business sector unit labour costs will have fallen by 22.9%.
The fiscal crisis which erupted at the end of 2009 escalated into a sovereign debt crisis in the early part of 2010. As Greece was eventually cut off from financial markets, the Government resorted to a 110 billion euro loan from the EU, IMF and ECB in May 2010; this was followed by a second, 130 billion euro bailout package in March 2012. As a result, Greece has been implementing an economic adjustment programme since May 2010, and its economic policies have been bound by a Memorandum of Understanding signed between Greece and its "troika" of lenders, with loan disbursements conditional on implementation of the programme’s fiscal and structural measures. Results on implementation have been mixed, as the Government focussed primarily on fiscal measures, but made slow progress – at least initially – on the required set of wide-ranging structural, tax, and public administration reforms. But although Greece has implemented a massive fiscal consolidation programme (the fiscal deficit has dropped from 15.6% of GDP in 2009 to 4.1% of GDP in 2013), its public debt burden has been an on-going source of concern, primarily because the economy’s deeper- and longer-than-expected recession has kept the debt-to-GDP trajectory above target. In November 2012, Greece’s Euro area partners committed to providing further debt relief at a future date if this became necessary. The Government’s biggest challenge at present is finding ways to kick-start economic growth in an environment of continuing fiscal austerity.
The EU is the country’s largest trading partner, but Greece has also developed links with Eastern European and Black Sea countries.
The Greek banking sector suffered severe losses as a result of the haircut on Greek government bonds (PSI) which took place in March 2012, and has faced an unprecedented liquidity squeeze due to massive bank deposit outflows and lack of access to capital markets. With their capital base essentially having been wiped out, the four systemic Greek banks have been recapitalised by the Hellenic Financial Stability Fund. The recapitalisation process, which was carried out in two stages, was completed over the summer of 2013, after the four banks had absorbed the "good" parts of a number of smaller, non viable banks.
The constitution and national legislation provide workers with the right to join and form unions with little or no government interference. Freedom to form trade unions is established under Articles 12 and 23 of the constitution and in accordance with International Labour Organization (ILO) Convention No. 87, which Greece has ratified. Members of the military are not allowed to form a union. There are some legal restrictions on strikes, such as requirements for four days’ notice before strikes affecting public utilities and 24 hours’ notice before private-sector strikes. In addition, workers must maintain minimum staff levels during strikes in the public sector.
Bribery and Corruption
Bribery is illegal. It is an offence for UK nationals and bodies incorporated under UK law, to bribe anywhere in the world.
In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.
Protective Security Advice
Greece adheres to all EU laws regarding copyright and intellectual property and the local branches of international watchdogs monitor breaches that may occur, including downloading of illegal software which mostly concerns the music/film industry. Piracy Software (PC) rate in Greece has dropped over the last few years, with severe fines for the use of illegal software. According to Software Alliance’s 2012 Global Software Piracy Study which measured the rate and commercial value of unlicensed PC software installed in 2011, the software piracy rate in Greece was 61%, representing a commercial value of unlicensed software of US$343 million.