High Taxes, Low Investment Dog Greek Recovery
New data have shown the damage done by Greece’s economic crisis, leaving a country with stagnant rates of research and development (R&D) as well as low tax revenues, despite Nordic levels of taxation on working families.
The OECD released its 2018 Going for Growth report this week which had some sobering news for Greek economists and policymakers alike.
It found that although Greece was among the countries which had undertaken reforms to “strengthen social protection”, public investment had fallen, then yo-yoed before reaching just 3.6 percent of GDP.
Families with two children “earning the average worker earnings” were paying over 38 percent tax in 2016, putting Greece among the highest tax rates in the EU.
Greece, no stranger to strikes and other forms of industrial action, saw labor union membership soar prior to 2013 to reach 24.6 percent of the workforce.
However, the coverage provided by collective agreements plummeted from 83 percent to 40 percent in 2013.
Government funding of business R&D has flatlined at around 0.03 percent of GDP; the same was true of tax breaks to support innovation.
The country’s tidal wave of privatization was also plain to see, with OECD charts showing a uniform fall in sector-specific product market regulation.
OECD Acting Chief Economist Alvaro Pereira OECD Acting Chief Economist also said Greece faced “labor informality” which remained “a key challenge for boosting inclusive growth”.
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