–Interview of SEV Chairman, Theodoros Fessas in ECONOMIA/ GREEK BUSINESS FILE magazine, April-May 2019 issue–

During the recent meeting of the IRC Committee of Business Europe in Athens, it was stated that despite the increase in Greek exports, the country’s contribution to the international trade remains stagnant (as the activity of other countries’ increases). How can that situation be rectified?

SEV was pleased to host the bi-annual meeting of International Trade and Investments Committee (IRC) of BusinessEurope in Athens in January 2019. All major European industrial associations from Europe met to discuss on the new European trade investment strategy. The meeting was an excellent opportunity for Greek companies to present their priorities directly to policy makers and counterparts from the rest of the EU.

SEV is an active participant in IRC. International trade and investment policies are key for growth in Greece. Currently, there are several free trade agreements (FTAs) under finalization at EU level (Mexico, ASEAN countries, Mercosur, Morocco, etc. The added value of FTAs to the Greek economy adds up to €4,3b since 2000, with 24% of Greek exports directed to countries with FTAs, so their importance to the Greek economy is significant.

FTAs have supported Greek exports’ significant increase in recent years. And exports drive economic recovery with a contribution of more than €33bn. For example, the recovery during 2018 was mainly driven by exports of industrial goods and services (tourism, shipping), which rose by +8.4% and +9% respectively, and contributed to GDP growth of +1.5% and +1.3%.

However, the contribution of Greek exports to global trade has remained stagnant at 0,18% for decades (0,14% excluding oil products). This stagnation happens despite the 163% export boost with FTAs (versus 96% in countries without FTAs). Despite the efforts of large industrial companies, the Greek economy seems to lack a sustainable export orientation. As a result, the trade deficit is, once again, on the increase (-€17,3b in 2018 vs -€16,1b in 2017).

Also, many SMEs still focus on the local market, while those who attempt to access international markets either lack competitiveness (currently at 50% of EU average), corporate size (only 3% of Greek SMEs are mid-sized vs 7% in EU on average), or delivery capabilities. Reshaping the economy towards tradable goods should remain a key priority for the years to come. This transformation requires investments in industrial sectors and/or added value services like ICT and Logistics.

SEV believes that investments and international trade are strongly related. The same barriers that stagnate trade also act against investments. The elimination of such barriers will improve the international investment profile of the country and at the same time will allow the local industry to manufacture tradeable goods with added value. SEV has identified a comprehensive toolkit that can expedite investments in tradeable products and services through the adoption of best practices from various EU countries to help Greece bridge the investment gap of €100b.

Key investment reforms include:

1. Elimination of red tape in investment licensing through introduction of one-stop licensing agencies or “all-in-one” permits
2. Simplification of justice administration through digital tools
3. Labor market rules that do not compromise competitiveness. With regards to trading across borders, the following reforms will reduce the cost of accessing international markets:
4. Introduction of a comprehensive tax portfolio to directly offset all taxes and duties (including VAT), including credit / debit tax payments.
5. Further simplification and digitalization of customs processes. The implementation of the Single Window initiative is long overdue
6. Active participation of Greece in all negotiations regarding new free trade agreements. Emphasis should be given to rules of origin, geographical indications, IP protection and non-tariff barriers like standards and certification.

Does SEV participate in the dialogue for the strengthening of the industrial policy in the EU and Greece? What are the main objectives of a contemporary industrial policy in Greece?

Industrial recovery remains key to growth and new jobs throughout Europe. The European Commission has proposed an ambitious strategy to increase industry’s contribution to EU GDP from 15% to 20% over the next 3 years. SEV fully supports the initiative and cooperates with BusinessEurope to promote the idea throughout Europe. It was also discussed at the IRC meeting in Athens.

In addition, SEV recently coordinated with 20 local sectoral and regional industrial associations to join the 136 EU and 395 national industrial associations in the call to EU governments to put industry at the core of the EU’s future.

SEV together with industrial associations throughout the EU call on Heads of State and Government to:

• Urge the next European Commission to name industry as a top priority of its 5-year Work Programme and appoint a dedicated Vice-President for Industry;
• Require the next European Commission to swiftly present an ambitious long-term EU industrial strategy, which shall include clear indicators and governance structures;
• Take stock, each year at the Spring European Council, of progress in the implementation of this EU industrial strategy and provide political guidance to foster European competitiveness.

In Greece, SEV asks the government to agree upon a comprehensive industrial strategy to reverse de-industrialization. All local stakeholders should agree on policies that aim to increase the contribution of industry to GDP to 12% in 3 years (9,6% today) and to 15% in the medium term. By converging with the EU average, Greece’s industry could gradually create 500.000 new jobs, setup industrial ecosystems with local SMEs and promote regional growth in areas with few employment alternatives.

In Greece, the need for a cohesive industrial policy is even more urgent. What are the main proposals of SEV in this respect?

The growth potential of Greek companies is hindered by the business environment. Investment and administrative barriers have affected industrial competitiveness in the last 20 years. Such barriers include quality of institutions, product markets, labor market, trading across borders, innovation capability, environmental licensing, tax evasion, over-taxation, cost of finance, delays in justice administration, etc.

Despite such a problematic business environment, manufacturing remains key to the growth potential of the country. It comprises 90% of exports (90%), with more than 220 international trade destinations (increased by 17% since 2017). Also, industrial investments exceed €26bn during the crisis and still support stable and well-paid jobs.

To increase industry’s GDP contribution to 12% in 3 years and 15% in the medium term, the following key policy recommendations remain a priority, in addition to the elimination of administrative barriers:

Taxation

• 30% reduction of corporate tax burden (CIT and Social Security contributions)
• Tax incentives (namely super and/or accelerated depreciations) to encourage investments on Industry 4.0 technologies and machinery
• Significant reduction on personal income tax for private sector employees

Energy market

• Alignment with the EU target model. Offer competitive pricing to the local industry
• Deliver projects regarding network connections

Funding

• Resolve insolvency issues and address NPE cases
• Reform state-aid allocation to direct co-funding towards grow-up / scale-up projects

Skills

• Up-skilling / re-skilling that contributes to Industry 4.0 competetiveness

Given that the post-surveillance framework limits the room on manoeuver on the taxation issue, which structural reforms should Greece urgently implement in order to improve its competitive position internationally? Which reforms should become a priority?

Greece has implemented key reforms to ratify fiscal imbalances and set the fundamentals to return to economic normality. Provisional data indicates a growth around 1.9% in 2018 vs. projections of +2.1%. This is in line with estimates for low growth in the coming years, as uncertainty related to the upcoming elections holds back investment plans, while risks associated with external demand, mainly due to the slowdown in world trade, are rising.

The recent upgrade of Greece’s rating by Moody’s by two notches (at B1 from B3) is also a positive development. Additionally, the fact that Greece managed to raise €2.5 bn in bond markets with the issuance of a 10-year bond (with 3.9% interest rate), underlines the belief of the financial markets, as represented by long term institutional investors, that the country is on the right track. This assessment is broadly compatible with the content of the recent European Commission reports on Greece, one in the context of the European Semester and the other as part of the enhanced surveillance.

It is also fair to say that the country has made some mild progress with respect to investment promotion reforms. Recent legislation encourages productive investments and job creation by introducing tax incentives for all business sizes and sectors, simplified subsidy allocation for SMEs and significant reduction of the customs burden. Though over-taxation is not properly tackled, the adopted measures include some key SEV recommendations and proposals. These proposals were extensively discussed during SEV’s main public events the last two years, such as the Investment Conference, the Industrial Forum as well as at the SMEs’ Conference. They include:

• Updated legislation for strategic investments
• 130% super-deduction of R&D expenditure. Tax exemptions for R&D capital. Patent box (tax exemption).
• 200% super-depreciation for energy efficiency investments
• 150% super-deduction of labor costs and Employers’ contribution subsidy (for employees under 25 years old).
• Tax incentives for shared service centers (super-deductions)
• Simplification of state-aid allocation with accelerated depreciations.
• Licensing simplification: Tax warehouses – customs warehouses – tax free zones
• Licensing simplification: land uses and construction permits on certain areas
• Licensing simplification: industrial parks and logistics parks
• Simplification of corporate transformations

However, appetite for reform seems to be lost. As a result, Greece is retreating in many international indicators regarding investment competitiveness. In the WEF competitiveness index, Greece fell 4 places in 2018 and currently ranks 57th out of 140 countries (27th in EU-28). In the World Bank – Doing Business Index, Greece lost5 places in 2018 and currently ranks 72nd out of 190 countries, and, again, 27th in EU-28. Further analysis on investment-related indicators, support the argument that reforms should return to the top of the political agenda. Institutions, Infrastructure and Dealing with Construction Permits seem to be three exceptions.

Certain areas could still improve significantly: a) the implementation of the “better regulation agenda”, b) the implementation of an action plan to combat corruption through electronic transactions and invoicing, c) the qualitative improvement of the education system and the connection of the education system and research centers with the market, d) the full assessment of the fact that Greek companies have been excluded from the Single Market for Financial Services since the onset of the crisis. This caused significant competitive disadvantages for Greek businesses which operate within the Single Market and e) the fact that the manufacturing base of the country, that the first MOU envisioned would spearhead the export-led recovery, remains relatively weak.

In addition, to safeguard fiscal stability, overtaxation must be dealt with, together with planning and delivering useful infrastructure projects.

How can the Center of Excellence of SEV contribute to the improvement of the corporate landscape in Greece?

For SEV, connecting knowledge and entrepreneurship is a key prerequisite for growth. Knowledge is a vital ingredient of entrepreneurship which touches upon it’s every aspect and determines its ability to survive and grow. Today in Greece however, there is a relative disconnect between entrepreneurship and education which has led to a significant skills-gap. Recent research by IOBE among 800 SEV member-companies found that skills shortages exist in key productive sectors. In AgroFood and Logistics, 50% of companies are affected, while in Energy, Construction Materials and Health, it’s 45%. CEDEFOP’s Skills Panorama places Greece as an EU laggard, while the OECD* worryingly notes the stagnation of the intergenerational cognitive level. In the same vein, higher education’s impact is also low among OECD countries. At the same time, skills’ level does not seem to change according to employment status which means that higher skilled people are not employed more.

All this means that the acquired skills do not cover businesses’ needs, and the reason is the chasm between education and entrepreneurship. It’s clear that we need to change our strategy with respect to the creation, dissemination and utilization of knowledge. The challenge lies in the constant adaptation to the requirements of the new economy, for all levels of education and skills, and for the consistent improvement of all human resources through upskilling and re-skilling.

SEV’s educational initiatives include the Junior Achievement Greece for children, IVEPE for vocational training and lifelong learning, as well as the cooperation with Alba Graduate Business School, The American College of Greece. All efforts aim to fulfill the economy’s need for innovation, new skills, adaptation to technological change, etc. Together with soft skills, critical thinking, creativity, and cooperation, they are prerequisites for growth.

Just as digital and technological progress is changing the way we work, so too, we must change the ways we are educated. Investment in human capital is not just a sound investment. It is a necessary one. That is the idea at the centre of the cooperation between SEV and ALBA.

Our Learning Alliance aims to capitalize on comparative advantages and to strengthen modern administrative and business knowledge and practices. Supporting workers’ development, exchanging views and experiences, learning how to seize opportunities stemming from technology (e.g. digital marketing) are all necessary in order to create a new generation of leaders with vision and abilities.

The SEV Centre of Excellence in Creative Leadership will be a meeting point for academic and business leadership through annual fora, roundtable discussions, as well as applied research and Field Consulting Projects for members of SEV. SEV and ALBA cooperation also includes scholarships (50%) for executives’ postgraduate courses at ALBA, presentations by business executives in ALBA’s academic courses in order to strengthen their interplay, and specialized seminars (16-50 hours) for all levels of management (senior, middle and junior).

Could you elaborate on how the ongoing collaboration and dialogue between SEV and Business Europe contribute to the strengthening of the industrial sector in Greece?

SEV is a very active participant in BusinessEurope activities and in constant contact with EU officials to present the views, concerns and proposals of Greek industry. Supported by the permanent delegation in Brussels, SEV networks it members with decision-makers to lobby for policies that strengthen Greek Industry. The current agenda that SEV is pushing for in Brussels includes industrial growth, energy networks and competitive pricing, climate change and sustainable development, expedited access to international markets, eliminating barriers to investments, attracting FDI, promoting better regulation in EU directives, simplifying competition rules, strengthening the digital economy, implementing Industry 4.0 initiatives, etc.

—

* OECD, (2016), “Greece-Country Note-Skills Matter: Further Results from the Survey of Adults Skills”

There is no doubt that the minimum wage of workers needs to be improved. For this to happen without hindering the recovery of the economy and employment, especially for the small and medium enterprises, it is now imperative to:

• Reduce the taxation on labor.
• Contain the non-wage labor cost, by reducing social security contributions.
• Disconnect the increase of the minimum wage from the average wage setting by rationalizing the existing system of compulsory arbitration.

The level of wages that an economy and a society can afford to pay its workers, is not something that depends on the wishes and the kind intentions of the Government. The reality is that the level of wages, and among them the level of the minimum wages that the economy can afford, is linked to its productivity and competitiveness, the size of unemployment and undeclared work.

* On the occasion of the Government decision to raise the minimum wage by 11%.

A. General Statement

Employers are committed to playing their role in eliminating violence and harassment from the workplace, and taking action individually and jointly with others to achieve that.

Violence and harassment occur throughout society, not only at the workplace. However, the nature of work and workplaces can offer perpetrators opportunities to harass or behave violently with significant negative consequences for individuals, groups and the business as a whole.

Employers should take reasonable steps to ensure that such misbehaviour does not take place within their sphere of control. The causes of violent and other forms of unacceptable human behavior are complex and multifaceted and cannot be solely addressed at the level of the workplace.

Workplace measures are therefore not adequate in themselves to suppress all facets of violence and harassment in society. They can only be complementary to measures taken in all other areas that influence the behaviour of individuals, including civil and criminal law, education, and culture, to name a few. At the same time, reasonable workplace measures may be a key component of overall efforts to reduce violence and harassment in communities.

Effectiveness is the key consideration. Measures intended to prevent and address violence and harassment should be outcomes focused in all domains, including at the workplace.

B. Specific Comments

At its 107th ILC, the ILO held the first discussion on “Violence against women and men in the world of work” with a view to draft an instrument/s on violence and harassment under a two-year discussion procedure. The proposed instruments will be submitted for adoption in 2019, on the occasion of the ILO centenary. Throughout the discussion the Employers reiterated their commitment to take effective action in this area, and to work towards an international standard that can be universally supported and widely ratified by Governments.

However, the result of the first ILC discussion on violence and harassment concluded with a text that is legally unclear, too prescriptive and does not enable practical implementation in diverse national and enterprise contexts. Too many Governments raised these concerns in their final remarks to overlook them. The draft instruments require substantive changes in order to attract wide ratification and thus, deliver the necessary change to protect all persons from workplace violence and harassment.

In our view, the Employers’ main concerns, which are summarized below, should also be shared by all Governments as the legal implications set out throughout the proposed conclusions will apply equally to both public and private employers:

• The merging of the terms “violence and harassment” in a broad, single definition creates legal uncertainty and represents a barrier to ratification for Governments (page 3).
• The definition of “worker” contradicts most national laws and includes groups which are outside the control of public and private employers because they are not in workplaces or performing work (page 5).
• The definition of “world of work” encompasses situations and spaces that are out of reach and control of employers (page 6).
• Any employer responsibilities must be appropriate to the diverse range of businesses that would be required to implement them, including small and family businesses (page 6).
• The exclusion of LGBTI persons from the list of persons who are protected is questionable (page 7).
• Protection from violence and harassment needs to be equally extended to public and private employers without any ambiguity, in any work-related context, including during industrial action (page 7).
• Action taken by employers to support victims of domestic violence can only be on a voluntary basis as these situations are complex and occur outside the employer’s control. The text should not impose legal obligations on private employers in that respect (page 8).
• Greater clarity is required to ensure that workers and their representatives have responsibilities to refrain from violence and harassment as the attribution of responsibilities goes exclusively to employers and governments (page 8).
• The text requires member States to encourage collective bargaining “at all levels”, which remains the responsibility of the national social partners. This introduces unnecessary uncertainty as there are different practices that apply at each national level (page 8).

We firmly believe that the ILC 2019, in Geneva, should provide an opportunity to address these concerns. Given the importance of the subject and the critical moment in history for the ILO, a text that is not widely ratified because it is poorly defined and legally unclear is unacceptable. SEV will remain highly committed to this issue to ensure the broadest possible support to an effective instrument in addressing violence and harassment in the workplace.

C.  Additional Comments on article 1a, possible new article after article 4, article 6 of the Convention

Following your statement during the meeting of the Higher Labor Council on the promotion and application of international labor standards, which was held on Tuesday 16 October 2018, we would like to share our position regarding article 1a, possible new article after article 4, article 6 of the Convention on ending violence and harassment in the world of work.

1)  Article 1a of the Convention

The current definition should be viewed as the result of a stalemate during the discussions, and not an agreement

• A single definition for two distinct concepts does not provide leeway to accommodate national laws but on the contrary, creates a significant barrier to wide ratification and implementation. Instead of flexibility, a merged definition creates massive ambiguity and leaves no concrete directions for countries to address the issue properly.
• Without clear definitions of violence and harassment, governments and employers will face unnecessary challenges to take appropriate measures for each situation: It’s unclear how public and private employers can identify the hazards of violence and harassment and take the necessary measures to prevent and control them, as stipulated in the operative part of the Convention, when there is no clear guidance as to what could be reasonably understood to fall under these two concepts.
• The merged definition will also require most Governments to undertake a huge amount of work assessing their ability to ratify the proposed Convention and modifying their current legislation to comply with it as almost no Government has a similar and a single definition for violence and harassment in its national laws.

Proposal

In order to avoid unnecessary ratification barriers, as it has been suggested, is to have separate definitions for violence and harassment.

i)The term violence shall mean all acts or threats exerted through coercion or arbitrary deprivation of liberty that have the purpose or reasonably foreseeable effect of causing physical, psychological, or sexual harm or suffering.

1. ii) The term harassment should be understood as any form of unwanted comment or conduct with the purpose or reasonably foreseeable effect of creating an intimidating, degrading or offensive environment.

2)  Possible new article after article 4 of the Convention

Possible new Article 4 is welcomed as it recognizes that the various actors have different roles and responsibilities and seeks to promote coordination and cooperation however it still does not go far enough to resolve the confusion around the circumstances in which responsibilities under the proposed instrument will be enlivened. Employers insist that Article 9 must refer to “workplace” instead of “world of work” as this clause could end up denying protection to the victims of violence and harassment Convention should be drafted so that they can be widely ratified. In addition the wording must ensure that the different capacities and specific constraints of all actors are recognized and that roles and responsibilities may vary according to each situation.

Proposal

In adopting and implementing an inclusive, integrated approach and gender-responsive approach for the elimination of violence and harassment in the world of work, members shall:

1. a) Recognize that governments, and employers and workers and their respective representatives, have different capacities and constraints, as well as different roles and responsibilities, in preventing and addressing violence and harassment in the world of work, and that these may vary depending on the situation
2. b) Promote coordination and cooperation between them, taking into account their complementary roles.

3)  Article 6 of the Convention

SEV aligns its position to the initial position of Employers’ group, to remove the specific listing with the aim to be less prescriptive and not to be exclusionary. The Employers’ Group firmly supports the UN-recognized principle that all persons should be protected from violence and harassment, including LGBTI persons. Any ILO instrument on violence and harassment should reflect that established principle. In that respect, SEV supports that the listing of this vulnerable group is maintained in the Recommendation.

Proposal

Each Member shall adopt laws, regulations and policies ensuring the right to equality and non-discrimination in  employment and occupation including for groups in situation of vulnerability that are disproportionately affected by violence and harassment in the world of work.