Kyriakos Pierrakakis, Minister of National Economy and Finance, participated in a discussion as part of the “5th Cantina Academy,” on the topic “Epirus: The Roots and Future of Authenticity,” organized by Proto Thema and Cantina Magazine.
Also participating in the discussion were Christos Megalou, CEO of Piraeus Bank, and Michalis Sarantis, President of the Interprofessional Organization of Feta and Management Consultant for the DODONI dairy industry, while the event was moderated by Babis Koutras, Editor-in-Chief of “Proto Thema.”
In more detail:
Journalist: A question regarding the demographics of Greece’s population. The data show that Epirus has a very low percentage—10.8%—compared to the other regions. Does the government have a plan to address both the issue of birth rates and the labor shortage? Because, as I understand it, companies like Mr. Sarantis’s are looking more for workers and less for customers.
Kyriakos Pierrakakis: All of these issues are interrelated and tied to the country’s broader economic plan in the following sense. As far as unemployment is concerned, Greece is poised to reach a historic low in unemployment. Very soon, we will have the lowest unemployment rate in our history. This milestone will be reached very soon, and it is very significant given where we started in 2019. That is the first observation.
The second observation is that the demographic situation is an existential problem not only for Greece but for Europe as a whole. There is currently no country in Europe that has a “replacement rate”—that is, more than two children per couple—necessary to maintain a stable overall population curve. There are two balances to consider: the birth-death balance and the migration balance, which plays a broader role in this context.
As far as we and our country are concerned, the Prime Minister’s entire speech at last year’s Thessaloniki International Fair was about a tax reform centered on demographics. For the first time in Greece, what did we do? We changed how we tax citizens based on how many children they have and their age. Young people up to age 25 pay no tax at the low rate. Families with many children pay no tax at the low rate, and we’re waiving the ENFIA property tax in all villages. Now, you might say, “Are you going to have one more child just because the government waived a tax?” Absolutely not. But, on the other hand, you can’t have a government that fails to acknowledge the problem. So, my starting point is that a change and reform of this kind was definitely needed.
Now, this is linked to the broader economic model and how we’ll move forward in the coming years. Why? Across Europe as a whole, this is one of the two major existential crises we face. The other is productivity.
Productivity is low across Europe as a whole, and Greece’s is lower than Europe’s. Europe’s is lower than America’s. Your productivity must offset the decline in your economically active population. If you look at the 20th century, the countries that managed to progress at a very rapid pace were those that also experienced growth in their economically active population. We, on the other hand, are experiencing not only a decline in the economically active population but also a decline in the total population, with some regions being hit harder than others.
So what is the surefire solution? Removing barriers. We need a better tax system, to reduce burdens as much as possible, so that a family with a child up to 5 or 6 years old doesn’t have so many worries, so that both parents can work at the same time and have somewhere to leave their child, and to ensure there is care and protection for the child. All of this is happening or will happen. We’re on that path. What is the honest reality? Countries that are making economic progress are experiencing a decline in birth rates. It’s the opposite, in other words. When someone enters this discussion, they ask, “How many children did we have in 1950?” Many, but we were also much poorer. It also has to do with cultural issues and personal choices. What is certain is that we must remove a number of obstacles in order to improve our current situation.
That is what we are striving to do, and I would like to add one more point that does not relate strictly to your question, but rather to the broader development model our country needs to adopt. Productivity and demographics are the key factors. The President of the Republic referred earlier to what Evangelos Averoff and Michael Tositsas did in Metsovo. The President has made me an admirer of Averoff’s legacy. If you go to Metsovo, you realize that “money doesn’t just exist”—“money is created.” You create money; you create development. That’s what Averoff did in Metsovo. He revitalized a place; instead of spending the money, he invested it, multiplied it, and changed the fate of his hometown. This illustrates an overarching philosophy of what can be achieved across the entire Region. What can you do, more generally, with every euro you spend? It should have a multiplier effect. Because I hear people in Parliament and many of your colleagues asking, “After the Recovery Fund, what then?”
A country’s development model cannot be based on how it spends imported money. It must be based on how it transforms it—yes, that’s what we did with the Recovery Fund. It must be the destiny it envisions for itself. Greece currently has a growth model that will grow at twice the rate of Europe over the next few years. This is so that it can achieve convergence with the European average.
We have achieved political stability, economic stability, and fiscal stability. Our debt is no longer a problem. Our debt is declining faster than any other country’s on the planet. Investment is rising as a percentage of GDP, but it is not yet at the level we want. It was 11% of GDP and will reach 17%; the European average is 21%. Exports have more than doubled—an area that also concerns Mr. Sarantis. They stood at 20% in 2009, when we entered the crisis; now they are at 42–43%. In Europe, the figure is 51%. So, by doing all of this—improving the economic model and removing barriers—you create the best possible conditions for every citizen to realize their full potential.
Journalist: The core of the problem you raised is increasing productivity and then changing the country’s production model—both of which remain challenges. The productivity index is very low, and growth continues to rely on tourism and the Recovery Fund—generally on money coming from abroad. Can this change in the first year, or will we need to make a long-term effort all over again from the beginning?
It relies much less on what you’re describing compared to the past, and this is contradicted by the data I mentioned earlier regarding investments and exports. If we were in the Greece that entered the crisis, it would rely purely on those factors. We’re no longer in that situation. Further improvement is needed. And a large part of that relates to the skills of the workforce. When I was at the Ministry of Education, we had launched an initiative to establish the so-called “Academies,” which was continued by Sofia Zacharaki and Konstantinos Vlasis, and eventually became law.
What was the idea? To go directly to the businesses themselves and try to retrain their staff there with state certification. That is, not to mention my beloved Epirus. In wine-producing regions, such as Corinthia and Arcadia, we would go to the winemakers themselves and have them train people in the relevant professions needed there. Similarly, in regions where specific companies and specific professions are thriving. “Transform” the business into a university. This has been legislated and is beginning to be implemented, and I believe we will increasingly see people being trained within these structures. It’s already in effect, but not on the scale we’d like. You, the business owners, are doing this for your employees. The difference would be for you to open the doors of your business, together with other businesses, and create a structure that—instead of being an old-style IEK (Vocational Training Institute), now renamed SAEK—would allow you to provide the training yourselves, with certification from the state. I think this is a much better model and less “state-centric.” It’s much more productive and appealing to a young person who wants to find a good job.
Reporter: During the election campaign, your government has always emphasized political stability as its guiding principle and slogan. You consider it a critical factor for the economy to continue growing and for us to move forward. Do you feel any concern now that we’re entering this election season and about what will happen the day after?
Kyriakos Pierrakakis: I deeply believe that political stability is like oxygen in a room: you appreciate it when it’s gone, in the sense that, as a country, we’ve experienced what it means to have no oxygen in the room. Issues—even those that are existential for us—that we thought had been resolved are now being decided within hours or days. In my new capacity as President of the Eurogroup, European officials very often recount these events to me—what took place in 2015. I think people know this deeply; it has profoundly changed them...
Reporter: It would be interesting, though, to hear about your experiences as President of the Eurogroup.
Kyriakos Pierrakakis: I think people know deep down—and have deeply internalized—that great saying by Santayana: that whoever does not remember their past is doomed to repeat it. Beyond that, politics is something that always concerns the future. It does not concern the past. It’s about “what comes next.” And the question is who has, on the one hand, the plan, as you said… The President (of the Republic) reminded me that Averoff’s last book was titled “With Reason and with a Dream.” Isn’t that right? It requires both.
It takes both vision and reason. So, you have to be able to both inspire and know very well how to implement solutions. And that’s what we’re trying to do. We’re saying that not a single day will go to waste. Today we began the discussion with a solution we’re proposing for private debt. We understand that a segment of Greek society is struggling… Many say, “We want to keep our heads above water. Help us.”
So, for those who want to pay, who want a manageable repayment plan, the state must not point a finger at them; it must lend them a helping hand.
That’s one part of it. A second part is the overall macroeconomic situation. And another part is coming up with solutions every day. You tell me, “You like numbers.” I use them. But they aren’t critical to the daily life of someone who goes to the supermarket checkout to pay. At the supermarket checkout, there are no numbers. There’s the cost. We know that, and I know it very well, too.
So we want every euro available as fiscal leeway, every solution that can be offered that touches people’s daily lives, every helping hand the state can extend in a way that helps its future rather than undermining it—we want all of this to happen. In the context of the election campaign, “governance” and solutions are far more important than any rhetoric or associations tied to the past. And I think that, ultimately, the public will appreciate this much more.
Reporter: You’ve brought up an interesting point, Minister, because the European Central Bank’s forecast is that growth will be lower—I’m not just talking about Greece, but about the Eurozone as well. Prices and inflation are likely to rise. We don’t know if the war is over, and we’re unsure where we stand in terms of energy costs, etc. What is the forecast for the winter—what will winter be like in our country, and not just in Epirus?
Kyriakos Pierrakakis: The critical factor is what will happen in the Strait of Hormuz. And beyond that, it’s clear that it’s absolutely crucial for the strait to remain open. The duration—how long the Strait will remain closed—the severity, that is, how much of the region’s energy infrastructure has been affected, and the institutional framework that will be in place in the Strait of Hormuz afterward— these three factors together will determine the overall impact on the global energy situation and, consequently, on inflation.
I am not in a position to comment on interest rates, nor would it be appropriate for me to do so given my role and the independence of the European Central Bank. What I can tell you is that inflation forecasts have been revised upward and growth forecasts downward. This was to be expected, given that our country will grow at twice the European rate.
But look at the same revision we made regarding Greece—what we did for next year. Just as we revised this year’s forecast downward, we revised next year’s forecast upward. From 1.7% to 2%. This means that Greece’s prospects regarding foreign investment, regarding total investment, and regarding the broader transformation of our production model…. In the banking sector, we have taken such steps. We are asking to be part of a broader European discussion among European leaders, not just Greek leaders. On the stock exchange: Euronext came in and acquired the Athens Stock Exchange.
A great deal is happening. And in all of this, it is very interesting—for me personally as well—to see how the local, regional, national, European, and global levels coexist. Take industry, for example: the number one issue—beyond the bureaucracy that was rightly mentioned—is that while many improvements have been made thanks to digital transformations in recent years, not everything has been resolved; there is still a great deal that needs to be addressed.
The number one issue is energy costs. If you asked me what the best policy for competitiveness and the best social policy anyone could implement is, it would be to tackle and reduce energy costs at the source, at the core. This is an issue I’ve raised in the Eurogroup; we’ve brought it up in broader discussions among European finance ministers. It’s clearly on the leaders’ agenda as well. And we know very well that Greece is one of the countries that isn’t at an advantage in this regard. There are countries like France that use, for example, nuclear energy in their system and have a much more competitive industrial sector. We need a single European market. And now we’ll have an energy escape clause to make the necessary investments… To reduce energy costs for businesses, citizens, and industry alike.
Reporter: Do we have time to take advantage of this provision? The energy escape clause?
Kyriakos Pierrakakis: We’ll see how the details are worked out in our cooperation with the European Commission in the coming period. Rest assured that we have plans and a very specific vision of what needs to be done.
Reporter: Greece isn’t just Attica, as we usually say. It’s also the regions. A message for Epirus and what they should expect from your government moving forward.
Kyriakos Pierrakakis: I can tell you that, personally, I love Epirus very much. It’s a wonderful place, which I try to visit whenever I can and at every opportunity. And I deeply believe that it has the potential to unleash even greater potential in the future.
The foundation lies in its past, in countless historical examples: in its great benefactors and the roles they played, in its people and how they distinguished themselves—both here and more broadly in Greece and internationally—and in its outstanding products...but beyond that, around the University, around the businesses, and, at the end of the day, around every resident of Epirus, there is truly immense potential.