Sponsored briefing: Recovery and Resilience Plan and labour market reform; Greece’s pathway to sustainable growth and investment attraction

Karatzas & Partners’ Angeliki Tsatsi and Christos Paraskevopoulos on the recovery measures in Greece in the wake of the Covid-19 pandemic

After almost a decade of deep recession and while being at the verge of sustainable recovery Greece faced the consequences of the Covid-19 pandemic, particularly adverse for an economy where tourism contributes to a very large part of its GDP. Following the global paradigm of using expansionary monetary and fiscal policy as the primary tool to tackle the Covid-19 economic shock the European Union (EU)adopted, among others, the NextGenerationEU recovery plan. Greece was among the first EU member states to seize the opportunity and to submit its national Recovery and Resilience Plan, the so-called Greece 2.0, for the European Commission’s assessment, as part of the EU’s Recovery and Resilience Facility, the heart of NextGenerationEU. Greece’s plan was approved in June 2021 and consists of €17.8bn in grants and €12.7bn in loans, a total financing of €30.5bn towards a green transition, digitalisation and improvement of the business environment.

Recovery and Resilience Plan’s grants will be channelled among others to electricity infrastructure and buildings’ energy efficiency improvement, development of 5G networks, digital transformation of public sector, digitalisation of businesses, social cohesion measures and improvement of the efficiency of public administration, including tax administration and judiciary. In parallel, €12.7bn of loans will be used together with equity, banking sector and EIB, EBRD loans to finance investment plans promoting green and digital transition, innovation, economies of scale, M&As and increase of exports. It is estimated that with the inclusion of private funding the total available funds under the Recovery and Resilience Plan could reach €57bn.

It becomes obvious that private investment leveraged with the use of the Greece 2.0 loan facility and the critical involvement of the Greek banking sector will be at the forefront of the plan, while M&As, project financing and long-term loan facilities will be the main legal tools to achieve the plan’s eligible targets.

‘The reforms recently introduced by Law 4808/2021 aim at increasing job creation and competitiveness, while reducing undeclared and under-declared work and improving work-life balance for employees.’
Angeliki Tsatsi, Karatzas & Partners

Further to the financing side of Greece 2.0 modernisation of labour law is one of the main areas of structural reforms in the context of Greece 2.0.

The reforms recently introduced by Law 4808/2021 aim at increasing job creation and competitiveness, while reducing undeclared and under-declared work and improving work-life balance for employees.

By the reforms to individual labour law, more flexibility is provided on overtime work and the relevant cost is rationalised. Daily and annual overtime caps are increased (to three and 150 hours respectively), while the Law introduces the possibility of a (limited in time) working time arrangement deviating from the 40/eight-hour standard scheme following a request by the employee.

While the new Law enhances and expands the protection of vulnerable categories of employees against dismissal and expressly prohibits dismissal in relation of exercise of legitimate rights by the employee, changes to the headcount not covered by this protective regime are facilitated. The Law provides a cap on the overall potential financial exposure of the employer in all other dismissal cases (including dismissals for financial/technical reasons), by introducing a penalty equal to twice the dismissal compensation as an alternative to the obligation to re-employee the dismissed employee and pay wages in arrears in case a dismissal is found invalid. Certain missing dismissal formalities can be cured, and the option of garden leave is recognised for the first time.

The remote working regime is amended in line with current trends in the global labour market, while the right to disconnect is established for remote workers.

‘Greece 2.0 does not come out of the blue but will rather reinforce economic trends already building up in the Greek economy and structural reforms which are already under way.’
Christos Paraskevopoulos, Karatzas & Partners

By the reforms introduced to collective labour and trade unions law, the regime for employee unions is modernised and strikes become subject to a stricter framework, including a 24-hour written notice, restrictions on re-declaration of a strike found illegal and safeguarding of the right of employees non-participating in the strike to enter and leave the workplace.

To promote work-life balance and bridge the gender employment gap, the Law provides additional and more extensive leave and flexible worktime arrangements for both parents, while a new regime against workplace violence and harassment is adopted.

The above are accompanied by reforms to the supervision of the Greek labour market to safeguard the protection of the employees’ rights, while at the same time cutting red tape and reducing the burden of extreme bureaucracy. The Labour Inspectorate will become an Ιndependent Authority, while the updated electronic information system ERGANI II will simplify and unify the system of employment-related filings and the ‘digital employment card’ will offer an electronic system of registration of working hours, real-time connected to ERGANI II.

However, Greece 2.0 does not come out of the blue but will rather reinforce economic trends already building up in the Greek economy and structural reforms which are already under way. Greek banks are in the process of a tremendous NPL deleveraging effort, making use of HAPS guarantees to large-scale NPL securitisations and is expected to have single digit NPL ratios in 2022, in order to be able to fully participate in the loan side of Greece 2.0. Greek businesses having survived through the recessionary years have already increased their financial resilience and increased their exporting capacity; recent deals for the sale of equity stakes in Pharmathen, a major Greek pharmaceuticals company, and in Chipita, a major food industry, at enterprise valuations of €1.6bn and €2bn respectively are road marks of the ongoing transformation. In addition, renewables projects are booming and all major Greek businesses have already achieved an undisrupted access to international capital markets. We are more than proud that our firm has advised in almost all major transactions in the aforementioned sectors and we believe we are in a position to offer high added value legal services to investors interested in leveraging on Greece 2.0 investment opportunities.