The Greek economy's struggle with productivity is a complex issue, and the answer lies not just in the numbers but also in the unique characteristics of the country's business landscape. While the high number of small and medium-sized enterprises (SMEs) is a common feature in many European countries, Greece's situation is particularly intriguing. According to the Alpha Bank's weekly economic bulletin, an SME employee in Greece produces only a quarter (25.5%) of the value produced by an employee in a large enterprise, which is the lowest percentage in the EU. This disparity is not solely due to the crisis years, but also to the structural challenges within the Greek economy.
One of the key factors is the dominance of low-labor-intensive service sectors. The service sector, which includes food service, accommodation, trade, and transport, employs about 37% of all workers and produces around 25% of total gross value added (GVA). These sectors, while essential, tend to have lower productivity due to their reliance on human labor rather than machinery and technology. In contrast, the industry sector, which is more technology-driven, employs only about 9.5% of Greek workers but produces 15.2% of total GVA, indicating a significant improvement in recent years.
The Greek economy's heavy reliance on SMEs, particularly very small enterprises with fewer than 10 staff, is another critical aspect. These enterprises, while employing a larger share of workers in Greece (47.5%) compared to the EU (30.4%), produce only 23.5% of GVA. This is due to their limited ability to reduce operating costs and invest in new technologies, which are crucial for increasing productivity. Large enterprises, on the other hand, with at least 250 employees, employ only 15.4% of Greeks but produce 41.7% of GVA, highlighting the productivity gap.
The drop in productive investments during the crisis is also a significant factor. According to the bulletin, investments as a percentage of GDP have recovered in the last five years, reaching 16.9% in 2025, which is marginally higher than the level recorded in 2010. However, this recovery is still not enough to bridge the gap with the EU. The Greek economy needs to focus on increasing investments in technology and innovation to boost productivity, especially in the service sector.
From my perspective, the Greek economy's struggle with productivity is a reflection of its unique business landscape. The dominance of low-labor-intensive service sectors and the reliance on SMEs, particularly very small enterprises, are structural challenges that need to be addressed. Increasing investments in technology and innovation, especially in the service sector, is crucial for boosting productivity. The Greek economy needs to find a balance between its traditional strengths and the need for technological advancement to compete effectively in the global market.
In conclusion, the Greek economy's productivity lag is a complex issue that requires a multifaceted approach. By focusing on increasing investments in technology and innovation, especially in the service sector, and addressing the structural challenges within the business landscape, Greece can bridge the productivity gap with the EU and achieve sustainable economic growth.
