The Greek economy's struggle with productivity is a multifaceted issue, and the high number of small- and medium-sized enterprises (SMEs) is a significant contributing factor. While SMEs are the backbone of many economies, their impact on productivity in Greece is notably lower than in the European Union (EU).
According to Alpha Bank's insights, 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 particularly striking when considering that SMEs employ almost half (47.5%) of Greek employees, compared to 30.4% in the EU. This imbalance suggests that while SMEs are crucial for employment, they may not be as efficient in terms of productivity.
One of the key reasons for this is the size and nature of these enterprises. Very small enterprises with fewer than 10 staff find it challenging to reduce operating costs and invest in new technologies, which are essential for boosting productivity. In contrast, large enterprises with at least 250 employees, which are more likely to have the resources for such investments, account for a larger share of employment (15.4%) and gross value added (GVA) (41.7%) in Greece compared to the EU.
The Greek economy's heavy reliance on service sectors, such as food service, accommodation, trade, and transport, also contributes to the productivity gap. These sectors are low-labor-intensive and have comparatively lower productivity. In contrast, industries that rely more on machinery and technology, such as manufacturing, have shown significant improvement in productivity in recent years.
The drop in productive investments during the crisis is another factor behind Greece's productivity lag. While investments as a percentage of GDP have recovered in the last five years, reaching 16.9% in 2025, this is still lower than the EU average. This suggests that the Greek economy needs to do more to attract investments and encourage productive spending.
In my opinion, the Greek government should focus on creating an environment that encourages large enterprises to invest in new technologies and expand their operations. This could include providing incentives for investments in machinery and technology, as well as supporting the development of high-value-added industries. Additionally, the government should work on improving the business environment for SMEs, such as reducing red tape and providing access to financing and training.
What makes this particularly fascinating is the potential for growth in the Greek economy. With the right policies in place, Greece could become a hub for high-value-added industries, attracting investments and creating jobs. However, it will require a significant shift in the economy's focus and a commitment to long-term productivity gains.
In conclusion, the Greek economy's productivity gap is a complex issue that requires a multi-faceted approach. By addressing the challenges faced by SMEs, encouraging investments in high-value-added industries, and improving the business environment, Greece could unlock its full potential and become a more productive and competitive economy.
