According to news from Tornos and int.ert.gr, Prime Minister Kyriakos Mitsotakis is quoted saying; “Greece needs to become attractive to investors in five ways, not simply over low labor cost.” The Greek leader was in a videoconference presentation of the final draft of the Pissarides Committee report on developing the Greek economy. If the Greek PM is serious, then Greeks can expect some drastic changes in the way tour companies and even individual tourists view the destination.
Mitsotakis stressed that Greece’s comparative advantage should focus on taxation, the quality of Human Resources, the operation of the state, transparency, and the independence of institutions. He emphasized that the country must not become a low-cost investment destination.
According to Trading Economics, even despite the negative effects of the pandemic, Greece seems to be hanging on in terms of unemployment. However, the chart below shows the current situation of Greece in a perilous situation. The problem with these figures is that officials might be tempted to sell Greeks short in order to elevate these figures.
source: tradingeconomics.com
The basis for Mitsotakis’ comments is certainly to do with Greece’s labor system being gutted by the EU and previous administrations. Pay and pensions for Greece’s workers have been chopped until there is little left for the people to live on. And this has a dramatic effect on GDP and overall stability. Greece is now the Mt. Olympus of part-time and low wage workers. Mitsotakis knows that rock bottom has been reached, and with the situation inflamed by a devastating pandemic, predatory investing will only explode the already flammable situation.
The Organisation for Economic Co-operation and Development (OECD) just released recommendations for rejuvenating Greece’s labor market last month. The report frames how horrible employment outcomes, especially for youth and women, cannot deliver Greece to where it should be internationally. The so-called “brain drain” Greece has suffered from, will only become more irreversible should the country be turned into a veritable banana republic wage wise.
Nowhere is the situation more indicative than the tourism industry, which accounts for almost one-quarter of Greek GDP. Also, Greece’s economy is supported by EU aid to the tune of 3.5% of GDP. The low quantity and quality of jobs in Greece can be attributed, in part, to the kinds of investments Mitsotakis is referring to in his statement.
In fact, lifting Greece from the basement of OECD countries job-wise, has a lot more to do with elevating the tourist experience, than with just about any other facet of service. Services, by the way, account for most of the profits businesses in Greece glean. The short to mid-term demand for travel is going to hit Greece harder than any nation in Europe, with the possible exception of Spain. Continuing to devalue Greece by making the country into a cheap tourism attraction, will spell disaster, and soon.
The Transforming Tourism Initiative, an open global network of NGOs, tourism practitioners and academia trying to transform tourism in line with the 2030 Agenda on Sustainable Development, offers key insights on all this. According to these experts, the quality of the jobs created and their effects on local populations need to be factored into any thinking about sustainability, which is what Mitsotakis’ administrations says is its goal. But let’s face it, creating the right kinds of jobs with the right benefits cannot be accomplished at rock bottom prices. Which is what huge corporations like TUI are constantly striving for.
Finally, I am not alone in asserting that Greece needs to up the game with regard to premium travel. Even the investors the Greek PM is referring to, are being advised to consider a new kind of Greece value proposition. This, V.K. Premium Business Consultants clues the reader as to what I mean:
“The tourist industry is currently undergoing a major strategic improvement initiative, focusing on the expansion of the tourist period, the attraction of higher-value tourist segments (High-net-worth, affluent), the increase of average daily spending, and the opening of new tourist markets.”
Mitsotakis’ words must be taken with a grain of salt, however. The reason being is that he and his Tourism Minister has been running about proclaiming Greece’s model as “pioneering in sustainable tourism development.” Harry Theoharis also addressed the 5th EU-Arab World Summit earlier this month saying the government has made significant structural changes to eliminate red tape to create an investment-friendly environment. Prime Minister Mitsotakis was at the same meetup predicting a boom economy in Greece after COVID-19, and selling hotel and tourism sector potential.
So, while it is easy to see the path to a sustainable future for Greece, the hard part for Mitsotakis or any Greek leader is going to be walking all the way down this path. While Mitsotakis and his ministers are fond of blaming the former SYRIZA leadership for Greece’s problems, talking from both sides of their mouths is not helping New Democracy politicians either.