Why productivity stays low
Labor productivity in Greece remains low compared to Europe, according to the annual report of the Hellenic Productivity Council highlighting a permanent weakness of the Greek economy.
By contrast, the total productivity of the factors of production have increased in the last four years at three times the rate of the corresponding European one and shifted back to the average rate of the latter.
According to the data in the report, labor productivity in employed persons in Greece is approximately 61% of the EU average and 55% of the eurozone average. Accordingly, Greek productivity in working hours is approximately 49% of the EU-27 average and 43% of the eurozone average.
Professor Panagiotis Liargovas, president of the Center for Planning and Economic Research (KEPE), to which the Hellenic Productivity Council belongs, explained to Kathimerini that the low performance of the Greek economy in terms of labor productivity is mainly due to the non-use of technology at work, as well as the failure to achieve economies of scale.
Combined with the country’s demographic problem, which is expected to become more acute over time, low productivity is a serious inhibiting factor for the development of the economy. “Reforms are key,” he stresses speaking about what should be done.
In this regard, the report notes, “Determinant for the realization of the expected growth dynamics of the economy is, on the one hand, the increase in the utilization of the labor force – a key factor – taking into account the medium and long-term adverse effects of the aging population, and on the other hand, the significant increase in fixed capital investment, especially in the business and high-tech sectors of the economy.”
Also of interest is the report’s commentary on the Recovery Fund, which will indeed lead to an increase in GDP by 13.7 billion euros, or 8.3%, and in employment by 400,000 jobs or 10.5% compared to 2020. However, that “may not be fully aligned with Greece’s long-term strategic goals due to its over-reliance on specific sectors, notably construction, which cannot adequately support the broader goals of equitable growth.”
