Capping a week in which Swiss company Schiesser Pallas said it was closing its Athens factory and US tobacco giant Philip Morris bought out Greece’s biggest cigarette maker, Papastratos, the Federation of Greek Industries (SEV) yesterday lamented the failure to attract foreign direct investment and warned of a possible surge in unemployment. «There is a serious danger of the jobs being lost not being replaced by new opportunities and unemployment soaring from 10 percent to perhaps 18 percent,» said SEV President Odysseas Kyriakopoulos. He cited a climate that is unfriendly to business, strategic mistakes in vocational training with EU funds and problems in education that affect competitiveness and employment. Schiesser Pallas’s decision to seek cheaper labor elsewhere for its Palco label has received great publicity as some 500 workers are to be left unemployed. The Labor Ministry is trying to reach a deal to keep the factory going. But since 1996, more than 400 Greek clothing companies have transferred most of their production activities to Bulgaria, the Former Yugoslav Republic of Macedonia and other countries, at a loss of about 35,000 jobs in Greece. Gross labor costs in Greece’s neighbors are about one-tenth of the cost here, according to the Hellenic Fashion Industry Association (SEPEE). SEV yesterday released an Economist Intelligence Unit report which noted that Greece attracted a mere $1.6 billion of foreign direct investment (FDI) in 2001, or 1.3 percent of GDP, and was estimated to have dropped to $1.3 billion in 2002. Greece was placed 18th out of 22 European countries for the FDI it attracted from 1998 to 2002. The report forecast that Greece would continue to attract less direct investment between 2003 and 2007 compared to other EU members and countries of Eastern Europe. Greece is expected to attract an average annual FDI of $1.7 billion over this period, with FDI in Europe expected to drop to $379 billion over the five-year period, from $429.7 billion in 1998-2002. The report cited problems in Greece that include red tape, undeveloped transport and telecommunications infrastructure, relatively high taxation, delays in privatization, a high rate of State intervention, instability in the Balkans, a small local market and great distance from European markets. Positive factors included political stability and the breaking of State monopolies.