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 contributor to this challenge. These SMEs, which account for a large percentage of workers, especially in low-labor-intensity sectors, are the backbone of the Greek workforce but fall short in terms of output. 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, a stark contrast to the EU average of 60.9%. This disparity highlights the need for a closer examination of the factors hindering productivity within these SMEs.
One critical aspect is the size of these enterprises. Almost half of Greek employees (47.5%) work in very small businesses with fewer than 10 staff, which often struggle to reduce costs and invest in new technologies. This is in stark contrast to the EU, where only 30.4% of employees are in such small enterprises. While these small businesses play a crucial role in employment, they contribute a mere 23.5% of gross value added (GVA), significantly lower than the EU average of 20.4%. This data suggests that the structure and capabilities of these SMEs may be a key factor in the productivity gap.
In contrast, large enterprises with at least 250 employees, which are more labor-productive, employ a smaller percentage of the Greek workforce (15.4%) but produce a substantial 41.7% of GVA. The EU, however, showcases a more balanced distribution, with large enterprises accounting for 36.3% of employment and generating 48.3% of GVA. This imbalance in the distribution of employment and output between SMEs and large enterprises further emphasizes the need for structural changes to boost productivity.
The Greek economy's heavy reliance on service sectors, such as food service, accommodation, trade, and transport, also contributes to the productivity challenge. These sectors, characterized by low labor intensity, result in lower productivity compared to industries that rely more on machinery and technology. The service sector, employing approximately 37% of workers, generates only about 25% of total GVA, while industry, employing 9.5% of workers, produces 15.2% of GVA, indicating a significant improvement in recent years.
The drop in productive investments during the crisis is another critical factor. Despite a marginal recovery in investments as a percentage of GDP, reaching 16.9% in 2025, this figure remains lower than the pre-crisis level of 2010 and still lags behind the EU average. This continued disparity in investment levels highlights the need for sustained and targeted efforts to enhance productivity through increased investment in technology, training, and infrastructure.
In conclusion, the Greek economy's productivity challenge is a complex issue, with SMEs playing a significant role in this context. The structure, size, and sectoral distribution of these enterprises, as well as the level of productive investments, all contribute to the productivity gap. Addressing these factors through strategic interventions and policy measures is essential to fostering a more productive and competitive Greek economy, one that can better align with the EU's standards and contribute more robustly to the global economy.
