Although the Greek economy has progressed significantly since it was plunged into the depths of financial hell during the government debt crisis of 2009, Greek industry still lags behind, according to a policy paper published late last year.
The policy paper was published in December 2022 by the Hellenic Foundation for European & Foreign Policy (ELIAMEP). Economic researchers from the Bank of Greece and several universities collaborated to produce the report.
The researchers examined evidence relating to Greek industry, manufacturing, workplace skills, and management practices. Several policy recommendations are also offered.
Weak points in Greek industry
“Greece remains a laggard among peer countries in various domains that are critical for sustainable long-term growth,” the policy paper says. “The production structure remains largely unchanged and domestic output still lacks sufficient knowledge-intensive characteristics.”
According to the researchers, “Greece has so far failed to shift its production structure towards more complex, high value-added activities, incorporating knowledge-intensive practices.”
Skills and qualifications
The researchers found that one problem plaguing Greek industry is a mismatch between the skills and qualifications required by employers and those offered by potential employees. This has created a supply and demand problem within the Greek labor market.
According to the policy paper, “a major problem facing the Greek labor market is the relatively large share of low-skilled individuals.” This means that Greek employers may be unable to fill vacant positions with appropriately qualified individuals.
The researchers also point out that “Greece had one of the lowest overall scores in the European Skills Index (ESI) survey of 2022,” an indicator that the Greek labor market is in worse shape than most of its peers in the European Union.
The research also demonstrates that Greek industry is simultaneously suffering from the opposite problem, overskilling. Overskilled employees underutilize most of their skills in their job, which may lead to decreased wages and reduced job satisfaction. It is also inefficient for the economy as a whole.
The researchers drew on data from the Programme for the International Assessment of Adult Competencies (PIACC). PIACC’s data shows that approximately twenty-eight percent of Greek workers are more proficient in literacy than their job requires. This is much higher than the OECD average of 10.8 percent.
Management is important as a key driver of growth. Studies have shown that better management leads to higher productivity and other high-performance indicators within firms.
The researchers examined a datasheet of average management scores recorded across advanced economies by the World Management Survey (WMS). According to this survey, Greece scored the lowest among other OECD countries. The researchers also found that “the quality of management practices in Greece is highly uneven.”
Based on the study, management practices across Greek industries varies. Multinational firms tended to perform better than domestic firms. Interestingly, the Greek branches of multinational firms performed on par with or better than branches of the same multinationals in other countries.
The policy paper also explores the differences between Greek firms that only operated domestically and those with operations abroad. The firms with overseas operations were found to have more efficient management practices.
Regarding specific management issues within Greek industry, the report says that “Greek firms are lacking in performance tracking, clarity and comparability of goals, as well as process documentation, through which these goals can be achieved, and they also fail in developing talent and promoting high performers.”
Greek industry performs adequately at lean manufacturing techniques, talent retention, and employee satisfaction.
To summarize, “Greek firms do worst in issues requiring people management, planning, and oversight requiring synergies, dialogue, and collaboration. They do best in issues requiring decision-making, possibly by a single individual.”
Innovation and technology
The policy paper asserts that Greek industry is generally slow to uptake innovative practices and technology. This can negatively affect their long-term competitiveness.
More specifically, “Greek manufacturing firms appear to perform in general rather poorly concerning usage of Big Data and data analytics as well as the introduction of new business models suitable for online operations.”
The study also found that smaller-scale family firms are less likely to adopt business practices associated with digital transformation.
At the end of the policy paper, the researchers propose twelve policies to address issues affecting the labor market and professional skills, management practices, and innovation and technology adoption.
To address problems affecting the labor market and professional skills, the researchers propose the following:
- establishing and promoting university-industry cooperation schemes
- maintaining a balance between formal education, in-firm training, and lifelong learning
- maintaining a balance between formal and tacit curriculum in Greek universities
- promoting student networks, including those which deal with issues related to their studies or offer volunteering opportunities
- upgrading secondary and upper secondary technical-vocational education and training
To improve the quality of management in Greek industry, the following policies are proposed:
- engaging in changing business culture and management practices in Greek
- encouraging HR departments to focus on the managerial skills of firm employees and the
selection processes of managers at different levels
- dealing in a professional way with the problem of succession in Greek family firms
- promoting joint ventures and other forms of cooperation between professionally
organized and managed firms and traditional family-managed firms
Finally, to encourage the adoption of innovative practices and technology, the policy paper advises the following:
- establishing a bottom-up technology transfer initiative
- activating university administrative capacity to promote the diffusion of academic
research into industry
- building the capacity of public bodies to conduct procurement, aimed at developing
innovation (Public Procurement for Innovation) and enhancing their digital capabilities and the provision of electronic services