Mixed News on the Investment Front

The past two weeks have seen some apparent good news in terms of investments in Greece:

·         On September 29^th, the Public Power Company (ΔΕΗ) announced on a strategic investment of up to EUR 2.0 bln in renewable energy projects in cooperation with EDF Energies Nouvelles, the renewables energy division of Électricité de France (EDF), the world’s largest electricity generator. This cooperation is studying at least two investments: a 250 MW wind park in Florina as well as a hybrid unit in Crete which includes 90 MW generation with energy storage. EDF and PPC are already cooperating on a 38 MW wind park in Beotia.

·         On September 23^rd, the government signed a non-binding memorandum of interest for up to $ 5 bln with the Qatar Investment Fund. A committee will be formed to investigate likely investment projects in Greece in the areas of tourism, real estate, transport, infrastructure and energy.

·         The Skaramanga Shipyards deal was approved by Parliament on September 29^th. This allows Abu Dhabi Mar to take control of 75% of the Skaramanga Shipyards, leaving 25% in the hands of Thyssen. The government also approved the order of two additional submarines in addition to the four submarines on order.

·         The Prime Minister of China, Mr. Wen Jiabao, is visiting Greece tomorrow, and is expected to announce his support of the efforts being taken to restructure the public sector and improve investment. Among the topics that will be under discussion include COSCO’s investment in Piraeus and other potential areas of cooperation.

As with all things, we need to evaluate these investments carefully:

Renewable Energy and Market Distortion

Although investments in renewable energy are considered a priority sector, this sector is only competitive given subsidies for construction/installation, and/or a green feed-in tariff. The sector remains dominated by a government monopoly, the Public Power Corporation, and a government regulator, which by its own admission faces a critical shortage of staff, and therefore can be inferred not to be working particularly effectively. PPC’s prices are regulated by government, and in past years PPC has incurred major losses as part of a social policy of keeping energy prices low to reduce inflation.

The experience from Spain, Portugal, Germany, the United States and other countries shows that without a long-term, stable incentive (typically in the form of a high feed-in tariff for 15-20 years), renewable energy is still not competitive with coal, natural gas or petrol-fired plants. The over-supply of investment in renewables in these countries has prompted many governments to reduce the green feed-in tariff as unsustainably high, even before the current fiscal crisis hit.  

In Greece, therefore, the main risk is that just as the government has unilaterally slowed down VAT reimbursements to enterprises, it will not be able to pass on either the investment incentive, or maintain a high feed-in tariff. The fact that the government is de facto  supporting its monopoly, the PPC, also indicates that the future development of this sector will be similar to many other sectors where the government acts through “national champions,” which are typically over-staffed by political appointees, have low productivity, and incur high debt.

We therefore evaluate any investment in the renewable energy sector in Greece as being of high risk, given the public sector framework in terms of pricing and Greece’s deteriorating public sector finances. Any investment in this sector should be designed as far as possible for direct sales to private sector clients, or for export, in order to mitigate risk.

Skaramanga Shipyards

The Skaramanga Shipyards deal is hardly a new investment: it is the resolution of a long-standing legal conflict between Greece and HDW/Thyssen, which has been simmering for at least 7 years now. In order to sweeten the deal and apparently safeguard employment, the government has ordered two new submarines, which it cannot afford, and which it does not need given the far more pressing situation in terms of air superiority in Greece’s national defence policy. Unless Abu Dhabi Mar can bring in new contracts from outside Greece, the impact of this deal—which is again, a government-funded transaction—will merely result in higher government expenditure and major economic problems within 2-3 years. Assuming a 24-month construction period, Greece will be trying to find funding to pay for 2 submarines (at least EUR 800 mlnbefore cost over-runs) in 2013-2014, precisely at the time when it has to roll over the EUR 110 bln bail-out loan as well as other private sector loans. Past government announcements have stated that some of the submarines can be sold onward to third parties: let’s hope this is actually the case.

China / Qatar

In both cases, the initial high potential of investments has proven much more difficult to implement in practice. In the case of COSCO, it found that the militant unions prevented the rapid change of management at the Piraeus terminal, and currently COSCO faces a EUR 38 mln delayed VAT refund. In the case of Qatar and the Astakos port, it found that the prices offered by Greece and other customers for natural gas was less than optimal in terms of market attractiveness.

In both cases, we see that state-sponsored capitalism in Greece is very different from that practiced in Qatar or China, where a government decision can actually be implemented very quickly. The incident of the Rhodes Airport driver who apparently crashed his transfer bus into the engine of the Emir of Qatar’s stationary jet, didn’t help matters. The two basic questions for state investors from any country into Greece are:

a.       Will the Greek government honour its commitments?

b.      Even if its wants to honour them, will the government remain solvent in 2013-2014?

Given all that we’ve seen in the past 12 months, these are not easy questions to answer in the positive sense.

My viewpoint is that although there are definite investment opportunities in Greece, it’s necessary to design the investment taking the following sensitivities into account:

·         Don’t count on receiving VAT refunds or investment incentives (grants/loans/tax holidays): if these do arrive, it’s an upside. Design your business plan without them.

·         Locate your investment as close as possible to multiple transport links and assure a minimum supply inventory of at least 25-30 days, or enough to ride out the frequent disruptions to the national transport network.

·         Structure your product or service offer to avoid high losses due to cut transport links, strikes, power outages, etc.

·         Prepare for redundant systems in every area, but particularly for energy generation: install back-up diesel generators or other energy sources.

·         Assure that at least 50% of output is exported to reliable markets and customers.

·         Have an independent source of working capital, if possible from abroad, because the Greek banking system is no longer able to provide working capital at reasonable rates, and because the future, hidden risks in the system are mounting. 

Once these costs are taken into account, it becomes clear that, together with high taxation on corporations (Societes Anonym-S.A.), high payroll taxes and high processing costs for basic elements such as permits, licenses, etc., Greece is not a very attractive place to do capital-intensive business. Although we have been hearing rhetoric from the government over the past 12 months on how it will improve the operating environment, so far nothing has been done, and it’s not clear the government actually understands what needs to be done.

Any investment decision should be approached with caution, a business plan weighted to the downside, and a very strong risk mitigation strategy. The superficially positive announcements made often bear little resemblance to the reality of day-to-day operations in Greece.

Letters from the Καφενείο

Yesterday I learned (from management sources) that a leading global firm with operations in Greece was audited here. The auditors showed up and requested that for the audit in northern Greece, the firm provide the audit team with 5* hotel accommodation, all room/dining expenses paid, a woman in every room at night, and a chauffered car from the hotel to “work”. The firm, which would have passed the audit anyway, but didn't want to get into a protracted legal and procedural battle, gave in to these demands, and passed the audit with flying colours. Yet another facet of business management that won’t make it into the HBR case studies.

Last week, the press reported that COSCO, the Chinese shipping/transport firm that privatised [part of] the port of Pireaus, was complaining about EUR 38 mln in unreturned VAT from the government. The press also reported that for the construction sector alone, there was EUR 1 bln in unpaid VAT. Other acquaintances report massive delays in both VAT as well as European subsidies for investments made. These investments have been audited and approved, but the EU money is nowhere to be found. I have to ask, with reports like this commonplace in local and international press, exactly how much credibility the Ministry of Finance’s revenue numbers have, and whether an official rebuttal or answer should be given by the government on this issue, given its interest in attracting more foreign investment.

Some years back I was drinking a Saturday late-morning beer (those were the days!) with a friend in Kolonaki. The friend, said half-approvingly: “To win this project, we paid the equivalent of 300 Mercedes S-600s.” That’s one for every member of Parliament. Just think of the savings Greece could have if we reduced the number of Parliamentarians from 300 to 200. Or to 150. Or just sub-contracted the job to Luxembourg.

Perhaps saddest of all was the news reported today in Kathimerini, that the Acropolis Museum restaurant was closing. This restaurant, despite some glitches in service, was a marvel, where you could get a cold espresso or a fresh juice for EUR 2.50, in the otherwise cut-throat tourist centre. Apparently the operation was being done using temporary staff, who’s contracts were no longer being renewed. Equally strange was the report that despite EUR 80,000 per month in revenue, the restaurant was not breaking even. Now that Mr. Samaras is no longer Minister of Culture, does this mean that the Museum might hire some employees who are not from Messinia? Whatever the provenance of its staff, expect higher prices. 

Why doesn't the government enforce the law?

I have been watching the news of the past 24 hours, and honestly fail to see where this country is going. What is so disturbing to me is not so much the news itself, as the fact that major crimes are allowed to occur in broad daylight, with no consequences for the criminals. Let’s look at just two examples:

The Truckers’ Strike

The strike of truck owners and drivers continues, now in its third week. They are implementing a stop of all transport activity as a means of protest against the law on liberalisation of transport professions, which passed in Parliament on September 22^nd.

As a result, according to the Athens Chamber of Commerce and Industry, there are:

·         over 6,000 containers “locked” in port – some reports speak of 13,500 containers

·         over 2,500 employees have been laid off

·         at least 120 major enterprises are idling or working reduced shifts

·         over EUR 2 mln per day in lost turnover is being incurred by enterprises.

Two things are stunning about this development:

a.       The law passed with the condition enabling truckers to depreciate the full cost of their license as a business expense over 3-7 years. In other words, the fee paid for their license is tax deductible. This is regardless of how many years the truckers have already been operating, or the fact that, under standard business practice, this depreciation should have already been factored into pricing and contracting.

b.      The truckers have been mobilised, or drafted into the military, since July to prevent fuel shortages. Yet today the truckers are on strike, parked at the side of the road, blocking other truckers from crossing the picket line, blocking trucks from loading on ships, etc. Although one expect such behaviour to be doubly illegal (illegal once for blocking legal movement of goods and passenger traffic, and illegal a second time because they have been mobilised), this strike is apparently not a strike. It’s a work stoppage (παύση εργασίας). In my opinion, it’s treason, and should be treated as such. Either they have been drafted, or they have not. 

In the meantime, Bulgaria has once again protested about the second major blockage of transport in 2 years (the first was the farmers in 2009-2010), while the European Commission has recommended Greece be taken to court for violating European law on the liberalisation of transport professions, which should have been done 5-10 years ago.

Once again, we are in a situation where a small handful of people enjoying disproportionate profits in a closed profession are able to shut down a country, despite the presence of legislation to the contrary. Instead of acting to force legal compliance, the Prime Minister was speaking at an educational conference in Delphi, with yet more proposals to “revolutionise” the higher education sector. Not a single thing has been said about the economic crisis affecting the business sector, which is now exacerbated by the truckers’ strike.

The irony, of course, is that if any private citizen followed the same tactics as the truckers, we’d be put in jail immediately. The other irony is that the vast majority of Greek businesses and citizens are tired of the illegal and extortionate behaviour of a minority, yet the government does not enforce the laws of the land. 

I suggest that if the truckers are not off the blockades and back at work within 24 hours, three corrective mechanisms kick in:

a.       Anyone found blocking the road, a harbour or railroad or other public place, or preventing another business or citizen from implementing their lawful activity is arrested and prosecuted and their vehicles be impounded.   

b.      The government issues 12-month, renewable licenses at EUR 500/license to anyone wishing to set up a transport company (who complies with the legal requirements for driving licenses), including through the use of rented vehicles.

c.       The real army and the police be mobilised and deployed to assure the free movement of goods within the country, and through its border posts, airports, and ports. 

Enough is enough.

The Vatopedi Scandal

The other amazing finding which has been making its round of the news programmes and print media is that New Democracy is claiming that there is no evidence that the Vatopedi land exchange resulted in a loss for the Greek state. To my vast surprise, I read today in Kathimerini that

The state’s official evaluators have delivered two reports on the property swap and neither was able to establish that the deal had left taxpayers worse off. The evaluations were both scrutinized by independent property evaluators, who found that the state officials had got their sums right. The parliamentary committee investigating the swap has now ordered a third evaluation.

This is simply unacceptable. The Vatopedi scandal resulted from the illegal exchange of commercially useless wetlands around Lake Vistonida, which were claimed by the Vatopedi monastery, against prime seafront land and government property, including parts of the Olympic village. Anyone with a calculator and a list of assets exchanged is able to calculate the relative value of the properties exchanged.

Over 24 months later, neither government has implemented a true forensic accounting of what should be obvious: that a major financial crime was committed against the Republic of Greece by the monks of Vatopedi, certain members of both parties, and a shady network of offshore companies, contractors and intermediaries. If the government is not in a position to correctly value the damage from the land deal, and has not done so already, then I suggest the following corrective measures:

a.       Fire the official evaluators who are not in a position to draw the obvious conclusions for gross incompetence and negligence;

b.      Force all members of the Parliamentary committee investigating Vatopedi to resign on ground of gross incompetence and appoint new ones;

c.       Censure and fine the current and former Ministers of Justice for neglect of duty and gross negligence; force them to leave Parliament;

d.      Investigate and prosecute any member of the government or the judiciary found to have covered up testimony or not followed the full letter and meaning of the law in this case;

e.       Turn the case should be turned over to an objective, independent forensic accountant selected by international tender within 1 month. Assure that this firm has the full backing of Greek and Cypriot governments–much of the money laundering occurred through Cyprus, and if that government does not cooperate, the Greek government should quite simply withdraw its military forces from the island and begin a tax audit of every Cypriot company operating in Greece;  

f.        The report will not take more than 3 months to publish, and the case should be turned over to an independent prosecutor with a mandate to make criminal charges and claw back the lost funds. If this means expropriating Vatopedi and turning it into a hotel, so be it. There are more than enough remaining monasteries and churches in Greece, and perhaps this will encourage them to respect the laws of the land and, possibly, even pay their taxes.

If the problem is a legal one, then the laws should be changed, since in this case they are a disgrace and an insult to the citizens and residents of Greece.

If any private citizen attempted to follow such a practise, he would be laughed out of the courtroom. Why is there a different standard in this case? How much money was made, who was implicated, and how many bribes were paid, for there to be a legal deadlock in what is a painfully obvious case of financial crime?

But instead of a search for a solution, Greece’s elected leaders search for political blame. Instead of real measures to reassure investors and its own citizens that Greece follows the rule of law, we have endless dithering and political committees. In the meantime, we are sliding rapidly into a deeper recession, while our international reputation deteriorates still further.

I can’t imagine why Cosco or Abu Dhabi Mar or anyone else would want to invest in Greece given the illegal transport blocks, the militant and illegal unionism, the illegal delays in VAT reimbursement and the long string of broken promises the Greek government has given to its citizens, and to the investors that entrust it.

Both these cases should have served as a litmus test in which the government stood up to illegal behaviour and enforced the law. Instead, it has failed, and we will be paying the price into 2012 and beyond. And in the meantime, the same corrupt political class will be elected in the regional and local elections in November, and apparently nothing will happen. But maybe we will have a revolution in higher education.

Flaming Garbage Cans: Greece’s Transition to the Second World

One of the strangest sights I’ve seen were the flaming garbage cans of the new Athens International Airport back in 2001-2002. AIA is a modern, efficient airport: of all the European airports I use, it’s one of the best in terms of accessibility and ease-of-use. But if it’s such a great airport, why were the garbage bins on fire?

Back in 2001 when AIA was commissioned, all flights were required to become non-smoking flights. For the average Greek traveller, this was a cruel torture. They would deplane in Athens after a four hour flight from Heathrow, shaking with impatience and suppressed rage, and light up while on the airport bus or at the foot of the escalators.

Since the terminal was also a non-smoking area (smokers’ corners were later installed), there was nowhere to put the cigarette butts, except in the garbage cans. So nearly every time I flew into Athens between 2001 and 2002, I would see smoke and flames rising from these ubiquitous receptacles.

This memory of flaming garbage cans in a shiny new airport illustrates for me where Greece finds itself now. In the 50 years after World War II and the Civil War, Greece transitioned from a Third World to a Second World country. Its ability to become a First World Country, long cherished by its political classes and the majority of its citizens, remains illusive.

Greece lost some 10% of her population and most of her industry between the Nazi occupation in 1941-1945 and the Civil War in 1946-1949. When these conflicts subsided, Greece was in ruins. The reconstruction effort, supported by the Marshall Plan, the Greek diaspora and the efforts of the government and population itself, was responsible for re-creating a country. Roads, ports, airports, and cities were re-built or, indeed, built for the first time.

The rush to rebuild, or indeed create, modern Greece on the ashes of these two conflicts has been unprecedented in Greek history. Although we tend to forget these things, the Greece of 2010 is very different from the Greece of 1960:

·         In 1960, the large-scale trend of urban migration was well underway, transforming metropolises such as Athens and Thessaloniki, which were in no way prepared for the influx. From an agrarian, rural country, Greece was transformed into an urban country in the space of less than 30 years, or about one generation. This was then exacerbated in the 1990s and into the present decade with the influx of a further 1 million illegal economic refugees and migrants from the former Soviet bloc and other less-developed countries.

·         In 1960, the ratio of early school leavers was high and university graduates was low. Although this trend has been reversed, thanks in no small part to the European Union, it’s clear that the educational system has not been able to modernise or transform itself at the same rates as the economy and society in which it is embedded. While quantitative targets may have been implemented, qualitative targets have not.

·         In 1960, the large majority of rural areas were still without electricity, indoor plumbing, running water, municipal sewerage, telephone access, or a range of other amenities. My mother, for instance, grew up in a village house where the only source of fresh water was from the village spring. Today, of course, the situation is vastly different. You can (theoretically) sign up for ADSL service in the countryside; electricity and water provision are available, and despite the odd problem, the situation is far better than it was 50 years ago.

This development has come at a financial price. Greece has had to invest high amounts to achieve a basic level of living standards. Anyone in doubt as to the actual benefits of Greece’s development should visit rural areas in Hungary, the Czech Republic, Bulgaria or Romania to see the difference.

Unfortunately, Greece has chosen to implement this investment primarily through the state. If the state organisations were as efficient and transparent as, say, Singapore’s, this could have been done at a lower cost, and more rapidly. But Greek state organisations are not interested in efficiency or transparency: they are primarily mechanisms to assure political loyalty to the two main political parties. This is ironic, since both parties profess to be against clientilism, corruption and inefficiency, yet both parties do their best to further precisely these attributes.   

The image of the flaming garbage can for me illustrates Greece’s struggle to transition from second to first world country.  How do I define a first world country?  

·        Political maturity. Greeks are increasingly sceptical of government and the promises of its political classes. The standard political approach of sloganeering or the search for external or internal enemies, is present, but is less valid.

·        A desire for higher quality public services. Greek citizens want quality education and healthcare. The achievements of the past 30 years, which saw the foundation of basic services across the country, are now no longer enough. Trading a vote for a place in the government has also lost its allure, at least among the upwardly-mobile professionals.

·         Higher productivity. Greece today is a Second World country with emerging pockets of world-class productivity: Athens International Airport; the Attiki Metro; Aegean Airlines; high-speed ferry operators and shipping groups such as Blue Star/High Speed Ferries; banking groups such as Ethniki, Alpha, Marfin, Eurobank or Pireaus Bank, which have expanded beyond Greece’s borders and control a significant share of banking in the region. Other notable cases include natural resources and energy companies such as Titan, Mytilineos or Motor Oil; food processors such as Vivartia; tourism groups such as Grecotel. In the future, this same productivity will extend to smaller companies now making their drive towards internationalisation.

·        A desire for greater personal mobility. Greek citizens above all want the assurance of an economy which offers them a meaningful career and personal development. The older model, of working for a single company over a lifetime, or working in the public sector, are less attractive that we may believe. Particularly younger Greeks, or professionals returning from abroad, are leading the way in this respect.

·         An emphasis on accountability. In theory, at least, citizens are against the status quo of statism, clientism, or corruption. While actual behaviour contrasts markedly with the idealism expressed, (e.g. many complain, but continue to bribe or avoid the law), more and more citizens and voters want to see effective public services which do their job properly.

·        Greater social involvement. The number of NGOs and other organisations emphasising volunteerism and community service has skyrocketed in recent years. This is highly encouraging, as it shows that citizens are concerned and will contribute if the correct framework is available.

·         Environmental integrity. Even before the massive fires of 2007 and 2009, Greek citizens have been taking a greater interest in the environment. We can only hope that this trend will accelerate in the future.

I see these trends occurring in every domain of public life: politics, public administration, business, social work. Yet three major questions remain:

a.       Can these changes actually materialise in a systematic way given the traditional deficiencies of the public and private sectors?

b.      Can Greece survive the dramatic public debt situation, and in the process transform the public sector from the corrupt morass of the present day into something leaner and more efficient in the future?

c.       Have Greece’s political parties and citizens really accepted the need for change, and do we see demonstrable indications of a new form of political, economic and social interaction?

To my considerable dismay, the answer I would give to these three questions is negative. The changes forced by the recent debt bail-out have been accepted in theory, but rarely in practise. Five of the six parties in Parliament are actively campaigning against the “Memorandum”. Few of the government reforms introduced over the past 6 months have truly addressed the needs of the sectors they purport to regulate, and few comply with the letter and spirit of EU law. Implementation is everywhere delayed, and the true magnitude of public revenue and expenditure numbers is increasingly open to question.  

Any objective observer reviewing the current local and regional elections will immediately conclude that nothing has changed. There is no vision, no coherent plan, few new faces with an idea of what is actually going on. It’s the same tired slogans, the same party hacks, the same intra-party manoeuvres. What real political choice is there? What political responsibilities exist when the same parties nominate the same members of a failed political class for power?

And finally, any objective observer would be shocked by the standards of public life and social intercourse in Athens and nearly everywhere in Greece. Whether queuing at the supermarket, or driving to school, or walking on the sidewalk, or travelling by ferry, there is remarkably little consideration for one’s fellow man. Public behaviour is as far removed from the cherished values of “philotimo” or “philoxenia” or even “philhellenism” as the planet Pluto is from the sun.

With democracy and freedom come the fundamental responsibility of self-respect and respect for one’s fellow citizens / residents. This is the grand paradox of Greece: despite decades of investment and relative political stability since 1974, the standards of public life and public service have slipped further than ever.

While the past traditional values were sufficient to help Greece survive through civil wars and occupation, these values have been so eroded in the last 30 years as to make Greece an essentially ungovernable country. We may have increased enrolment in public education, we may have increased the number of hospitals, and we may have better banking and internet access, but we have still not accepted the need for self-respect and respect for others.

This can neither be mandated nor legislated by government, nor by the Troika or any other “external enemy”. It cannot be bought with European subsidies or Goldman Sachs loans. It can only be done by the Greeks themselves.

Thoughts on Emigration from Greece

The New York Times ran an article on September 14^th entitled Young Greeks Seek Options Elsewhere, which comprised a series of vignette-style interviews with young Greek professionals seeking to leave Greece for better jobs, or academic degrees, abroad.

 

While I agree with its broad conclusions—that the political scandal, the austerity measures and the nature of the Greek private sector all contribute to increasing emigration from Greece—I would like to add some perspective which balances the negative sentiment of the article.

 

There is no doubt that for urban, educated professionals, working in either the public or private sectors in Greece can be difficult. But we should look at the structural problems which affect skilled, professional employment in general, rather than the economic crisis or “cronyism” alone:

 

1.      In Greece, payroll taxes for social security (IKA) amount to 44.06% for employee and employer combined. Annual wages are paid on the basis of 14 monthly salaries. These two facts combine to force many potential employers—such as myself—think very carefully before deciding to employ in Greece. The risks and costs in offering formal, highly-paid employment are often too high to justify a hiring decision.

 

2.      Exceptionally poor value is derived from high social insurance costs. Although the employer and employee pay a combined 44.06% of net salary to IKA, we know that a private health policy is necessary due to the poor quality of the public system, while a private pension will also be necessary, since IKA itself cannot provide an actuarial assessment of likely retirement benefits. This leads to a situation where the employer and employee have to double-pay for already-expensive public services.

 

3.      These risks are compounded by the fact that most of the employees available in the labour market in Greece may have one or two degrees, but these are highly academic and often of little real value in the workplace. I do not speak solely of Greek academic degrees, but of the vast diploma mill which churns out qualifications in the United Kingdom or the United States. In my experience, gained from hiring and deploying consultants and staff on behalf of clients in over 6 countries, hiring an MBA graduate from most universities or business schools usually means four things:

 

·         A very theoretical approach to complex business problems;

·         A shocking lack of applied skills or problem-solving ability;

·         The need for at least 6-8 months re/training before the employee is ready to perform;

·         A vastly inflated self-assessment of personal value, leading to unreasonable wage demands.

 

This third point, in conjunction with the first two, means that we are paying a high price for often unproductive MBAs who very often refuse to get their hands dirty or put in the hours needed to become productive. Yet not everyone can sit behind a desk “managing”.

 

4.      The large majority of Greek companies are micro-enterprises, usually classified as self-employed professionals. Most companies employ less than 10 people. Even larger, internationally-oriented companies, such as Titan Cement or Boutari, are often family-owned and operated. This means that cronyism is in fact a symptom of the particular ties that bind a family-owned enterprise.  In this environment, it is not unusual to see the entire B- and C-level management positions filled by family members, who by nature cannot be fired or replaced. This accounts for an unusual stagnancy among management boards, which may also be a factor in the small prospects of advancement for Alexandra Mallosi or others mentioned in the article.

 

5.      A large number of Greek companies are heavily seasonal in nature. The tourism industry, for instance, accounts for at least 17% of Greek GDP in official terms. Yet it is heavily seasonal in nature, usually operating for at most 4-6 months per year at capacities in which the company actually breaks even. This makes it economically impossible for the largest sector of the Greek economy to develop and retain professional managers. A further particular factor in tourism, of course, is the small-scale, family-run hotel model which has been adopted by successive governments in Greece. This, more than anything else, has ruined the professional development of the tourism sector.

 

6.      We should also be aware that in the current labour market, there is a tremendous mis-match between demand for academic versus vocational qualifications. Greece attracted over 1 million immigrants since 1990, usually from the Balkans and former Soviet Union. These individuals are today employed in a large spectrum of vocational trades: plumbers, carpenters, masons, farm hands, etc. The fact is that many Greek students associate vocational trades as a less-prestigious form of development compared with academic degrees. As a result, it is quite rare today to find Greeks working on construction crews or repairing the plumbing or gathering olives. It is much more difficult to find a qualified plumber in Greece than to find a “qualified” marketing executive.

 

The result of these facts is the incoherent system we experience today:

 

·         We have a “surplus” in academic degrees being produced by Greece (annual enrolment in academic tertiary-level institutions is over 600,000 per year), versus the “deficit” in vocational qualifications and degrees being produced (less than 250,000 enrolled).

 

·         We have a country which desperately needs to promote employment, particularly among the theoretically highly-skilled management professions, but propagates a tax framework in which legal employment is prohibitive.

 

·         We have a country in which the business environment in the best of times (e.g. delays in payment, bureaucratic obstacles, family-run businesses) does not provide an attractive option for professional employment.

 

In this situation, there are typically three options available to those educated professionals who do not have the advantage of a family business to receive them: 

 

a.       Accept work in an often demeaning professional environment, and gradually watch your skill set and ambition wither;

 

b.      Set up your own company (which was my decision) and put in the long hours and sleepless nights needed to succeed;

 

c.       Emigrate.

 

Emigration is hardly the bugbear made out in this article. I’ve had the privilege of working in the US, France and Germany during my career. I learned positive and negative things in each country in this time, but have been able to synthesize the good elements and, I hope, become a better person and a better consultant. And I returned to Greece, bringing my particular skills and competencies with me.

 

I am therefore in favour of emigration, and I don’t see this as a zero-sum game. In my opinion, every young Greek should go abroad for at least 5-10 years. They should learn how international business culture and active citizenship works, and try to match employment with educational background. Along the way, that person will do more than just earn an income: s/he will change and hopefully develop in a positive way, using different role models and inspirations than what one would find in Greece today.

 

Implicit in my opinion is the hope that, like me, the emigrant eventually returns to Greece, putting his or her skills to good use in this country. Should this be the case, I strongly recommend that the returnee comes back an entrepreneur. This is the only way of controlling one’s own destiny (insofar as any entrepreneur actually does), but it is also usually the only way to increase the competitiveness of the domestic market.

 

Greece needs new people, new ideas and new professions to move forward, and I can attest that there is plenty of room in the market for growth of this kind.