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McKinsey & Company proved that it is possible to open 500 thousand new jobs in Greece in the next 10 years

05 September 2011 / 20:09:50  GRReporter
6630 reads

Victoria Mindova

In an ideal world, Greece could have 500,000 new jobs and € 50 billion in additional gross budget revenue in ten years. These are the conclusions of McKinsey & Company’s analysts, who after ten months of work have drawn a detailed business plan what steps Greece should take to become a competitive European economy again with economic growth and demanded goods.

Greece 10 Years Ahead: National Growth Model not only presents old truths in new covers, but gives concrete ideas on what the government should do to open the path for the business in five key sectors of the Greek economy. As a bonus, it presents eight less developed areas of the economy of enormous potential for the future. Unlike other studies on the feasibility of the Greek economy, the analysis of McKinsey & Company studies in detail the market niches and the specific actions to be taken to develop them.

The analysis of the economic experts is an initiative of the Hellenic Federation of Enterprises and the Hellenic Bank Association and all hope that it would be the book of reference for the Greek managers towards economic recovery rather than a coffee pad on the desk of a forgotten bureaucrat.

Like a management manual of a troubled state, the final report contains 500 pages of detailed description of the pathological mistakes made so far and the new measures, which could change the course of the Greek Titanic. It does not exclude the previously established program of fiscal consolidation and structural reforms, but only supplements them so that in ten years Greece could see the light at the exit of the tunnel towards economic growth, rather than the lights of the train of the full financial collapse.

The 10-month work of the Athens office of McKinsey & Company analysts was presented to the Prime Minister George Papandreou in the middle of the summer and the supervisory Troika of the International Monetary Fund, the European Central Bank and the European Commission. GRReporter asked the authors of the report, "How did the government and the supervisory Troika take your suggestions?" The head of the Athens office of McKinsey & Company George Tsopelas answered concisely, "All parties responded positively and appreciated the analysis, but the main question whether the proposed measures will be implemented remains."

The sectors that could bring the desired recovery of the Greek economy are typical for the local economy. By facilitating then and making some administrative reforms, sectors such as tourism, energy, industry, food production, agriculture, wholesale and retail could breathe new life into Greece and its role in the European economic development.

Tourism, which is a major sector in Greece due to its geographical location and its historical sites, offers great opportunities for growth, the report says. A new, better strategy is necessary to attract tourists from major international markets like USA, Russia and China with not so burdensome visa procedures for the visitors from these countries. The share of tourists from the continent, including the UK, Scandinavia, the Netherlands, Germany, France could increase too. So far, tourism brings about 15% -17% in GDP. 70% of the revenues are the result of domestic consumption, which declined due to the recession. The real advantages of Greece as a tourist destination, however, should be used to attract foreign tourist flows. Cruise tourists are an important part of it but they do not rank Greece first as a port. McKinsey & Company recommends that the government should build at least 3-4 new key ports with appropriate infrastructure for cruise ships’ landing and fueling. The main source of income for this type of tourism is their fueling and the interest in the Greek Mediterranean see remains a significant and untapped asset.

The services offered in tourism should be expanded. Large urban centres should be adapted to meet the so-called City Break tourists who visit the country throughout the year. This type of tourism has a great future in Athens and Thessaloniki, but also in other beautiful towns in the country. Economic analysts recommend the development of 30-35 new smaller airports for charter flights and cheap airlines to make Greece more accessible and attractive. Furthermore, easier and quicker procedures are necessary for large investment projects related to tourism as well as restructuring of public policy to meet the market needs.

The energy sector has yet to develop and modernize. Some of the advantages of Greece are its key position in the region and the opportunities given by its natural inexhaustible natural resources. The country should improve its power generation mix, giving more incentives for the use of alternative energy sources. Furthermore, energy efficiency is a brand new segment that would not only reduce household costs and improve quality of life, but also would recover some almost 'dead' sectors of the economy such as construction and repair. Experts say that the improved energy efficiency could bring € 1 billion annually in the budget by 2021.

Industry in Greece has weakened seriously in the last 20 years. Today, the country should find again its productive force in order to reach the world markets again. Food industry and related occupations are traditionally strong sectors, giving 20% ​​of the employment in the country. Another known industrial activity is the heavy industry and the mining of ores, metals, minerals, the production and export of cement and the shipping industry. The relevant entrepreneurs often find the right way out themselves, but the state should resolve problems of common concern to facilitate the public administration and the permits issuing procedure and to minimize the obstacles to free competition.

Tags: EconomyMarketsMcKinsey & CompanyStudyGreeceProspectsEconomic growth
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