The current count of 51,000 migrants trapped in Greece rises daily. Despite a new agreement between the EU and Turkey to return people coming across the Aegean, 3m people are stuck in the Europe-wide migrant holding pattern.
It is a humanitarian crisis that is naturally receiving a great deal of attention for the desperate situation these migrants are in. It has also proven costly for the Greek economy, which is enduring a humanitarian crisis of its own. But there is another exodus taking place that could prove to be the last nail in the coffin of Greece’s economy. This is the emigration of Greek professionals and companies that are vital for the country’s economic recovery.
Most of the migrants arriving in Greece are desperate to leave and continue to places such as Germany and the UK. Migrants from countries such as Syria, Afghanistan and Pakistan are piling up on Greek islands, the port of Pireaus and the border village of Idomeni. Images of scenic holiday destinations set against the makeshift camps and life jackets are incredibly harmful to tourism, which is a vital branch of the economy and provides 18% of Greece’s GDP. Major islands such as Lesvos, Kos and Chios are reported to have experienced a drop in tourist pre-bookings as high as 90%.
Yet far worse for the Greek economy is how its own people are looking to leave in search of economic security. Since the beginning of the crisis, at least 250,000 young professionals are reported to have left the country, with some reports putting the estimate even higher. They do not use the illegal trails to leave, but their EU passport.
These professionals are skillful, highly educated and internationally marketable, making it easier for them to migrate. But they also are the very resource that is required for the resurrection of Greece’s economy. They are needed to build the high growth exporting businesses that are meant to drive growth and pull the country out if its slump.
But Greek professionals are seeking more fertile ground for their talents – places that will be able to provide some basic assurance that they will receive a pension or can finance their children’s education. They have been forced to leave their country not only because many have lost their jobs, but also because many have been the victim of the huge tax increases that the government has introduced to reduce its deficit. Unable to reduce the public sector or target the big tax avoiders, it has squeezed the middle classes as they are easy prey.
These are the very private sector professionals that, according to the OECD, work the highest number of hours in the EU. They are a crucial component of Greece’s recovery, not least because their taxes can help fix the country’s broken pension system. Tax-paying private sector employees are needed to counter-balance the number of pensioners and public sector employees they help to support.
Glimmer of hope?
Dynamic entrepreneurial businesses have an innate instinct to survive. It is therefore no surprise that 60,000 Greek businesses are reported to have moved to neighbouring countries such as Bulgaria in order to seek a safe harbour away from high taxes and capital controls.
Economic recovery can only come by supporting high growth, export-oriented businesses. Luckily, a new wave of high tech start-ups is arising, bringing a glimmer of hope. But in order for them to succeed, there is one viable business model that they need to follow. As so many professionals and experienced technical personnel have already left, they need to base their headquarters and outward facing activities abroad – not in Bulgaria or Cyprus as the average business has, but in London, Silicon Valley or Boston where they will be able to benefit from world class, high-tech ecosystems. Here they can gain legitimacy, enjoy a stable business environment and access better financing resources.
This is what large exporting firms such as yogurt producer FAGE and industrial leader Viohalco have done – they moved their headquarters abroad, giving them better financing and reducing their dependence on the capital controlled Greek economy.
While the EU-Turkey agreement has placed a 72,000 cap on the number of Syrian refugees EU countries will accept, there is no limit to the number of professionals and companies that will leave Greece. Unless Greek politicians realise that it is companies and professionals based in Greece that can turn around the country’s economy, it will continue on its downward spiral. They need to realise that entrepreneurs and professionals will seek more fertile ground and will only return to Greece to enjoy its sun and sea during the summer months.