From digital transformation to brain drain, key areas present room for improvement as we strive for enhanced collaboration between Greek businesses and the state on the road to a stronger economy.
Two factors have marked the Greek economy in recent years: the country’s drive for digital transformation and the large scale exodus of skilled young professionals seeking career opportunities and better prospects abroad.
The first factor is the effort to modernize public administration through information technology. A unique aspect of Greece is that businesses bear the cost of this effort. A recent example is the mandatory use of electronic invoicing in B2G transactions. The European Parliament’s Directive 2014/55/EU provided guidelines for e-invoicing, which included (a) the creation of a format for B2B and B2G transactions and (b) ensuring no administrative costs in the operation of small and medium-sized enterprises (SMEs).
In Greece, contrary to the EU’s guidelines, two formats of e-invoices have been approved: one for B2B (A 1017/2020) and another for B2G (KYA 63446/2021). The cost of e-invoicing begins with the higher cost of internet access compared to other EU countries, continues with the mandatory use of e-invoicing providers that simultaneously devalue companies’ ERP systems, and extends to equating printed documents with electronic ones if they are issued by e-invoicing providers. In practice, non-electronic invoices are labeled as electronic as long as they are issued by specific companies.
In contrast to Greece, in Italy (paragraph 6 of the 2021/2251 decision of the EU Council), the state “provided various free solutions for the transfer of electronic invoices, constructed, and distributed a free software package for installation on companies’ computers and mobile devices.” Indeed, the European Commission’s report of February 19, 2024, concerning Directive 2014/55/EU, notes that nine countries have already created similar public infrastructures for free use in B2G transactions.
Greece, with its economy supported by SMEs, must develop public infrastructure for B2G transactions; otherwise, the cost will be unbearable for many businesses.
The second factor affecting the Greek economy relates to human resources and brain drain. The migration of thousands of skilled young professionals from Greece is a severe shock to the country. Capitalization on the country’s greatest investment in recent decades, the investment in “the education of new generations,” is failing. Greek families, characterized by their close bonds, continue to spend significant amounts on their younger members’ education. However, due to brain drain, these investments migrate and contribute financially to other countries’ economies.
Since the main reason for migration is the financial rewards from work, it is imperative to reintroduce the only logical option for enhancing the salaries of professionals without creating problems for the company: the partial profit distribution to employees.
Under the current regime, a company, after paying its due income taxes, is prohibited from distributing profits to its employees by waiving this shareholders’ right. As a penalty, it is required to pay social security contributions, resulting in employees receiving minimal amounts compared to the sums distributed as profits. While the tax free process of stock option, which practically concerns only senior executives, has been rightly legislated, it is illogical to indirectly prohibit the distribution of profits to employees, which can easily be adopted by SMEs that are the majority in the country.
In shaping its economic policies, the state should take into account that businesses in Greece are mainly SMEs and should continuously seek their cooperation rather than treating them with hostility. Only through business-state collaboration can we achieve an improved new cycle in the economy.
