Tourism and coffee instead of industry: a portrait of the modern Greek economy

New study from the London School of Economics (LSE) called “The Café Economy” showed that the Greek economy, after the memorandum era, was effectively entrenched in a model based on low-productivity sectors.

The main driving force is tourism, hotels, bars, restaurants and short-term rental housing.

Authors of the study: Michalis Nikiforos, Vlasis Missos, Christos Perros And Nikolaos Rodousakis — call this dependence “the cafe economy.” Behind the outward shine of the tourism boom lies stagnation: labor productivity fell by 16% since 2009, and real wages decreased by 26–35%in tourism – up to 60%. Employment is growing, but in sectors with minimal added value.

The cafe model reproduces the features dual economy: one part of it relies on cheap labor and seasonality, and the other on lost industrial capacity. Instead of innovation and technology, the country exports hospitality, coffee and cheap labor.

The study records that from 2009 to 2023, employment in tourism increased by 87%but added value is only 11%. Today, this sector has become the largest employer in the country, where even university graduates work without finding a place in their specialty. According to Eurostat, 86% young professionals in tourism they are employed in positions below their qualifications.

On the positive side, the trade balance has improved: travel revenues helped reduce the current account deficit by 5 percentage points. However, the negative effects are obvious: housing crisis due to short-term rentals, environmental load and the dependence of entire regions on the tourist season.

The authors emphasize: Market liberalization has not improved efficiencybut, on the contrary, perpetuated structural vulnerability. Without a new industrial and technological strategy, the “cafe economy” may become not a temporary phenomenon, but a norm for Greek reality – with beautiful storefronts and a fragile foundation.

Study conclusion: Greece’s escape from the trap requires policies that stimulate high-productivity industries, increased innovation, and fair income distribution. Otherwise, the country risks remaining “the cafe of Europe” – cozy, but dependent and stagnant.

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