Look deeper, and a glimmer of hope is emerging from growth in manufacturing. In the September 2015 economic update video for eZonomics, senior economist Bert Colijn tells how the business environment has significantly changed in Spain, Portugal and Greece, increasing competitiveness.
Wage shifts and new regulations
Colijn says Greece saw average labour costs in the manufacturing sector decline from more than €13 an hour to about €11 during the crisis. “Compare this with Eastern European countries, which are popular destinations for outsourcing. Poland and Hungary have seen around a 40% increase in wages since 2008.”
He says regulations had been modernised and the World Bank had recognised these changes in its “ease of doing business” rankings.
Outperforming Germany in export growth
Spain and Portugal outperformed Germany and Netherlands for export growth since the start of the crisis, says Colijn. But the question remains whether these changes are enough for businesses to move production.
“Central and Eastern Europe remain very competitive as wages are still lower than in Greece and Portugal. It is difficult to see ‘Mediterranean tigers’ emerging, but surely entrepreneurs will think twice and consider whether Portugal, Spain or Greece is the place for them," says Colijn.