Greece’s government and its lenders should stop focusing on cuts to labor costs as the main avenue to attract foreign investment and redouble efforts to improve the country’s infrastructure and bureaucracy, according to speakers at a United Nations Conference on Trade and Development press conference in Athens today.
“Labor-cost cuts is not a sustainable policy to attract foreign investment to the country,” Marina Papanastasiou, an UNCTAD representative for Greece said during a presentation of the Switzerland-based organization’s world investment report for 2011. Greece needs a “targeted, integrated policy that will focus on exports, foreign investment, small and medium size businesses and privatizations,” she said.
Frequent changes to laws and tax policies, in part under pressure from international lenders to implement structural reforms since the country’s first bailout in May 2010 have created an unattractive and unstable environment for foreign investors, speakers at the press conference said. Greece’s potential to attract foreign investment lies in a high quality labor force at a relatively low cost along with natural resources.