A new study by the Labour Institute of the Confederation of Greek Workers (INE GSEE) highlights the need for a reorientation of the development strategy for Crete, with a reinforcement of productive added value and a reduction of the dependence on tourism. The study was presented at the 39th conference of the GSEE which took place at the Creta Maris hotel in Heraklion from 15th to 19th April. The introduction to the study summarises its main aims as follows:
Summary of aims
“The study aims to set out a framework of proposals of a holistic nature, with the emphasis on reinforcing the existing productive sector in Crete with qualitative characteristics, and on the structural reorientation of the economy so as to make it more resilient in the face of crises of external origin. Basic parameters for achieving this aim are the quality of employment, stability of incomes, utilisation of human capital and reduction of social insecurity.
“Crete has strong capacities of production, economic activity and employment, but the existing developmental model presents restricted opportunities for structural upgrading and integration, as it remains orientated towards sectors of lower productivity and high vulnerability to external disturbances.
“The basic challenge lies not in the further extension of demand but the transformation of existing comparative advantages, especially in tourism and the agricultural system, with deeper value chains, the reinforcement of manufacturing/processing, knowledge-intensive activities and quality of employment, so as to render the economy more resilient, productive and capable of supporting sustainable long-term development.”
(www.inegsee.gr)
An article in Haniotika Nea of 16th April gives a digest of the data presented in the study:
The economy of Crete and its differences by Nomos
The Region of Crete makes a steady contribution of 5% to the national GDP. At a European level, the per capita GDP of Crete in 2023, expressed in terms of purchasing power parity, was 59% of the EU average. In 2022 the per capita GDP at current prices was €16,618.
Within the Region, there are significant differences between the four Regional Units. Over the period from 2009 to 2022, the Nomos of Lasithi, exceptionally, showed an increase in per capita GDP of 6.4% (from €18,958 in 2009 to €20,180 in 2022), exceeding the national average by 3%. In the other Regional Units by contrast there was a reduction: in Heraklion by 13.8% (to €15,848), in Chania by 10.6% (to €16,917) and in Rethymnon by 7.7% (to €15,855).
Despite the reduction in per capita GDP, the Nomos of Heraklion continues to accumulate the largest proportion of gross value added (GVA) in the Region, with 47% in 2022. The Gross Fixed Capital Formation (GFCF) in Crete amounted to €2.15 billion in 2022, representing 6.8% of the national total.
The structure of the local economy
In the period 2009-2022, the productive structure of Crete underwent changes, with a strengthening of the primary sector and a shrinkage of the secondary sector. The primary sector’s contribution to GDP increased from 6.4% to 9.4%, an amount twice the national average (4.3%).
Crete has 31.1% by area of the greenhouses in the country, accounting for 69.5% of the national production of tomatoes and 71% of that of cucumbers. It also has 84.9% by area of the country’s tree crops (with 37.2 million olive trees).
The contribution of the secondary sector, by contrast, was reduced from 16.2% in 2009 to 14.1% in 2022. The food and drinks industry represented 52.1% of the turnover of the agri-food system in Crete in 2023, lower than the national average of 66%, indicating a smaller degree of processing of agricultural production. The tertiary sector has maintained a steady dominance, contributing 76.5% of the GDP in 2022.
An analysis of sectoral interconnections shows that Crete is characterised by strong forward connections in the areas of trade, transport, hospitality and property management. However, manufacturing and processing show low levels of connectivity.
Tourism
Tourism is the central pillar of the tertiary sector. Visitors in 2024 totalled 5.96 million, A basic characteristic of Cretan tourism is the high average length of stay, which in 2024 was 7,84 nights per visitor, significantly higher than the national average.
Travel receipts in 2024 approached €4.56 billion, representing 22.2% of the country’s income from this activity. At the same time there has been a structural upgrading of hotel capacity, with 4- and 5-star hotels representing 33.4% of all units in 2024 against 21% in 2015. The average expenditure per night’s stay in 2024 was €97.8.
The researchers note that Crete constitutes “a hybrid model of mass but qualitatively upgraded tourism”.
The labour market on the island
The labour market has recorded a significant reduction in the general unemployment rate, from 24% in 2015 to 9% in 2024. Long-term unemployment in Crete (over 12 months) affects 36% of the unemployed, an amount appreciably lower than the national average of 54%. However, the overwhelming majority of the unemployed (91.5% in 2024) come from the tertiary sector. A large proportion (43%) of the unemployed declare that the reason for their situation is the end of limited-term employment, as against 34% nationwide.
The sectoral distribution of employment reveals the predominance of the tertiary sector (68.9% in 2024) followed by the primary and secondary sectors (18.1% and 13% respectively). Salaried employees make up 61.4% of those in work, while the proportion of self-employed without staff is also significant (23.9%).
The average number of hours worked is higher than the national figure (40.8 against 39.1). Forty-three per cent of workers in Crete work more than 48 hours a week as against 35% in 2009, while nationally the figure has reduced to 19%.
In addition, 16% of salaried workers in Crete (around 24,900 people) work on short-term or limited-hours contracts, as against 10% in the country as a whole.
As regards earnings, the data show that in the wider geographical area of Crete and the Aegean Islands, the average annual salary for full-time employment was reduced by 24% in the period 2016-2020 (from €16,688 to €12,719). In addition, in 2023 the declared per capita income from salaried work in the Region of Crete came to €14,560, equivalent to 88.3% of the national average.
With regard to skills, employment is concentrated in the field of sales and services. Two-thirds of posts (66.2%) are at the medium level of skills, while the proportion of high-level skills is lower than the national average (25.5% against 31.6%). Unemployment among graduates of higher education increased by 7% in Crete between 2015 and 2024, while 55.9% of the unemployed come from non-manual jobs of low qualifications.
Productivity showed a decrease between 2019 and 2023 in sectors of critical importance for Crete, such as trade, transport and accommodation-hospitality (-8.5%) as well as in property management (-15.5%). The study states that Region’s productive model is stuck in a “downward developmental path” based on the intensification of labour and pressure on costs.
Economic insecurity
Poverty indicators in Crete show some improvement, with the risk of poverty or social exclusion having been reduced from 30.1% in 2019 to 20.3% in 2024, somewhat lower than the national average of 26.9%.
Similarly the proportion of people in a state of severe material and social deprivation receded from 17.5% in 2019 to 9.6% in 2024. There was also a reduction in the proportion of people in want of adequate heating, which was 13.6% in 2024 as against 19% in the country as a whole.
However, other indicators show increased economic pressures. The number of people living in households with arrears of debt (mortgages, rents, bills) has increased steadily, from 36.8% in 2021 to 50.6% in 2024. This amount is higher by 7.8 percentage points than the national average of 42.8%. At the same time, 47.1% of Cretan households declared that they were unable to cover regular expenses for the year 2024 (against a national average of 43.9%).
The researchers note that social vulnerability in Crete is not expressed as extreme poverty so much as a state of economic insecurity and restricted ability to withstand unexpected pressures.
The need for a new orientation
The concluding chapter of the report proposes a reorientation of the Region’s developmental strategy. The high degree of dependence on tourism and the primary sector, together with the under-representation of manufacturing/processing and knowledge-intensive services, restrict the possibilities of long-term integration with Europe.
The proposals include strengthening the sectors of medium and high added value (such as modern agri-food and green technologies). The creation of deeper value chains is proposed which will connect tourist consumption with manufacturing/processing so as to increase intraregional connections.
As regards the labour market, there is a need to aim at the qualitative upgrading of conditions of employment.
The report proposes the provision of incentives to businesses to take up highly skilled staff in R&D activities. In addition it underlines the importance of strengthening collective labour agreements and control mechanisms, especially in tourism, so as to reduce employment insecurity and intensification of work. For tourism in particular it proposes concentration on the qualitative upgrading of demand and the maintenance of long-term stays, avoiding further quantitative expansion.
(Haniotika Nea, 18/04/26)