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LSE study finds post-bailout Greece turned into a cafe economy

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A new study prepared by the Hellenic Observatory at the London School of Economics (LSE) has examined the structural transformation of the Greek economy following the bailout era.

According to reporting by the Greek Reporter, the study titled “The Café Economy”, authored by Michalis Nikiforos, Vlassis Missos, Christos Perros, and Nikolaos Rodousakis, revealed that the country has become excessively dependent on Accommodation and Food Service Activities (AFSA), a sector encompassing all tourism-related fields including restaurants, bars, hotels, entertainment, and short-term rentals.

The researchers pointed to a fundamental issue that is often overlooked behind the “café economy” characterisation. According to the study, despite promises of a new “development model”, Greece has over the last 15 years remained trapped in a growth cycle built on an exceptionally fragile foundation.

Labour productivity declined as tourism expanded

The study reported that following austerity policies and structural reforms that liberalised labour and product markets, tourism-linked activities expanded disproportionately compared to other sectors. This unbalanced growth became one of the primary drivers of the economy’s broader loss of productivity.

Contrary to the productivity gains promised by bailout reforms, an opposite trend took hold across the Greek economy. While labour productivity suffered a steep decline, employment shifted toward low-productivity sectors, led by accommodation and food services.

The researchers identified the contraction in aggregate demand and the sharp erosion of real wages as the main causes of this productivity collapse. Between 2009 and 2024, labour productivity fell by 16% and remained below pre-crisis levels.

The slide in real wages was even more pronounced. Across the country, real wages dropped by between 26% and 35%, while losses in the tourism sector reached as high as 60%. The authors described this outcome as a severe process of income redistribution operating against labour.

The shift of employment toward the AFSA sector accounted for approximately one-third of the total decline in labour productivity. The loss of hundreds of thousands of jobs in productive sectors such as manufacturing, alongside the scarcity of employment in high-technology and innovation fields, deepened this decline.

Greece enters regression under a dual model

According to the study, Greece’s development model is displaying a historical regression by evolving into a “dual” structure typically observed in underdeveloped or transition economies. In this model, economic growth relies on deploying labour, cheapened through wage suppression, into low-productivity sectors.

Noting that the three bailout programmes implemented between 2010 and 2018 triggered a deep recession instead of boosting competitiveness, the researchers stated that the Greek economy has never fully emerged from this slump.

The study also recalled that the International Monetary Fund (IMF) had in the past apologised for underestimating the negative impacts of severe fiscal contraction.

Educated young population works in low-wage jobs

Data published by the LSE showed that the workforce in the AFSA sector underwent a fundamental transformation between 2009 and 2023:

Employment in the sector surged by 87%. Gross Value Added recorded 11% growth. AFSA became the largest employer in the Greek economy.

On the other hand, the sector is characterised by low wages, precarious working conditions, and an increase in part-time work. Although the educational attainment of tourism employees has risen, workers are increasingly employed below their qualifications.

Eurostat figures confirm that Greece, behind Spain, has one of the highest rates in Europe of young graduates who are overqualified yet employed in unskilled jobs.

More than 86% of young university graduates working in the tourism and hospitality sector are employed below their qualification levels.

Structural risks deepen while external balance improves

The report titled “The Café Economy” listed the advantages along with the severe vulnerabilities generated by this development path:

The positive effect emerged in the external balance. The tourism sector provided a significant contribution to correcting the current account balance. The trade surplus in travel services rose by five percentage points between 2009 and 2023, covering approximately half of the total current account deficit contraction over the same period.

Conversely, overreliance on tourism and a low-productivity, low-wage, labour-intensive services economy brought heavy structural weaknesses:

Social and environmental degradation: The disproportionate growth of the sector lays the ground for environmental and cultural deterioration, frequently described through the concept of “overtourism”.

Housing crisis: The proliferation of short-term rentals and foreign property acquisitions drives up rents, making housing costs unaffordable for local workers.

External dependence: As the café economy expands at the expense of other sectors, reliance on external demand and seasonal fluctuations multiplies; entire regions remain exposed to shifts in tourist flows.

The researchers warned that low-wage policies erode economic competitiveness over the long term by weakening incentives for technological innovation and progress.

Noting that the thesis claiming market liberalisation automatically delivers productivity has been undermined by the Greek experience, the study stated that dependence on low-productivity sectors such as AFSA creates an economic dilemma. Even if these activities support demand and foreign currency inflows, they damage long-term productivity and social sustainability.

The report noted: “A successful way out for Greece requires policies that do not merely stimulate demand, but also strategically promote high-productivity sectors, support technological upgrading, and ensure inclusive growth. Without such a change of course, the ‘café economy’ risks becoming not a temporary adjustment process, but a long-term stagnation equilibrium.”

The study concluded with a call to re-evaluate structural reforms in light of real economic and institutional conditions, and to prioritise development focused on high productivity.

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Poland’s presidency to file complaint against three judges over scuffle

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Polish presidential spokesperson Rafał Leśkiewicz announced that a criminal complaint will be lodged with prosecutors against three individuals, citing a violation of President Karol Nawrocki’s immunity during a scuffle at the Constitutional Tribunal building on Friday night.

Speaking on Radio Wnet on Sunday, Leśkiewicz stated that the head of state’s bodily inviolability was infringed during the incidents that occurred overnight between Friday and Saturday.

The presidential spokesperson emphasized that Anna Korwin-Piotrowska, who took over the administration of the court, along with judges Maciej Berek and Krystian Markiewicz, who were elected by the current Sejm, had no right to lay hands on the president.

Leśkiewicz noted that the presidential office would initiate criminal complaint proceedings against these three individuals.

“Neither Ms Anna Korwin-Piotrowska nor Mr Krystian Markiewicz are judges of the Constitutional Tribunal; they blocked the entrance door of the Constitutional Tribunal to Mr President and violated the immunity of the head of state,” spokesperson Leśkiewicz said.

Defending Nawrocki’s visit to the court building, Leśkiewicz stated that the president acted as a citizen exercising his rights and aimed to observe the de facto situation within the institution in person.

In his remarks, Leśkiewicz said: “This is a public office established for citizens to conduct their affairs, and Mr President entered to understand the actual situation inside the Constitutional Tribunal.”

Karol Nawrocki, who cut short his visit to Senegal and returned to Poland as tensions escalated around the Constitutional Tribunal, found himself caught in a scuffle between opposing parties outside the court building shortly afterwards.

Sharing one of the videos circulating on social media, Judge Maciej Berek described the situation as “disturbing and scandalous.”

In a post on the platform X, Berek wrote: “The president moved with great speed directly at Judge A. Korwin-Piotrowska and began pushing his way through the group of other judges.”

Speaking to broadcaster TVN24, Judge Anna Korwin-Piotrowska said the president “virtually trampled over” them.

Addressing Korwin-Piotrowska’s remarks during his Radio Wnet interview, Leśkiewicz rejected the claim and argued that the judge was attempting to defend herself.

“Ms Korwin-Piotrowska is trying to build a line of defence for herself in this manner; this is natural because, just like Mr Berek or Mr Markiewicz, she will undoubtedly bear criminal liability for this conduct,” Leśkiewicz said.

Describing the nighttime recordings on social media as “dramatic”, Leśkiewicz claimed the footage constituted a “ready-made indictment” against Prime Minister Donald Tusk and the three individuals in question.

Leadership dispute escalates into midnight crisis

The crisis at the Constitutional Tribunal began when court president Bogdan Święczkowski and deputy president Bartłomiej Sochański were announced to have had their duties suspended.

The administration of the court was assumed by Judge Korwin-Piotrowska, who was elected by the Sejm.

Leaving the court building on Saturday morning, President Nawrocki held successive consultations with representatives of political parties in parliament, arguing that the constitutional order had been violated.

Addressing the nation that same evening, Prime Minister Donald Tusk closed the door to any compromise regarding the Constitutional Tribunal.

In an earlier assessment, Prime Minister Tusk had said, “It is our duty to restore the rule of law.”

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CDU youth wing urges military deployment against student protests

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As school strikes against the reintroduction of compulsory military service continue across Germany, the Christian Democratic Union (CDU) has faced calls to deploy the military against student demonstrations.

The next nationwide school strike in the country is scheduled for 20 November. Like earlier school walkouts, it is primarily directed against the reintroduction of compulsory military service, which is clearly looming on the horizon.

In addition, coalitions of high school and university students are calling for fresh demonstrations this Saturday (31 October). These actions take French student protests as a model, but go even further in opposing mass militarization in Germany.

So far, demonstrations have been announced in just under a dozen cities, and these protests also face the threat of growing state repression.

In Hamburg, for instance, a police spokesperson announced that there would be a “very strong police presence” and that drones would also be deployed against demonstrators.

Going a step further, the Berlin-Mitte branch of the Junge Union (JU), the CDU youth wing, demanded the deployment of the Bundeswehr [German Armed Forces] as a precautionary measure against high school and university student demonstrations “to defend our liberal order.”

Meanwhile, debates over banning political parties are currently underway within conservative circles, echoing developments in France with La France Insoumise (LFI).

Years ago, during his tenure as secretary general of the Christian Social Union (CSU), Federal Interior Minister Alexander Dobrindt raised the possibility of banning Die Linke (the Left Party).

Frankfurter Allgemeine Zeitung (FAZ), an influential German newspaper, also recently brought the issue to the fore.

In an editorial, the newspaper asked openly: “Why not ban Die Linke?”

Against this backdrop lies Die Linke’s victory in the Berlin Senate elections. If the party becomes too powerful, the threat of a ban looms.

According to author Jasper von Altenbockum, the Left Party can act as it pleases in Berlin because the Social Democratic Party (SPD) and the Greens have not applied the “firewall” strategy against it that the CDU maintains against the Alternative for Germany (AfD).

Describing the party’s lead Berlin candidate, Elif Eralp, as “the vanguard of a movement that sympathises with leftist and Islamist terrorism, shows ‘respect’ to organised criminals, fuels immigrant and radical left antisemitism, and seeks to practice anticapitalism through expropriation,” the author continued:

“If the standards applied to extremism in the AfD were applied to the Left Party’s rhetoric, tactics, and ideology, then a debate on banning the party would emerge, and politicians from the Left Party would be subjected to the same treatment as those at the other end of the ‘horseshoe.’ But that is not the case at all: Left Party politicians are fixtures on morning shows; Left Party politicians determine who may call themselves a democrat and who may not.”

Arguing that the SPD and the Greens in Berlin face the exact same predicament that the CDU confronts in Saxony-Anhalt, Thuringia, or Saxony, the FAZ author contends that if the Christian Democrats fail to devise a counter-strategy, they will have to accept either a “red-green” coalition in Berlin or a shift of votes toward the AfD.

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Vučić scrapped plan to hold power after phone warnings, report says

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Former Serbian President Aleksandar Vučić was preparing to retain power by force following the country’s parliamentary elections, according to a report by the British newspaper The Times, citing politicians and a former commander of a specialised police unit.

However, he abandoned this scenario after receiving phone calls urging him to back down.

Spasoje Vulević, the former head of the Serbian police counter-terrorism unit, told the newspaper that 4,000 police officers and 3,000 people whom he described as “thugs” were deployed to central Belgrade on voting day, 25 October.

According to Vulević’s assessment, Vučić was preparing to reject the election results.

Vučić’s spokeswoman denied the claim. Speaking to The Times, she said the police presence in Belgrade was a response to threats of violence from protesters and was unrelated to any attempt to seize power.

Member of the European Parliament Sandro Gozi also said he received alarming messages from diplomatic sources on election day indicating that Vučić was preparing for a scenario involving the use of force.

According to the newspaper, Gozi’s political group issued a statement around 21:00 local time, as initial projections were being released, warning that supporters of Vučić’s party could be mobilized to provoke clashes.

Where did the calls forcing Vučić to back down come from?

Radomir Saičić, a leading candidate from the winning Student List, also argued that plans had been made to alter the results by force if the vote margin between the sides was narrow.

“If the results were close, there were plans to overturn the outcome of the vote by brute force,” Saičić said. “However, according to the information I obtained, numerous calls to him from the police and other figures prompted him to change his mind. They convinced him that executing this plan would end very badly for him.”

Former commander Vulević, on the other hand, was sceptical that police officers could have played a decisive role.

Noting that Vučić personally selected the unit commanders in Belgrade and that these figures were unlikely to oppose him, Vulević said: “I suspect that representatives of European governments called Vučić; these were talks conducted at the highest level.”

European Parliament member Gozi did not confirm the claim that the telephone calls had a decisive effect.

“I cannot rule out the possibility that phone calls took place, but in any case, the vote margin against him was far too large,” Gozi said. “Vučić was stunned.”

According to The Times, roads were closed in Belgrade during the evening, gendarmerie personnel appeared on the streets, and groups of men dressed in black headed toward the city’s Pioneers Park (Pionirski Park).

Vulević claimed these individuals arrived in groups of 20 to 30. However, the newspaper reported that at 21:30, an hour and a half after polls closed, Vučić backed down and his assembled supporters dispersed.

From the Novi Sad collapse to early election defeat

Early parliamentary elections were held in Serbia on 25 October.

According to Election Commission data, after processing results from 8,139 ballot boxes, the Student List secured 52.65% of the vote, while Vučić’s United Serbia coalition remained at 39.22%.

Vučić conceded defeat without waiting for the final results.

“It is obvious that we have lost these elections. The Student List has won,” the politician said, attributing the opposition’s success to support from European countries and the US “deep state”.

Prior to the election, the country was the scene of prolonged mass protests that began after the collapse of a railway station canopy in the city of Novi Sad in November 2024.

Protesters initially demanded accountability for those responsible and an investigation into corruption allegations, before subsequently calling for the government’s resignation.

Having dissolved parliament in September 2026 and announced his resignation from the presidency, Vučić was subsequently nominated as the candidate for prime minister by his party.

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