Surviving under Recession: Greece comparing to the European South
by Dimitris Rapidis and Alberto Paez
On October 7, the European Commission's DG on Employment, Social Affairs and Inclusion published preliminary facts on a study over the survival rate of enterprises for the period 2007-12. Paradoxically, from this listing, one state that has been harshly affected by Eurozone austerity politics was missing: Greece.
Hopefully, we retrieved information from our aggregate data and calculations after our consistent monitoring of the Greek crisis since 2009, even before Bridging Europe was established.
Absence of Greece from this listing is predominantly an omission -on purpose or not, that remains unclear- of the Greek side, the relevant Ministry and certainly ELSTAT. Considering allegations on the credibility of ELSTAT's work in the recent past, that does not surprise us.
Going back to the essentials, only 17% of self-employed entrepreneurs that established a company in 2007 achieved to keep it alive in the midst of the first round of economic recession. The majority of such business endeavors failed to address abrupt tax hikes introduced by the first MoU signed between Greece and its creditors on May 2010. During the following two years, around 72% of these enterprises faced increasing difficulties to remain active in the market.
The major problems that most Greek enterprises faced are related to the subsequent decline from tax payments, the lack of necessary funding to grow, and the difficulty in getting established in the relevant market. Such companies could not thus surge and were obliged to restraint, at first place, their activities, before going bankrupt or deciding to shut doors down.
Bigger businesses, with 10 or more employees, performed better during the same period, but again they did worse comparing to enterprises in Portugal, Spain, and Italy. Similarly, problems are related to the general slowdown of domestic economy, the minimization of available bank loans aimed to investment and growth projects, and the breakdown of EU structural funds.
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Dimitris Rapidis is Director at Bridging Europe. Alberto Paez is Policy Analyst at Bridging Europe.
October 9, 2015