Edition: International | Greek
MENU

Home » Analyses

A long term policy needed for Greek SME’s

Although their mere existence does not automatically lead to growth, their development becomes even more important and almost imperative as a key instrument in poverty reduction efforts

By: EBR - Posted: Friday, June 10, 2016

The areas of construction and industry, on the other hand, were close to the EU average (13 and 10 %, compared to 15 and 10% respectively). It is obvious that the SME sector in Greece varies considerably compared to the structure of the European and it is far more important for the country’s economy.
The areas of construction and industry, on the other hand, were close to the EU average (13 and 10 %, compared to 15 and 10% respectively). It is obvious that the SME sector in Greece varies considerably compared to the structure of the European and it is far more important for the country’s economy.

by Antonios G. Zairis and George A. Zairis*

Greece has a very high share of SMEs, with large enterprises representing only 0,1 % of the total number of businesses. In respect to employment, Greek SMEs account for a higher proportion of total employment in relation to the rest of European countries, with the exception of Italy, Spain and Portugal. 

More specifically, 85,6% of employees was working in the sector (in 2010), which was well above the EU average (67%) for the same year. The difference was maintained for the subsequent three years at about the same level (18 %). In terms of value added, the contribution of SMEs to the Greek economy also exceeded the EU average (71,7 versus 58,4% in 2010). Nonetheless, the vastly fewer large companies managed to create 28,3 % of value added (in 2010) compared to the 35,3% of the micro enterprises, suggesting that the productivity of the later was quite low. 

Regarding the economic sub-sectors, SMEs in Greece were more concentrated in the trade area (38%) in comparison to their EU peers (30%). In contrast, the proportion of companies active in the services sector was smaller in Greece than the EU average (40% versus 45%). The areas of construction and industry, on the other hand, were close to the EU average (13 and 10 %, compared to 15 and 10% respectively). It is obvious that the SME sector in Greece varies considerably compared to the structure of the European and it is far more important for the country's economy. 

In the 2012 report, there was also evidence about the impact of the financial crisis on the Greek SMEs: they had suffered a dramatic decrease. It appears that the total number of SMEs had fallen drastically since 2003, as there were nearly 90.000 fewer companies in 2011 than in 2008 (the last year of the pre-crisis period). In terms of employment that was reflected in the loss of more than 200.000 jobs. This negative development also applied for the value added data (SBA Fact Sheet, 2012). Numbers continued to decline in the next year's report as well.

Approximately 196.824 of SMEs ceased operating, a total of 571.613 jobs were lost and the value added was reduced by 13 billion Euros. This was attributed to the austerity measures that were implemented (increased taxes, reduction in salaries and pensions) that reduced the purchasing power of consumers, and increased the financial and tax obligations for the Greek companies. The biggest decline occurred in the construction sector, which is substantiated with the steady reduction in the number of building permits that were granted. The same applied for the manufacturing sector that suffered a 20% loss in the number of employees, and a reduction of 10 % in the value added. The only sector with positive numbers and growing signs was energy production. That was mainly attributed to the government support of projects that belonged to the 'green economy' and the operational programme for Competitiveness and Entrepreneurship (2007-13) which encouraged energy efficiency in housing and public buildings projects (SBA Fact Sheet, 2013). 

In light of the current economic climate, Greek SMEs struggle to recover from the crisis so that they can continue to be the backbone of the economy. But there is no doubt that the severe recession has affected their ability to survive. And after years of declining numbers, even the slightest recovery seems fragile.

Although their mere existence does not automatically lead to growth, their development becomes even more important and almost imperative as a key instrument in poverty reduction efforts. Their role is indisputable. The creation of new and innovative firms in times of crises and rising unemployment could help face many challenges.  

Despite the fact that their recovery depends mainly on the country's macroeconomic environment and financial stability, their development could emerge through policy measures. These actions are not to be fragmented, or serve different goals. Their context should be specific. There should be a long term policy, serving a specific purpose, with strict monitoring of its implementation. Policy makers should influence entrepreneurs and provide incentives for the creation of new firms, on innovating projects and for existing companies to become more productive and competitive. Each country faces different challenges but also has many opportunities.

*Zairis G. Antonios is the Vice President of the Hellenic Retail Business Association and Zairis A. George is an Economist

READ ALSO

EU Actually

Respite for Wikileaks founder Assange

N. Peter KramerBy: N. Peter Kramer

Wikileaks founder Julian Assange can stay in the United Kingdom for at least another two months

View 04/2021 2021 Digital edition

Magazine

Current Issue

04/2021 2021

View past issues
Subscribe
Advertise
Digital edition

Europe

EU says plan to ensure critical raw materials supply is not aimed at China

EU says plan to ensure critical raw materials supply is not aimed at China

A senior European Union official denied that the bloc’s recently agreed-upon plan to diversify its supply of strategically critical raw materials targets China

Business

Artificial intelligence and competitiveness in the retail sector

Artificial intelligence and competitiveness in the retail sector

The importance of AI and machine learning in the retail market is confirmed by the projected dramatic growth of AI services worldwide, which will skyrocket from $5 billion to $30 billion by 2030

MARKET INDICES

Powered by Investing.com
All contents © Copyright EMG Strategic Consulting Ltd. 1997-2024. All Rights Reserved   |   Home Page  |   Disclaimer  |   Website by Theratron