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Mass drop in small companies’ turnover in Greece

24 August 2011 / 17:08:26  GRReporter
3137 reads

Victoria Mindova

The most pessimistic predictions of small and medium-sized companies at the beginning of the year proved optimistic compared with the results of the first six months of 2011, according to the survey MARC SA held, commissioned by the Hellenic Confederation of Professionals, Craftsmen and Merchants. 80% of the respondents say that the year seems to be very bad so far and two-thirds expect things to become even worse in early 2012.

Analysts say that around 183,000 enterprises are directly threatened to go bankrupt in the next 12 months and 100,000 of them will not even celebrate the new 2012, for which the government of George Papandreou promised 0.6% positive growth. And how should small companies trust him when there is an average reduction in turnover of 30%. The most serious is the situation in catering, where there is a 40% -50% drop in turnover compared to the turnover before the crisis.
"People first gave up going out to restaurants and taverns when the crisis began," said the President of the Hellenic Confederation of Professionals, Craftsmen and Merchants, Dimitris Asimakopoulos. He replied to the attacks that the prices in catering have not dropped, arguing that in Greece most essential goods are imported. In addition to the significant increase in their market value due to the economic crisis in 2008 the increased direct and indirect taxes further burden them. "Greece imports wheat, meat, sugar and many other essential supplies because there is no domestic production or it is uncompetitive. You should also know that when there is a drop in a company’s turnover, the losses in profits are twice larger than the drop rate in turnover."

About 50% of the respondents say that the black trade does not affect their business, but one out of every eight answered that the demand for the product or services provided by him / her is significantly low. Only 5.6% respond that things improved since the beginning of the year and the demand for their goods increased. Six of every ten respondents expect the market to shrink further, which corresponds to the latest government data that the recession will not remain at 3.9% and will reach at least 5.4% in late 2011.

The drop in the GDP is inevitably part of the lack of liquidity on the domestic market. 80% of the companies operate with greatly reduced working capital, and the companies that accept checks for payment fell from 63% in 2009 to 45% in the summer of 2011. The companies that accept checks require them cashed not later than two months, unlike two years ago, when the checks could be cashed within six or eight months, and every seventh out of ten checks is likely to have no effects.

Relatively good news could be the fact that 75% of the respondents say that they have not fired none of the employees despite the difficult economic conditions. About 3% employed new workers, and about one in five say they had to fire some of the employees to reduce operating costs. According to the data of the Confederation of Professionals, Craftsmen and Merchants, 88,000 jobs were lost in the first half of 2011, and by the end of the year, their number could exceed 134,000. This figure does not show only the number of unemployed but the opportunities for professional development, which disappear from the labour market. Analysts have found that for every seven dismissals one new job opens in the private sector. With this rate of development of the labour market, unemployment is expected to reach new peaks after less than six months.

The research company MARC SA used a sample of 1200 small and medium-sized enterprises in the past two years. They employ between 1 and 49 people and the major part of the surveyed are companies and self-employed in the sectors of trade, industry and services. Indicative of the rapid collapse of the Greek economy is the fact that 20% of the companies that were surveyed in the last analysis are not existent any longer due to bankruptcy or liquidation.


Tags: EconomyMarketsGreeceSmall companiesDrop in turnover
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