ECONOMY

Incentives for growing firms

Government planning taxation and funding boosts to entrepreneurs deciding to join forces

incentives-for-growing-firms

The government is planning a series of initiatives in the coming months aimed at increasing the size of Greek companies by encouraging mergers and acquisitions, so that corporate forces join up to create more robust and competitive entities, in a country with a dearth of big enterprises.

There currently are only 331 enterprises in Greece – out of a total of 821,540 corporations – that can be classified as “large” by European standards, in that they employ more than 250 workers each. That list also includes corporations with a direct or indirect relation to the state.

Greece is the European Union country with the most fragmented business map, with an obvious impact on workers, as firms employing up to nine people account for 97.4% of all businesses. That means significantly smaller salaries in the private sector than in other countries, with the average gross salary at 840.41 euros per month.

According to data from the Single Social Security Fund (EFKA), 99.96% of enterprises employ less than 250 people, accounting for 88% of all workers.

To reverse that picture – which is regarded as another drawback of the local economy – the government is preparing an integrated intervention in favor of larger enterprises. After private capital companies (IKE) known as “one-euro companies” – dominant in recent years thanks to their advantages – the government will push for a new form of business entity that will target the merging of forces, even involving personal enterprises.

The incentives that will be granted concern both taxation and financing. Ahead of the activation of the national recovery plan, which will supply cheap credit for investments, the objective is to have many more enterprises acquire the potential to utilize those resources than those that fulfill the main criteria today: The capacity or the funding for investments and access to bank credit. The market response to those incentives introduced in the coming months is another major challenge for the government.