ECONOMY

Greek clothing firms keep shifting production abroad

Thessaloniki – The Balkan hinterland has become a highly welcoming place for more than 400 Greek clothing companies that have transferred part or the whole of their production activity to Bulgaria (mainly), the Former Yugoslav Republic of Macedonia (FYROM) and other countries since 1996. The past couple of days may have been dominated by the headlines caused by Swiss company Schiesser Pallas’s decision to close its Athens factory, thus laying off 500 workers, but this is actually current practice among Greek companies. Associations such as the Exporters Association of Northern Greece (SEVE) and the Hellenic Fashion Industry Association (SEPEE) defend such practices in view of the fact, they say, that the State lacks a clear-cut policy to encourage companies to retain their production at home. At present, 55 percent of Greek clothing companies’ production takes place in the Balkans. During the period 1996-2002, 35,000 jobs were lost in the sector in Greece, while Greek companies created 45,000 jobs in Bulgaria alone. Of the 400 clothing companies that moved production facilities to neighboring Balkan countries, 90 percent are based in northern Greece. Only about 20 of these 400 firms have transferred all their activities abroad; the others have maintained their headquarters and their sales, planning and marketing departments in Greece. Among those companies who have transferred part or the whole of their production are Hadjiioannou, Fanco, Minerva, Cotton Fields, Xanthi clothing and others, that is, some of the biggest names in Greek industry. The reason for this transfer is easy to guess. According to SEPEE data, annual gross labor costs per employee in the Balkans is estimated at 1,000 to 1,200 euros per month, barely one-tenth of the cost in Greece. It is obvious that this constitutes a very strong incentive for moving production to the Balkans. Most Greek companies have located their production facilities in southern Bulgaria and southern FYROM, the areas closest to the Greek border. Recently, however, the concentration of so many production facilities in southern Bulgaria has been driving wages upward; thus, Greek companies are now seeking more remote areas to move their facilities, in order to tap yet more sources of dirt-cheap labor. SEPEE claims to have alerted ministers to this trend long ago, as well as to its effects on local jobs, without, however, arousing their interest. «This mass migration of production facilities could have been averted if the State had taken SEPEE’s proposals seriously,» a high-ranking SEPEE official told Kathimerini. «Unfortunately, there were no measures to boost production during the past decade, as happened in many other European countries.» Among the counterincentives SEPEE mentions is the State’s delay in approving the creation of industrial and commercial parks, high taxation, high social security contributions by employers, the rigidities of labor law that prevent employment flexibility, and the State’s lack of interest in securing European Union funds through the Third Community Support Framework. Despite this, clothing and textiles remain Greece’s strongest exporting sector, with annual exports worth over 2.1 billion euros.