Hikes point to an even grimmer future for battered businesses

Hikes point to an even grimmer future for battered businesses

New hikes in taxes and social security contributions introduced at the start of the month, coupled with pension cuts, are leading to a deeper recession, the closure of businesses and more people losing their jobs, experts warn.

Speaking to Kathimerini, the president of the Athens Chamber of Small and Medium Industries, Pavlos Ravanis, says that the new measures will strangle any small and medium-sized enterprises (SMEs) that have survived from the very first days of June, with the worst of the effects becoming apparent from September.

Besides companies such as Athens Ledra, Pyrsos Security, Ilektroniki Athinon and Papasotiriou that threw in the towel in the past couple of months, smaller firms face an even grimmer future. More than 10,000 SMEs have shut down since January, another 21,000 are on the verge and 63,000 have a very slim chance of survival, figures show.

In the first five months of the year the number of new companies was for the first time smaller than those that shut down, by 2,949, as 12,486 enterprises were set up against 15,435 that closed. The number of closures in the January-May period, meanwhile, was 45.87 percent higher than in the same period in 2015, at 10,581.

Given these signs, Ravanis estimates that the new taxes may bring a short burst of revenues to the state but will also further eat into disposable income and, by extension, consumption. This will lead to lower revenues for enterprises, an inability to sustain many jobs and more debts to social security funds, he warns, painting a bleak picture of the future.

Vassilis Korkidis, the head of the Hellenic Confederation of Commerce and Entrepreneurship (ESEE), notes that the number of jobs lost since the start of the year is estimated at 30,000.

Workers’ unions are also very concerned. In the wake of the closure of the Athens Ledra Hotel and the Pyrsos security firm – leaving around 1,000 workers jobless in two days – the General Confederation of Greek Labor (GSEE) argues that current policies will only cause more businesses to close down and may, in certain cases, strengthen the “extortionist behavior of immoral employers.”

Panteion University Professor Savvas Robolis tells Kathimerini that social security funds have seen a drop in revenues of 4 billion euros per year because of rising unemployment, the reduction of state support and an aging population.

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