The fabric of the economy, that is the enterprises that compose the Greek market, is in a slow but steady process of transformation. The number of companies in commerce and production is fast declining as shutdowns increase, but this process is not being accompanied by the streamlining that is expected from economic theory.
Every sector is caught up in the same pattern: Everywhere there are fewer and bigger players – from retail commerce, food, books and electronics, to insurance, banks and coastal shipping – though not necessarily in a healthier position than they were before the crisis and without the benefits of competition.
Likewise, Greece has its own model when it comes to mergers and acquisition. Groups absorbing or merging with others do so in an environment of zero or negative growth, rendering their future prospects doubtful.
At the same time, we have thousands of “zombie companies” (accounting for around 17 percent of the total, according to estimates by PricewaterhouseCoopers) that are overindebted, unable grow, have negative operating profits and cannot service their loans, yet continue to shuffle along while depriving turnover from healthier groups and marring banks’ financial reports.
The demise of the small Greek business – not necessarily because of the operation model but mainly due to the irrational burden of rising tax and social security obligations – is the clearest and upward trend in the local economy. According to the recent “Inclusive Growth and Development Report” by the World Economic Forum, Greece is failing to provide support for small and medium-sized enterprises, even though SMEs are regarded as the backbone of developed economies and a dynamic force in economic activity.
European Commission data presented at a recent general assembly of SMEs, meanwhile, showed that 2017 is expected to see a further decline of very small businesses in Greece. “The outlook is modest with no signs of further recovery,” reads the SBA FactSheet 2016, published in late November.
Added value in the entire economy shrank 35 percent from 2008 to 2015, while employment contracted 22 percent. Prospects for 2017 remain poor, with added value set to shrink another 2 percent and no change in employment.