Major drop in profits and escalating unemployment the biggest problems

The 1999 earthquake affected 8,148 businesses in Western Athens (in the suburbs of Aghia Varvara, Aghioi Anargyroi, Aegaleo, Ilion, Kamatero, Peristeri, Petroupolis and Haidari). Of these, 18 percent (1,456 buildings) were classified for demolition. About 15 percent of all businesses closed down with the loss of 3,239 jobs. Most of them stayed open for business, probably in violation of security and hygiene regulations supposed to protect their 12,351 employees. Moving to new premises was the second option. Buildings, equipment and raw materials were damaged. Perhaps the damage to buildings was not the most important factor for the businesses themselves (most had been built without the proper permits). «Damage to goods and raw materials, fragile material, windows, tiles, perishable goods such as foodstuffs, and damage to equipment in businesses with sensitive machinery, along with the hidden costs (such as temporary closure and loss of customers), are far more important that damage to buildings,» said Costas Hadzimichalis, who headed the survey. Halting production had a drastic effect on the fulfillment of orders and practical matters involved in organizing sales, making it difficult to pay wages, taxes, social security contributions and rent, forcing many smaller businesses with marginal profits to close down. «Larger industries that had taken out insurance against earthquake damage, or those that were able to take stock of damage immediately, recovered quickly,» said Hadzimichalis. «However, the 6,692 small and medium-sized businesses that needed repair were not generally in a position to carry them out and either they stayed open as they were, or were forced to close down for at least a short period. This is something that the state agencies did not take into account, with serious repercussions. Customers who couldn’t wait simply looked elsewhere.» The earthquake resulted in a redistribution of production in Western Athens, where many of the so-called «invisible production networks» are sited – major contractors, piecework, business partnerships, leading to a knock-on effect of the damage. The immediate social effect was unemployment. Businesses that were not viable closed down. Others seized the opportunity to let more staff go than was legally permissible. After the earthquake, unemployment, which was already comparatively high in the area, jumped by 28 percent. The most jobs were lost in Kamatero, Peristeri and Petroupolis, and was highest among the middle-aged, reaching 51 percent among the 45-64 age group (37 percent among men and 19 percent among women). The researchers submitted questionnaires to a sample of 50 businesses in Western Athens. Of these, 47 had stayed on the same premises despite sustaining damage to the building. Of these, seven are still being repaired, another seven have done nothing. Forty-two closed down for a few weeks after the quake, 10 of them for over two months, creating huge liquidity problems and reducing the number of orders received for up to a year. «In Ilion, a large number of businesses closed down permanently, but within a short period of time a number of new ones opened because of the municipality’s administrative and technological reorganization. In other municipalities there was not such an intensive renewal of the urban environment,» said Hadzimichalis.