The Greek economy is starving, unable to breathe, and this is clearly evident from a survey by the Athens Chamber of Commerce and Industry published last week. The ACC is calling on the government to correct the suffocating situation faced by small and medium-sized enterprises due to government policy. They focus on the following: over-taxation, lack of financial tools, insufficient support from the state and a business environment that does not allow for growth.
The ACC survey, based on the responses of 502 of its member companies, reveals that 77.1% consider heavy taxation to be a major problem, while 34.7% consider energy costs to be too high. 27.5% complain about the lack of qualified personnel, while 17.3% are suffocating from a lack of financing. Of the self-employed, 61.8% state that the imputed taxation significantly burdens their income.
Government policy is tailored to the demands of large businesses, both Greek and foreign. The view of Finance Minister Kostis Hatzidakis, who clearly expresses the government’s view, is that growth can be based on large businesses alone. And all the measures he has announced so far, as well as all his public statements, reveal that he considers the growth model through small and medium-sized enterprises problematic.
The issue, however, is that if in a small country with a small market like Greece, you favor the growth of large businesses at the expense of medium and small businesses, you inevitably end up with oligopolies and cartel practices. We see this today in all sectors – and it makes sense. There is not room for many large companies in a small market, the obvious result will be the creation of oligopolies and when there are oligopolies, we have coordination and circumvention of competition to the detriment of consumers. In addition, production is limited, because a small market cannot support large industries, while it could easily support many small and medium-sized ones by absorbing their production. You will tell me that the large ones can also export. Indeed, they export, but little. Because global competition leaves low profit margins and they prefer to plunder the domestic market, in which they sell much more expensively than abroad and ensure excessive profit margins.
Competition in Greece can only survive when there are many small and medium-sized producers. And this is completely contrary to the beliefs and goals of this government, which pretends not to understand the problem and instead of fixing it, announces temporary fire-fighting measures every now and then.
So far, the government’s goal has been and remains to improve the country’s fiscal picture by creating surpluses and satisfying large foreign investors. The goal of fiscal consolidation was achieved and more, as the cost of all products and services increased due to the war in Ukraine and on this increased cost the government continued to collect 24% VAT, multiplying public revenues. However, this has made the cost burden for all Greek businesses and consumers much higher, taking oxygen away from the economy.
The result is that the numbers prosper and the people suffer.
It could – and should – have followed a much more flexible policy to relieve everyone from the increased costs, but it did not.
As for foreign investors, it did indeed satisfy them as much as it could by ensuring them superprofits at the expense of consumers, e.g. in banks. However, it did not manage to bring productive foreign investments that would increase domestic production and jobs. On the contrary, it attracted unproductive and short-term investments. It did not create a business – investment environment in which everyone, foreign and Greek entrepreneurs, could invest, on the contrary it created an environment that was very hostile to productive enterprises.
And while all business organizations, industry associations, etc., repeatedly point out the problems of bureaucracy and licensing, of overtaxation, of the high non-wage cost of social security contributions, of energy costs, of the lack of financing, the government pretends not to understand.
In practice, all that is mentioned is inapplicable and ineffective. Especially in Greece, most loans to small and medium-sized enterprises, we all know where they end up, when most of the time they become unpaid and go into the red. Nor will the reduction in VAT be felt by consumers because prices will remain the same, because they will be paid by those who make up the chain of those involved from production to consumption. The only thing that will save is the single taxation of around 15%, of what will remain after deducting income minus expenses.
