IME Research GSEVEE – August 2017 – Biannual Economic Impact of Small Businesses

RETURN TO REGULARITY FOR SMALL AND MEDIUM – SIZED ENTERPRISES – IMPROVING ECONOMIC INDICATORS, BUT LOST THE STRUCTURAL INCIDENTIALS THAT WANT DEMAND AND INVESTMENTS

IMPORTANT CHALLENGE OF THE PARTICIPATION OF SMALL ENTERPRISES IN DEVELOPMENT DIVISION

The first half of 2017 marks the gradual return of economic activity to a minimum of normality, which is manifested by the simultaneous improvement in the economic and macroeconomic environment indicators, which all other parameters are constantly anticipating – the medium-term sustainability of a stable growth rate across the economy. Under the current circumstances, the projection of a 2% annual growth rate approach in 2017 seems realistic and achievable. It should be borne in mind that the elimination of uncertainties about the outcome of the negotiation and the conclusion of the second assessment (which is observed in each round of evaluations and distorted duplication of publications) from the equation of the Greek economy creates a more favorable environment for businesses, households , financial stability and investment initiatives.

The decline in unemployment, the achievement and over-achievement of fiscal targets, the positive balance of business write-offs, the strong performance in the tourism industry are undoubtedly positive developments for the Greek economy. Without neglecting the negative effects of a rigorous fiscal adjustment policy, it is evident that at this stage in the economic cycle the marginal effect of the contraction and the negative multiplier is marginal. However, postponing measures for the next two years (with regard to tax-free and pension-related interventions) simply postpones the economic decisions of households and small businesses in the future, coupled with low savings and a reduction in disposable income, leads to a deterioration in the demand and investment indicators of small businesses (a finding also emerging from official data).

On the supply side, the difficulties faced by businesses remain with the previous accumulation of financial obligations, with 1 in 3 having late debts, either in public insurance funds or in banks, in the private sector. Effective enforcement of the out-of-court debt settlement mechanism will determine to a large extent the form that the new economic allocation will take in the country in the coming years.

Alongside the existence of a number of businesses responding and keeping pace with growth dynamics, a significant proportion of enterprises (over 50%), which is governed by the characteristics of “need entrepreneurship”, contributes significantly to employment. Thus, the phenomenon of informal entrepreneurship and undeclared / undeclared work does not seem to subside and takes on new forms.

Structural problems are most evident in micro-enterprises and self-employed, for which there is a lack of a coherent framework for enhancing liquidity and ensuring their sustainability, either through widening their participation in wider clusters or through their inclusion in value chains and opening up to new over-the-top markets. Small manufacturing enterprises, which have such opportunities to overcome the narrow business horizon, – unlike commercial ones – are unable to compete in the existing overbilling and networking environment.

IME GSEVEE’s economic conjuncture confirms the positive trajectory of the Greek economy and at the same time demonstrates the need to develop specific policies that focus on the needs of the small manufacturing unit and will financially facilitate small and medium-sized enterprises as a whole. The move towards a “growth for all” goes through the simultaneous exploitation of available tools and tools for all businesses in a cost-effective and sustainable way.

In the next period, economic policy should be geared to differentiated solutions – interventions, depending on the target groups they are called to serve:

1. For small businesses that have growth potential, incentives to invest and promote them in larger and larger markets.
2.
For firms in difficulty, a coordinated strategy for restructuring and restoring the market, with simultaneous adoption of early warning and second chance mechanisms.
3.
For companies that appear to be weak and in danger of being closed, with serious implications for employment and the survival of members, it is proposed to establish a solid social protection mechanism, including actions to immediately clear and exploit productive equipment and human capital, with parallel coverage of professionals for the risks of stigma, poverty and exclusion from social and economic life.