The Small and Medium-sized enterprises are found in a phase of shrinking and lasting frustration or in the best cases of the suspension of investment plans ("closed until further notice") due to the lack of any exogenous positive outlook, according to the latest economic climate survey conducted by IME GSEVEE. The latest crisis, which culminated in the imposition of capital controls, significantly worsened the actual business figures, while the signing of the agreement does not imply an automatic reversal of the climate. Indications of halting of the recessionary path shown during the second half of 2014 seem to be reversed significantly during the first half of 2015.

It must be stressed that the solution chosen at the end of these negotiations, despite the fact that it has excluded the disordered bankruptcy, deteriorates the catch-22 situation for the small enterprises, which except from being over-indebted and having to confront the vertical fall of domestic demand they have to encounter an extremely hostile environment of regulations that harms competition and leads to further oligopolization of the market.
Lack of liquidity, absence of private and public investment initiatives, stagnation of employment are alarming factors suspending indefinitely the country's path towards recovery. It is clear that the Greek economy tends to form and strengthen a dangerous «development- underdevelopment» dualism, where specific sectors and enterprises will be forced to switch to the informal sector of the economy in order to survive in an unfavourable taxation and competitive environment. IME GSEVEE estimates that due to the implementation of the new front-loaded austerity programme during the next six months there will be again a significant decline in business activity. The fiscal measures and the recession will hold back micro enterprises and the self-employed.
The government that will emerge from the upcoming elections is appealed, together with ensuring political stability, to seek for "solutions" in order to achieve economic recovery and restore confidence in an environment that hides significant risks at financial, geo-economic and competition levels. There is an urgent need for the formulation of an investment policy while drawing on national resources, private and public, as well as for the rapid absorption of EU funds in sectors of national interest with multiplier benefit. Production reconstruction and production base reforms must precede other reforms. The coveted extroversion must be combined with initiatives for creating solid domestic production base and market.

The main conclusions of the survey conducted by IME GSEVEE in collaboration with the company Marc S.A. on a nationwide sample of 1,005 micro and small enterprises (0-49 employees), between 21 and to 27 July 2015, are as follows:

A. OVERALL ECONOMIC SITUATION OF ENTERPRISES
1) The assessment of the first half of 2015 shows the disproof of positive expectations that had been cultivated during the previous half, as 84.3% of respondents reported deterioration of the overall economic situation of the enterprises (only 4.8% showing improvement), which leads us back to the figures recorded in 2012.
2) The average decrease in turnover stood at 21.23%, which is mainly due to the developments of the last quarter and the significantly reduced business activity that followed. Cumulatively for small and micro enterprises the total weighted reduction since the beginning of the crisis and after 2010 reaches 78%.
3) As regards the other figures 3 out of 4 enterprises state that this half demand was reduced (75.4%), orders were reduced too (77.1%) and liquidity worsened (81.7%).
4) Disinvestment rate is high, as 49.8% of the enterprises recorded reduction of investments during the previous six months, while only 4.9% has increased its investments. This situation is a harbinger of a continued depreciation of the Greek economy into a new spiral of recession - disinvestment- underemployment of production factors.
5) Forecasts on the course of the enterprises during the next six months are heavily influenced by the recent developments as regards the banks and the real economy. Indeed, uncertainty remains despite the achievement of an agreement, reflecting the true anguish for the next day of the Greek economy. The balance of negative and positive business expectations for the second half of 2015 soared to the levels of the period 2011-2012 (-61.6 from -7.2). All individual economic confidence indicators recorded overwhelmingly negative performance and pessimism for over 7 in 10 companies.
6) Indicative of the impact of new taxes and increased VAT is the trend appearing on the prices level, as the number of enterprises which states that it will raise prices in the next six months has more than doubled (from 5.7% to 12.6% ).

Β. CLOSE DOWNS- BUSINESS ACTIVITY

1) The percentage of small enterprises considering very or fairly likely the possibility that they will experience a serious breakdown to the extent of risking to closedown has returned to the levels of previous years, reflecting the actual survival problems that professionals and enterprises face. 46.3% of the enterprises considers as very likely the risk of closing down (compared to 32.9% in the relevant survey of February 2015).
2) 27.3% of small enterprises faces immediate risk of closing down during the next six months. It is estimated that reduction of enterprises during the next six months will amount to 63,000, especially with regard to micro enterprises. It is worth noting that 30% of self-employed states that they are likely to disrupt or suspend business.
3) It must be noted that according to the baseline scenario of the IME GSEVEE possible closedowns of enterprises that are in the "red" entail the risk of losing totally 138,000 employment posts (employers, self-employed, employees).

C. OBLIGATIONS - DEBTS
1) The majority of the obligations for enterprises with arrears has to do with the obligations towards the public sector (social security funds, tax authority, and public utilities). Significant increase was recorded in overdue obligations towards public utilities (from 25.5% to 29.1%).
2) In the field of tax obligations, despite the beneficial arrangements of 100 installments for tax and social security debts that the enterprises took advantage of in the first half of 2015 (3 out of 10 state that they have filed a request for entry compared to 11% in the previous arrangement) the fact that still remains is their explicit inability to meet the high tax and social security obligations in the next six months (37.9% stated default).
3) Much of arrears of enterprises has to do with the social security debts towards OAEE, that is the main social security fund for professionals (35.6%).
4) 16.3% of small enterprises owe overdue debts towards banks. The new arrangement for red loans and the protection of primary residence must take into account the fact of the steady increase of private debt.

D. EMPLOYMENT

1) The impact of the recent crisis on employment is evident since it is especially in this sector that practical business concerns about the economic outlook are manifested. 11% of enterprises reported staff reduction during the past six months while only 4.8% reported an increase.
2) In absolute terms the loss of total employment in micro and small enterprises during the previous six months of 2015 stands at 25,000 (of which 15,000 were salaried employment) a figure partly confirmed by the salaried employment flows published by the Ergani system, since in July there was a negative balance of hiring- redundancy (for the first time in two years), which sounded the alarm about the real state of the economy. It should be noted that this fact comes to contradict the expectations that had grown during the previous six months about a marginal increase of employment.
3) The picture about future employment flows is worrying. The outlook for the next six months remained negative, as about 1 in 4 enterprises foresees a reduction of personnel. The phenomenon is more intense in ‘larger’ enterprises (employing 5 persons or more) where there is a clear intention to proceed in a new restructuring of jobs and employment costs in order to meet the new financial burdens and sluggish growth prospects. Ιn contrast, it is expected that micro enterprises and self-employed will put themselves in idle mode, indirectly strengthening the informal sector of the economy.
4) It is clear that the marginal deceleration of unemployment that was recorded in previous months (ELSTAT, 25% in May 2015, monthly data) does not seem to continue in the second half of 2015. Findings from statistical projections by IME GSEVEE for the next six months are particularly worrying as the hiring-redundancy balance will tend to be negative, and therefore the unemployment reduction prospects are limited. Over 1 in 5 enterprises considers it probable that they will lay off staff during the next six months. This figure is higher in enterprises employing more than five people (40.2%). If the estimates of IME GSEVEE are verified then there is a risk of losing 55,000 jobs of salaried employment during the next six months. Overall, it is expected that 138,000 employment posts will be lost, if we count the number of those that will suspend business (employers, self-employed).
5) The element that constantly turns up repeatedly in the climate survey is the difficulty faced by SMEs in the timely payment of wages. 43% of the enterprises encounters this problem without any prospect of relief and 1 in 4 enterprises stated that they have reduced the wages of employees during the previous six months. Although declining (39% compared to 43%), the scheme of implementating flexible forms of employment remains. Indeed, 41.1% of the enterprises stated that they are very likely to reduce employees’ wages or hours of work during the next six months. Given the lack of prospects for increased demand and investment, this practice will continue to be a last resort for the enterprises.

Ε. SPECIAL ISSUES OF THE SMALL ENTERPRISES – CONSEQUENCES OF CAPITAL CONTROLS

1) The consequences of the imposition of capital controls were considerably painful. Vertical drop in turnover due to the imposition of capital controls was recorded for 9 out of 10 enterprises. 3 out of 10 enterprises reported a reduction over 70% while for the total of enterprises weighted average turnover stood at 48%. The immediate consequence was the shrinkage of consumption by 50% or by € 3.8 billion during this period. According to a moderate assessment it is estimated that from this reduction the Greek state lost 570 million euros that would come from indirect taxes.
2) The small enterprises were not ready to cope with the consequences of the imposition of capital controls and the closing of the banks. More specifically, only 1 in 2 enterprises uses e-banking for their transactions with customers and suppliers while 7 out of 10 do not have EFT / POS devices to perform transactions with credit, debit and prepaid cards. It is estimated that the high purchase cost of these devices and also the high analog cost of commission on turnover prevented small enterprises from their timely adjustment to the new digital banking era.

F. SPECIAL ISSUE – POLITICAL CONJUNCTURE
1) It seems that the position of the country in the hard currency is nonnegotiable despite the negative aspects introduced by the new unfavourable agreement for the country. The vast majority of respondents considers that the country should remain in the euro-zone (71.7%).
2) The business world appears quite skeptical and divided with regard to the political processes and the new electoral battle, the winner of which will have to manage the third memorandum. With regard to their political representation, more than 1 in 2 (56.5%) enterprises consider that no existing political formation represents their interests.

* This survey is the second one in 2015 conducted bi-annually by the Small Business Institute of GSEVEE in cooperation with the company MARC SA since May 2009. Conducted on a nationwide sample of 1,005 micro and small enterprises (0-49 employees), between 21 and 27 July 2015 and has as main objective to reflect the economic climate on micro and small enterprises in the sectors of manufacturing, trade and services, which constitute 99.6% of enterprises in Greece. The findings of this survey can be compared with those of previous surveys (May 2009 - February 2015). These surveys are the only tool to record nationwide the situation and the course of the largest part of the real economy in Greece.

As in previous surveys, so now, there is a clear record of the trends in the economic climate and the monitoring of key business indicators of small enterprises during the first half of 2015, while there is an attempt of economic forecast for the second half of 2015.

Επισυναπτόμενα

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Survey presentation	1683 Kb	09/09/15 10:09