Greece’s business backbone nears breaking

As Greeks hope for the best outcome to the crisis shaking their nation, small businesses are preparing for the worst.

Maria Iliadou, who owns a franchise for the Goody’s Burger House chain in Thessaloniki, said suppliers who used to get paid by electronic banking were asking for cash for July. With capital controls now in their second week and banks shut, she said she would have to close by the end of this month if she couldn’t access her bank account.

“I, and the other people like me who have a business to run, or have job positions in the private sector, are dubious about the conclusion of an agreement and are anxious about the time being lost every single day,” said Iliadou (37).

There are few signs of progress. Prime Minister Alexis Tsipras was given a Sunday deadline by European leaders to work out economic reform proposals that would let Greece stay in the euro. In last weekend’s referendum, 61% of the electorate supported his call to say “no” to austerity.

Greece’s biggest companies tend to have accounts abroad that aren’t affected by withdrawal limits. It’s the smaller businesses, the backbone of commerce, that are living day to day as the government’s confrontation with the euro region heightens. Greece has one of Europe’s highest proportions of small enterprises and people working for themselves.

The ratio of self-employed to the labour force is about 35%, according to a report by the Washington-based Centre for Economic and Policy Research. Among services companies, more than 60% employ fewer than 10 people, according to the Organisation for Economic Co-operation and Development.

Many are soon to be in “irreversible deadlock”, according to Haris Makryniotis, the managing director of Endeavor Greece, part of a New York-based nonprofit organisation that backs entrepreneurs in the country.

‘Out of control’
“Things have gone out of control since capital controls and cross-border transaction limitations were imposed,” he said. “This situation will very soon be irreversible. We expect shortages of goods in the next couple of weeks and dramatic shortages of basic foods within one or two months.”

In the affluent Athens district of Kolonaki, Areti Georgilis said her bookstore, with a gallery and coffee shop, was on the brink of collapse: sales were down 90% in 10 days. She had to dismiss two of her employees last week.

“This week, I have to make the critical decision of whether to stay open or think of another city in Europe,” she said. “Until now I was a healthy business. Now foreign wholesalers have decreased my discount and credit.”

Efstathiou, a pharmacist in Athens who didn’t want to give her first name, said her immediate concern was supplies.

“There are many medicines we don’t have enough of,” she said, pointing to a piece of paper with about 30 drugs listed. “But I’m not worried. I think we will be okay.”

That optimism is shared by Tsipras’s supporters, according to Iliadou. She voted “yes” to creditor proposals for more austerity in the Sunday referendum to ensure Greece stayed in the euro and banks reopened. Most of her employees, who are under 30, voted “no” with the majority.

“People who voted ‘no’ are completely relaxed and not expecting any consequences,” said Iliadou. “The devoted followers of Tsipras absolutely honour him and believe this will end in a few days.” – © Bloomberg


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