Greece's parliament has passed a new set of reforms to secure another agreement with creditors in exchange for more aid. Prices in Greece rose on Wednesday as part of the deal. CCTV’s Filio Kontrafouri reports from Athens on how small businesses, already struggling after six years of recession and tax hikes, will be impacted.
It’s a small, family restaurant almost 100 years old, having survived wars and fires. But lately, it’s been a struggle for its 24-year-old owner to keep it afloat. Business has been so bad in the last few years, the restaurant, he says is only open maybe two days a week. And the recent government reforms could be the final blow.
“From the moment VAT goes up, not only our prices go up but also our supplies, the food and the products that we buy. So we are forced to raise the restaurant’s prices so it can survive along with the people in here, a business that provides jobs. There won’t be any business when prices go up. People don’t have money to go out to eat, have fun, drink coffee. And because of all this, business goes down and we will slowly shut down,” said Stavros Eleftheriadis, restaurant owner.
According to one Greek study, more than 200-thousand small businesses closed during the first five years of the economic crisis. Last year’s capital controls imposed on the banking system made their operation even harder. The new Value Added Tax increase from 23 to 24 percent will be another blow, merchants say, along with the increase in social security contributions.
“There’s no chance we’ll transfer the extra 1% VAT to the customer. When a customer comes in, we give them a better price, how can we add the VAT difference? So we’ll have to cut our expenses. I’ve already done so on all fronts, aside from cutting the employees’ salaries. That’s what’s left to do next. The government must understand what increased social security contributions mean. They mean you also reduce working hours,” said Pavlos Politakis, merchant.
Small businesses are considered the backbone of the Greek economy. And for good reason. About 85% of all Greeks working in the private sector are employed by a small business. And each time one of them closes down, it adds to the unemployment problem --in a country where one in four is without a job.
Federations and unions also sounded alarm bells long before the new measures were even voted. The warning? Within months, thousands more small businesses will be forced to shut down.
In March, the organization that represents small businesses in Greece, predicted that more than 20-thousand would vanish by September. And along with them, thousands of jobs.
“If there are incentives given to the remaining 650,000 small businesses and they could hire one employee each, about 50% of unemployment would disappear overnight as long as we tackle the issue of unemployment not through policies of providing benefits to the unemployed but rather by supporting employment,” said Giorgos Kavathas, president of Geseve.
The government acknowledges the new measures ARE recessive. It also said it’s the beginning of the end of Greece’s six-year crisis something that for now, few small business owners seem willing to believe.
