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31 October 2017
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| Greek business (The Total Investment & Insurance Solutions |
If Greek business needed a role model, Stathis Stasinopoulos would make
an ideal candidate.
An athlete, engineer, and entrepreneur, he invented an easy-folding
bicycle design and began building them himself and created a small company. The
project was shortlisted for a national start-up award in 2014 and, the
following year, he peddled onto the stage to applause to give a motivational
speech.
Today, he has some advice for young Greeks with a good idea: "Get
your passport and leave."
In July, Stasinopoulos took his family and dream of a self-made business
and moved them from Athens to bicycle-friendly Bremen, a city in northwest
Germany. Years of effort had been crushed by high taxes and outdated bureaucracy.
"There are a number of reasons why I made the move. Many of them
have to do with taxes," Stasinopoulos said, speaking at the small workshop
of his newly-registered German firm, Velo Lab GmbH.
Greece is getting ready to exit its bailout program next year and the
country is finally emerging from nearly a decade of financial depression and
stagnation. For most Greeks, however, the recovery is likely to be slow and
painful as austerity measures will endure for years to come. That's
particularly true for many startups, which the government has put its faith in
to help the economy grow, but are burdened by red tape and the high taxes meant
to pay for the country's debts.
The government is trying to advertise the country as a potential new hub
for European investors looking to tap Greece's large pool of under-employed
university graduates. A limited number of new businesses can qualify for tax
breaks, but still Greece slipped in the World Bank's 2017 global ranking for ease of doing business. And most of
the new jobs being added to the economy are low-paid and seasonal. Nearly half
of the workers hired in 2017 do not officially work full time and are paid
under 400 euros ($465), according to government data.
The 41-year-old Stasinopoulos found himself in a bind familiar to many
in business. Taxes rose but rebate payments were delayed, and hopes of growing
exports were crippled when the government put controls on the size of bank
transfers two years ago.
In 2017, the government increased workers' monthly contributions to
health care and pensions and even demanded that businesses pay steep taxes on
earnings they had not even made yet but forecast for the following year.
Emergency taxes on income and property were extended to continue beyond the end
of Greece's bailout program, breaking pledges made by successive governments.
"That was the killer for me. It was impossible to continue,"
Stasinopoulos said.
Greece became unable to finance itself on bond markets seven years ago,
when it was revealed that its public deficits were much higher than reported.
As the country accepted loans from a eurozone rescue bailout and the
International Monetary Fund, it agreed to a drastic re-engineering of its
economy by slashing spending, public sector jobs and raising taxes.
Living standards dropped at the fastest rate in the European Union —
leaving nearly a quarter of the country unable to meet basic needs like heating
their homes or keeping up with utility bill payments. The crisis left just 49
percent of the adult population with a paid job, while up to 100,000 people per
year left to find work abroad, according to data from Greece's central bank and
the Paris-based Organization for Economic Co-operation and Development.
The country is now preparing to end its international bailout programs
in 2018 with an enormous bill left to pay: more than 320 billion euros ($372
billion) in national debt, or roughly 180 percent of annual economic output,
most of it owned not by private bond holders but rescue creditors from other
eurozone countries and the IMF.
There is relief that economic indicators are now getting better rather
than worse — not an assumption the country could often make in the past decade.
The European Commission expects the Greek economy to grow by 2.1 percent this
year and 2.5 percent in 2018. Credit for businesses is somewhat easier to come
by and deposits are trickling back into Greek banks, according to figures
reported this week by the central bank.
The number of businesses created since Jan. 1, 2015 finally exceeded the
number of failures several months ago.
"Despite all the hurdles, there is a positive outlook and there are
companies taking hope from that," said Nick Skrekas, a representative of
two Cyprus-based companies that recently expanded to Greece, corporate service
provider InvestCor Corporate, and cyber security firm GNL Europe. "When
companies expand to Greece it's a vote of confidence. After such a crippling
crisis, it's good news."
But the progress is painfully slow and doubts remain about how
successful governments have been in modernizing the public sector and business
environment.
"The recovery narrative coming from the government and the EU
institutions is overstated. Greece is benefiting from the strong cyclical
upswing in the eurozone," said Joan Hoey, regional director for Europe at
the Economist Intelligence Unit.
"Greece is on course to grow modestly this year, but from a very
low base," Hoey said. "The economy is still more than a quarter
smaller than it was in the first quarter of 2008."The Total Investment & Insurance Solutions
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