- Observatory: EMCC
- Published on: 14 May 2013
Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.
The current social and economic crisis has brought a halt in the public discussion regarding statutory policy concerning very small and small businesses in Greece. Even though, during the previous years, there has been an effort to specify nation-wide actions to deal with the issues facing small and medium enterprises in the country, the crux of the matter remains that there are no specific instruments targeted specifically for Small and Medium sized enterprises and that actions offered are general active/passive employment policies carried out almost solely by Human Manpower Organization (OAED). Herein can be found the context of the dialogue conducted between the Ministry of Finance and the social partners in previews years, as well as many of the still on-going actions.
Part 1: Overall policy context
1.1. Has there been public or policy debate on the specific challenges for SMEs and/or their employees in restructuring before the global recession of 2008/09? Please specify, for example:• If so, since when (e.g. up to 3 years before, 3-10 years before, longer), at which level (national, regional, sectoral, all of them) and in which form (‘real’ policy debate mirrored in policy documents or rather public debate mirrored in media, or both)?• Which policy areas (for example, SME policy, entrepreneurship policy, employment policy, social policy, regional policy etc.) were involved? Particularly: Does SME policy specifically deal with restructuring? Does ‘restructuring policy’ specifically deal with SME issues?• Did the public and policy discussions deal with restructuring as such or were specific types or phases of restructuring covered?• Which were the issues/contents that have been discussed? Which specific characteristics of SMEs in restructuring were considered in this context? Was the specific case of SMEs as subcontractors a topic for discussions?• Did the discussions rather deal with the enterprise perspective or with the employee perspective or both?
Small and Medium sized enterprises (SMEs) comprise the vast majority of all businesses operating inside Greek territory, employing the majority of the Greek workforce which makes them the backbone of the country’s economy as well as the provider of means for a considerable percentage of the populace. In this case, governmental policy has been in concert with the importance of the SMEs to the Greek economy, providing incentives to promote self-employment, hiring the first employee and creating more jobs in micro enterprises, these family-based businesses being the primary focus of this attempt since approximately 1997. However, these efforts were fragmentary, with limited means and no planning for the collection of data which could assist in the comparison and evaluation of the actions’ objectives. Moreover, social dialogue on the challenges facing small and medium enterprises from globalisation, namely the need for restructuring and modernisation was producing gradual, if slow, progress. The reason for this delay lays mainly in the deviation of opinions of the social partners, their usual trend of conflict and the different, often contradicting approaches of statutory cross-sectoral legislation for SMEs. The first attempts to generate social dialogue on some of the aspects of enterprise restructuring were initiated at national level by the Economic and Social Council (OKE), an institution comprised of representatives from employers’ and employees’ syndicates, which released a number of opinions concerning the dangers for social cohesion and employment from restructuring in the business world during the years 2000-2005. These opinions were mainly focused on the need to strengthen employment and competitiveness of the Greek enterprises (op. 64, op. 91, op. 98, op. 104, op. 117) on the one hand, while on the other, to ensure that the proposed changes would not negatively affect employment. In addition to OKE’s attempts to bring the subject of restructuring to the public sphere, there have been several state initiatives to reinforce SMEs during the same period.
The first organised attempt to host social dialogue on the challenges facing the Greek enterprises began in 2004, when the Ministry of Finance launched an extensive social dialogue in regional and national level, including production agents and the social partners, in order to finalise the National Plan for Development (NPD) 2007-2013. The NPD was to include the totality of developmental priorities and programmes, both statutory and communally funded, the National Strategic Reference Framework (ESPA) and the cofinanced Operational Programmes (EP). The objective of the social dialogue was to harmonise the national efforts with communal efforts: the EU policy for SMEs dates back to when the first action plan was approved in 1983 at the end of the European Year of SMEs and the craft.
In this wider spectre of public debate, representatives from GSEVEE (The Hellenic Confederation of Professionals, Craftsmen and Merchants) and ESEE (The National Confederation of Hellenic Commerce) focused their concerns on the problems facing small and medium enterprises from globalisation and mapped their request for cohesive governmental policies in the entirety of the business sector. The employers’organisations provided their suggestions covering actions to consolidate financing for Greek enterprises, to promote developmental programmes inside the confines of the fourth Community Structural Fund (SCF), to strengthen competitiveness and employment by the creation of competitive and sustainable full-time jobs in SMEs and promoting vocational training on the one hand, while petitioning for particular policies supporting the creation of SMEs and employment in areas of deindustrialisation, production restructuring and areas with strong presence of very high unemployment (cumulatively) on the other. In addition to these requests, GSEVEE and ESEE also suggested the reorganisation of the labor market and industrial relations without, however, further deregulation of the existing structures, minimum wage, pension rights etc).
The dialogue generated between the social partners in this context included a wide variety of issues concerning enterprise restructuring. The prime focus of the discussion was employment policy, where upon the social partners made several observations. The most important of them were the need for constant flow of finance for the enterprises where the syndicate representatives suggested governmental policies such as the founding of a financial and support system for SMEs in control of interest subsidies and loan guarantees as well as the inclusion of small business investments in development incentives and simplified procedures based on qualitative criteria of development, employment, innovation and reliability of the investment. Further, the social partners proposed incentives to promote regional employment (inclusion of the social partners in the regional development initiatives, utilisation of SMEs to regional convergence through the development of sustainable and competitive activities) as well as restructuring-focused initiatives such as a governmental turn on the creation of sustainable and competitive full-time jobs in SMEs, especially the very small enterprises (employing less than 20 people) and self-employed enterprises with combined measures (programmes) active employment policy and investments. In general, the conducted social dialogue preceding the financial crisis was mainly based on the perspective of the Greek enterprises rather than the employees, putting the focus on the need for competitiveness and modernisation of production and reduction of work cost rather than the protection of the employees and the preservation of jobs and labour rights. This persistence on focusing on the needs of the enterprises is of particular interest considering that in the case of Greece, where the process of enterprise restructuring followed the international trend with the same intensity, the dominant aspects of restructuring were merges/acquisitions: most importantly, the Greek trend was multi-sectoral acquisitions, where an enterprise would acquire the stock rights of similar businesses in order to acquire access to new market possibilities. An example of this practice is IT companies intervening in e-trade or banks acquiring businesses from across the services sector (INE/GSEE, Study case No.30, ‘Mergers and Acquisitions of Enterprises: The results in labour rights and employment’). This study also provides useful insight on the mainstream practices following an acquisition/merge, namely changes in the number of workforce in the enterprises involved (in 7 out of 10 cases) where voluntary exits following the restructuring of the enterprises and the ‘aged’ (over 45 years old) employees being the primary group suffering from job losses can be observed, a shift in the balance of labour contracts with the context of 1/3 of the new contracts signed being about flexible employment and finally, a change inside the enterprise where the managerial right is strengthened, promoting personal bargaining instead of the usual collective processes.
1.2. Did the global economic and financial crisis of 2008/09 cause any change in focus of the above (for example, increased/decreased focus on SMEs and their employees in restructuring, change in policy areas or issues covered)?
The Greek economic crisis has led the government to further specify the National Plan for Supporting Small and Medium-Sized Enterprises (2010-2013) as well as assisting for the further strengthening of self-employment support programmes already in action. The goal of this policy is to promote competitiveness and improve the regulatory framework which usually hinders enterprise growth in an attempt to promote job creation. Several of the actions shouldered by the government aim at innovation and competitiveness (that is, Youth Employment programmes) as well as to target specific groups like young people, the unemployed or women. Finally, it should be mentioned that there has been an attempt to diversify actions aimed at Very Small Enterprises and those aimed at Medium-sized Enterprises with public policy and discussion ending, in majority, to additional actions focusing on battling the effects of the economic crisis as well as boosting the Greek Government to shoulder a more interventional role.
1.3. Are social partners or employers’ and employees’ organisations involved in public and policy debate on restructuring in SMEs?• If so, which (types of) organisations and at which levels?• What are their opinions, perspectives, recommendations?• Did they succeed in convincing governments or public authorities at various levels of their viewpoints?
Social partners are involved in public and policy debate concerning SMEs’ restructuring. On the employer’s part GSEVEE and ESEE are the prime social partners who involve in public debate on the issues of restructuring in SMEs while the Greek General Confederation of Labour (GSEE) acts in the same way on the part of the employees. Both sides have laid out many suggestions and voiced many concerns on the issues of enterprise restructuring. In the case of GSEVEE and ESEE, these opinions were voiced during the public dialogue initiated by the Ministry of Finance in 2004 in the confines of determining the actions to be incorporated in the National Plan for Development (2007-2013). Their recommendations were trilateral: the social partners requested solid governmental policies to promote stability in the financing of SMEs (for example, the founding of a financial support system for SMEs in control of interest subsidies and loan guarantees), actions to promote competitiveness and modernisation in order to maintain jobs and finally, regional policies supporting the creation of SMEs and promoting employment in areas of deindustrialisation, where there is strong presence of very high unemployment. In the case of GSEE, INE/GSEE has released a study on the results of SMEs’ restructuring, focusing on the cases of mergers and acquisitions, which goes in length to proving the social and labour issues caused by restructuring, mainly the changes in the agreement contracts within restructuring enterprises, the retraction of collective bargaining in favour of managerial right and personal bargaining, and finally the loss of jobs in the case of the elder employees with the first group to experience job loss being the employees aged 45 and older (INE/GSEE, Study case No.30, ‘Mergers and Acquisitions of Enterprises: The results in labour rights and employment’).
Part 2: Support instruments
2.1. Please provide an overall assessment about how accessible and suitable public and social partner based restructuring support for companies in general are for SMEs or their employees.• Do SMEs and/or their employees generally have access to the available instruments and are these suitable for their specific needs in restructuring?• Are there specific (types of) instruments (for example, targeting specific types or phases of restructuring, offered at specific administrative levels) that are more/less accessible and suitable for SMEs and/or their employees that for larger firms? If so, why?
In Greece there are no specific actions/instruments targeted at the negative effects of business restructuring. Due to limited research and experience of the phenomenon, since there are virtually no cases where businesses restructured on grounds of new business specialties and/or new technology introduction, the general measures for contract cancellation (in the case when restructuring is followed by job losses) and the active/passive employment policies are used for companies in general. The main, if not only actor in these cases is Human Manpower Organisation (OAED) which, in concord with the Ministry of Employment, carries out programmes and initiatives which aim at managing the negative side of restructuring.
OAED’s subsidy is the main instrument available to employees suffering job losses from restructuring, extended for a period of one up to two years depending on the work days the employee had completed during the fourteen months prior to their contract cancellation/expiration. The subsidy amounts to € 367.25 and is given every twenty-five days.
OAED’s programmes reflect the statutory policy for maintaining employment and offering incentives to the employers to hire the unemployed. This inclination was realised by the organisation’s support during job hunting, its training programmes for the unemployed and the financial support for job creation, mainly on the Public Sector. Several programmes and initiatives carried out by OAED are also suitable for SMEs and their employees. One example of such programmes is the programme entitled ‘Subsidy of 200,000 full-time jobs through the subsidisation of employers’ social security contributions for the maintenance of at least 400,000 jobs in enterprises and private sector employers in general’ which reliefs the employers from the social security contributions, providing incentives to retain the current workforce as well as create a favourable climate for further hiring. It should be noted here that OAED’s programmes are mainly financed by the European Social Fund.
In recent years, the Greek government has enacted various laws designed to foster growth in certain sectors of the economy, encourage investment in rural areas, and attract foreign investment. For example, Investment Law 3299/2004 replaced Law 2601/1998 and introduced substantial and procedural changes to the regime of state aid to corporations. The new law provides for the same type of incentives as the previous regime (cash grants, leasing subsidies, and tax relief) with the exception of interest subsidies (due to low interest rates), while it adds a new incentive, a cash grant for payroll expenses relating to employment created by an investment. The cash grant for payroll expenses covers a percentage of the total payroll cost of each new employment position, depending on the geographical area. Investment Law 3299/2004 was partially amended at the end of 2006 to be harmonised with the new Regional Aid Map that will apply to the EU for the period 2007-2013. The Map defines new regional aid guidelines as well as new maximum permissible limits of state aid. Similarly, the objective of the New Investment Law (3908/2011) is to promote economic development in the country by creating regimes, strengthening investments, which improved entrepreneurship, technological development, business competitiveness and regional cohesion that promote the green economy, the effective operation of infrastructure availability and the utilisation of human resources in the country. The projects that fall under the New Investment Law provide the following types of incentives:
- Tax Exceptions on Profits. It must be marked that the tax exemptions incentive constitutes an income tax exemption on profits before taxes as determined on the basis of tax legislation of the entire business enterprise.
- Targeted Capital Subsidisations, that constitutes the donation from the State funds to cover part of costs of the assisted project and is determined as a percentage of them.
- Leasing Subsidy that constitutes the financial coverage from the State of the overwhelmed doses of financing hire that is contracted for the acquisition of new mechanical and remaining equipment and is determined as percentage on this value of acquisition that is included in the overwhelmed doses. The subsidy of financing hire cannot exceed the seven years. The eligible investment projects are falling into two categories, General Investment Projects and Special Investment Projects. The General Investment Projects are divided into: General Business, for which the tax exception is provided in conjunction with low interest loans from ETEAN. Technological Development, which includes investment projects for technological modernisation of enterprises with the use of technological and organisational innovations, such as systems assurance and quality control, certification, technology, energy saving projects and research and development and use of specialised scientific and research potential. These investment projects provided the aid of a grant or leasing subsidy by 80% for existing businesses or 90% for new and the rest filled with tax exception and low interest loans from ETEAN.
- Regional Cohesion, which includes investment projects in productive activities that build local competitive advantages, local needs and address regional problems in an environmentally sustainable technological applications, introducing energy saving technologies and use of water resources and contributing to environmentally friendly reconstruction, rehabilitation and development areas economic activity. These investment projects get a grant or leasing subsidy of 70% for existing businesses and 80% for new businesses and the rest filled with exemptions. The Special Investment Projects are divided into: Youth Entrepreneurship. In this category is included the investment projects submitted for the establishment and operation of small and very small enterprises where at least 50% of the capital is held by individuals under 40 years old who exclusively manage the company. Major Investment Projects. This category includes investment projects of at least € 50 million. These major projects can receive one or a combination of all the incentives, on the condition that the capital grant or the leasing subsidy does not exceed 60% of the entire subsidy provided. Integrated Long Term Business Projects. This category includes long term (two to five years) integrated plans for businesses which have been in operation for at least five years. The business projects must be for a minimum total amount of € two million that includes technological, administrational, organisational and business modernisation development costs. Tax exception is provided for this category of investment projects.
- Synergy and Networking. This category includes investment plans submitted by synergy and networking schemes aiming to implement programmes. Such programmes must either develop competitive business advantages, or best utilise infrastructure created with the aid of national and European financing, or contribute to the adaptation of specific and geographically defined productive activities and services towards a modern financial and technological environment. The New Investment Law excludes investments such as in steel, coal, synthetic fibers, public enterprises and also problematic enterprises as well as specific business sectors such as construction of buildings, legal and accounting services, production of electrical power from photovoltaic systems, advertising, offshore organisations and agencies. Additionally, investment projects which still fall under the provisions of the new investment law include those for the establishment, expansion or modernisation of three star hotel units or hotel units which are upgraded to at least three stars. The law also covers investment projects regarding the modernisation of hotel units before the expiration of six years from the commencement of operation of the hotel unit or from the date of issuance of a decision regarding an integrated investment for modernisation of the hotel unit. Furthermore, investments in the health tourism sector also still fall under the provisions of the new investment law.
2.2. Do there exist specific public or social partner based support instruments explicitly targeting at SMEs and/or their employees in restructuring? Please specify, for example:• If so, by whom are they offered (public vs. social partners/employers’/employees’ organisations) and at which administrative levels (national, regional)?• Are the activities of different support service providers coordinated? If so, how and how well does this work?• Which phases of restructuring do they target?• Which types of restructuring do they target?• Do they target SMEs in general, or specific size classes, sectors, regions, legal forms, roles (for example, as subcontractors) etc.? Do they target employees of SMEs in restructuring?• What type of support do they provide? What specific challenges for SMEs in restructuring do they address?• Is there some information about how well they are known among SMEs and their advisors and about how they are generally assessed by the SME sector? What are their strengths and weaknesses? Are there recommendations for improvement?
Currently there are several instruments targeted at SMEs such as Business Angels, OAED’s programmes such as the ‘Programme for the 'structural adjustment of small and very small enterprises employing 1-49 persons, during the economic crisis’, the programme for the ‘Structural Adjustment of Workers and Enterprises during the economic crisis’ or the programme for the ‘Promotion of Employment through the Subsidisation of Social Security Contributions for the Recruitment of 25,000 Unemployed Persons’. In addition to the above, there is also LAEK fund for the purposes of vocational training, the short-term export credit insurance offered by the Ministry of Finance and ECIO (Export Credit Insurance Organisation) and finally, Centres of Entrepreneurial and Technological Development (KETA) funded and organised by the Ministry of Development and the General Secretariat of Industry.
The aforementioned instruments target SMEs in general, following the trend for avoiding specialisation in statutory policy, and are predominantly focused on the anticipation phase. Their role is to provide advice, support on internationalisation/growth, training (in the case of LAEK) and access to finance (in the case of the short-term insurance scheme). These instruments answer the challenge for information and technical advice on the one hand and provide employment incentives and access to much needed finance during the economic crisis.
Finally, there is no official information on whether these instruments are well-known among SMEs, but some of these projects have been running for a period of years and their effectiveness, participation and progress rate allows for some speculation. Specifically, since 1988 when the short-term credit insurance has been in effect, more than 700 Greek export companies have benefited and to this day, ECIO's value amounts to €1.47 billion, including the state guarantee capital.
Part 3: Good Practice
Name of the instrument in national language and English:
Κέντρα Επιχειρηματικής και Τεχνολογικής Ανάπτυξης (ΚΕΤΑ)
Centres of Entrepreneurial and Technological Development
These centres are an important part in assisting small and medium enterprises in the country by providing access to information and raising awareness on the possibilities and issues facing SMEs in the modern, globalised economy. In addition, there are several cases where these centres have cooperated with the local student community or the local government (e.g KETA of Central Greece). Finally, the KETAs have also focused on assisting SMEs in turning their business to exporting as well as bringing small and medium-sized businesses in contact with technology organisations. Overall, KETAs are a fundamental institution.
|Date of Launch/End date:||
Coordinated and supervised by the General Secretariat of Industry and the Ministry of Development.
|Other involved actors:||
Regional prefectures (local governments)
|Source of funding:||
National funds, European Regional Development Fund (ERDF), private companies.
Centres are mainly available to small and medium enterprises (SMEs), with a particular emphasis placed on the needs of small and very small enterprises.
|Phase of restructuring targeted:||
|Type of restructuring targeted:||
Advice, support on internationalisation, support of companies’ growth
|Purpose/content/characteristics/description of services:||
The 13 centres operate in the capital city of every prefecture of each region. They act as a one-stop-shop, providing information on the export of goods and services and on activities aiming to support export efforts (including, for example, the development of prototypes to benefit export marketing). They also provide organisational assistance in form of providing know-how and advice. An 'expert tool box' provides information on specific topics (for example, IT skills). In addition, the centre encourages companies that are ready and able to embark on export activities to work collectively in the promotion of their goods and services in international markets. This work involves the involvement and cooperation of the Hellenic Foreign Trade Board.
|Outcome of the instrument:||
Unfortunately, there is no information available on the number of beneficiaries or the effects the KETA had on SMEs.
|Strengths/success factors of the measure:||
Centres have provided information and improved awareness among SMEs; libraries have been set up and are used as information centres for KETA (e.g. in Epirus, Crete). Certain ΚΕΤΑs have taken the initiative in cooperating with the student community. Finally, good and interesting practices that have been developed include mediation initiatives between technology organisations and enterprises in the region (e.g. ΚΕΤΑ of central Greece).
|Weaknesses/bottlenecks of the measure:||
No information is available.
As mentioned above, the financial crisis has put a hold on the ongoing public dialogue on the matter of SMEs and their specific needs in the modernised, globalised conditions of competitiveness. Despite many suggestions placed by the social partners regarding the needs of SMEs for competiveness, modernisation and financial support or the need for special policies which could provide incentives for employment in deindustrialised areas of high unemployment, these suggestions were largely looked over. What actions have been carried out so far have been the initiatives of, mainly, OAED, and revolve around the need to boost employment in SMEs with programmes that relief employers of their social security contributions to maintain jobs and subsidies from OAED to make the hiring of new personnel more appealing. Nevertheless, programmes such as the Centres of Entrepreneurial and Technological Development go a long way in assisting in the preventive phase of the restructuring process. Finally, it should be said that there is certain doubt on the effectiveness and ability of the existing programmes and instruments to deal with the current situation while, in the meantime, the continuing spiral of recession makes dealing with the social repercussions of restructuring in SMEs an ever harder matter.
Kostas Achontakis & Elena Kousta, Labour Institute of the Greek General Confederation of Labour (INE/GSEE)