Study of the IME GSEVEE: “Income – Expenses of Households ”

This is part of a press release published in the 7th if February by the the Small Enterprises’ Institute of the Hellenic Confederation of Professionals, Craftsmen and Merchants (IME GSEVEE). The institute a non-profit organization that carries out studies and surveys, concerning the micro, small and medium-sized enterprises of the Greek economy. Although the approach of the study is strictly business-orientated, and not so much social or humanitarian its conclusions are a good indication of the social impact that recent austerity measures had on Greek households. Additionally they are a clear indication that such measures fail to rekindle economic activity and the creation of jobs, as opposed to what austerity advocates claim.

Translated by ReINFORM

The Small Enterprises’ Institute of the Hellenic Confederation of Professionals, Craftsmen and Merchants (IME GSEVEE)

Press release

Athens 7 February 2013

Subject: Study of the IME GSEVEE – “Income – Expenses of Households ”

This study is part of a series of special surveys and studies conducted by the institute in collaboration with marketing and research firm MARC. The study was conducted on 1207 households covering the entirety of the Greek territory. The goal of the study was to record the consequences of the economic crisis on the income and expenses of Greek households, the influence on demand and the perspective of the consumer-citizen on the changes in quality of life, tax and general economic responsibilities.

The question that this study brings forth is whether is it possible to achieve economic development and the creation of job positions without sufficient demand and by strangulation of business liquidity, especially in the small and mid-scale businesses. About 85% of the new job positions that were created in the last decade in Greece, and Europe in general, came from small and very small scale businesses. On the other hand, large scale business had exactly the opposite behavior in creating new jobs (European Commission Report September 2012). Unfortunately decision making seems to ignore this reality (as indicated by the new tax reforms, increases in energy taxation and cutbacks on pensions and the welfare state).

In short this study came to the following conclusions:

− The emergence the society of the 50%. Almost half of the population is expected to be economically marginalized (is unable to fulfill their tax and loan obligations and is forced to buy lower quality products to fulfill these responsibilities).

− About 93.1% of households have suffered a reduction in their income in the duration of the economic crisis.

− 40% of households have at least one member that is unemployed.

− Most are pessimistic about the future of their households. Most predictions are negative (about 72% expect an additional reduction in their household income). This economic climate has an additional negative impact on the economic cycle.

− Households are at the edge dodging payment towards the public sector, public services and their loans due to inability to fulfill their obligations altogether (40% is actively delaying bill payments in order to be able to fulfill them and almost 50% does not have an income high enough to cover their expenses).

− A crisis of quality in the Greek economy is also observed: households are demanding increasingly lower quality products (42.5%) and companies supply increasingly more product of reduced quality. A danger of degradation of competitiveness of Greek products is detected especially for the products that are subject of international trade.

− Dangerous degradation of taxpayer responsibility for survival reasons. The great tax increase in products and services in conjunction with the over-taxation and decrease of incomes, “loosens” the taxpayer’s sense of responsibility towards his obligations, with a clear danger for the reduction of state income. 47% of the population (with increasing tendencies) are positive towards not acquiring purchase receipts if that would yield an economic benefit. This phenomenon should be taken into account in the tax reforms since it is not something that can be dealt by the threat of arrest, legal re-precautions and austerity measures.

− The consumer market is in constant “hibernation”, since 70% of households are expecting the 2 months of annual sales to acquire products of basic necessity.

− Significant reduction of household income stemming from business activities (just 12.6% of households identifies business activities are their main source of income). Most households are dependent on income coming from pensions (42.6%).

− Dramatic cutback in consumption after the horizontal income reduction; This creates a number chain reactions that influences the entirety of the economy (70% of households has made cutbacks on food expenses and 92% has made cutbacks on expenses concerning shoes and clothing).

Original Powerpoint