Why social enterprise in Greece is a modern day myth

Friday, 4 May 2018 14:30 GMT

ARCHIVE PHOTO: Employees sit behind a stand with souvenirs at a shop for tourists in Plaka neighbourhood in central Athens March 31, 2009. REUTERS/John Kolesidis

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The number of social enterprises in Greece has mushroomed, but their social impact is negligible.

Over 2,000 social enterprises have sprung all over Greece since the crisis hit hard back in 2010, according to the Ministry of Employment Registry.

Greece lost roughly 30% of its national GDP; a sign of ultimate duress when compared to Syria which has seen its economy shrink by 25% amidst a devastating civil war.

Yet, it’s now more than evident that this peculiar social business sector is nothing but words, with no social impact created or employment generated in a setting that is desperate for social innovation that delivers.

People have begun starting up social enterprises for the wrong reasons: because they are a cheap substitute for a regular enterprise with more elastic social insurance obligations, since their members are not liable as is the case for all other entrepreneurs.

There is also a better chance of subsidies and preferential treatment from the local public sector, since they enjoy many advantages provided by law when it comes to utilizing public facilities for commercial use.

Very few high net worth individuals - if any - have participated as impact investors. No single social enterprise was set up by a socially responsible corporation or a charity-making foundation. The not-for profit incentive is not here.

Greek social businesses suffer a dramatic lack of committed capital, which is also widespread in the Greek SME sector. Capitalization of the majority of social enterprises is in most cases virtual or evidently inadequate, usually a ceiling of a few hundred euro of committed capital.

Their business orientation is necessity-driven, in many cases resembling charitable, non-profit-making associations having no solid mid-term entrepreneurial vision or action plan and directly targeting grants in a very short-sighted manner.

All in all, the social business sector in Greece produces an annual turnover of some hundred thousand euro, as recently presented by ministry officials in a dedicated public event.

in 2011 the European Union encouraged Greece, via its Social Business Initiative, to pass a law dedicated to social economy and social entrepreneurship. But so far the regulatory context has just triggered the wrong responses.

Many former municipal public enterprises were shut down due to downsizing of the wider public sector in Greece and political pressure pushes towards substituting the former with new social enterprises bidding for local public contracts.

No visible social business public demand exists in Greece yet. Local public budgets are at a total loss with municipalities having already entered a long tunnel of fiscal consolidation, cutting down public expenditure, re-profiling their debts and practically minimizing their annual deficits.

The Greek social business bubble did not appear out of thin air. Venomous dynamics push towards the substitution of conventional small enterprises by social businesses: the sky-rocketing costs of entrepreneurship, expressed via a totally irrational taxation and social insurance contribution context make it inevitable that the unemployed and the latent pool of inactive freelancers would come up with a genuinely Greek solution.

As if caught up in the epic episodes of a modern Odyssey, Greeks have made their first encounter with social innovation a block-busting myth: the European Union Gods and the Greek bureaucracy envisage that social innovation has been boosted in the crisis-torn member-state.

But Greeks themselves receive their messages only as tokens of a luxurious worldview which does not pay attention to the earthly needs of subsistence, and pays less than entrepreneurship borne out of necessity.

Ioannis Nasioulas is the founder and director of the Social Economy Institute