Greek Start-Ups Say They Can’t Solve Jobless Problem

Haris Makryniotis of Endeavor Greece has shown the way for entrepreneurs
Haris Makryniotis of Endeavor Greece has shown the way for entrepreneurs

With Prime Minister Antonis Samaras saying small start-up companies can help Greece reduce the country’s record unemployment rate, the entrepreneurs he’s counting on say their businesses won’t produce enough jobs to make a difference.

The jobless rate is hovering around 27.6 percent, and as been as high as almost 65 percent for those under 25 percent, with many of the young giving up and fleeing to other countries for work and a new life as Greece endures a crushing economic crisis.

Samaras last year said he was going to unveil a program this January to put 75,000 young back to work but then never said anything else about it.

Greece needs small companies specializing in the “new economy” to help spark growth, Samaras said this month at a startup industry event in Athens he attended with German Chancellor Angela Merkel.

“Start-ups do create jobs and revenue for the country, and act as a positive role model, especially for the young,” Haris Makryniotis, Managing Director of Endeavor Greece, said in an interview in Athens with the Bloomberg news agency.

While the focus on start-ups is good news, “We can’t expect these companies to be enough alone to generate the number of jobs needed in Greece,” he said. New York-based Endeavor Global Inc. is a non-profit organization that backs “high-potential” entrepreneurs.

Greece has lost a quarter of its economic output during a six-year recession, under the weight of austerity measures the government has imposed on the orders of international lenders.

The value of Greece’s economic output fell 40 billion euros ($55 billion) from 2010 to 2013, according to the country’s statistical authority ELSTAT.

Greek start-ups employ about 1,500 people in a range of businesses from taxi-finder applications to social networking to souvlaki takeout operations and city-center cupcake shops.

The number of new start-ups reached 144 in 2013, compared with 65 in 2012 and 16 in 2010. Thirty of the new companies attracted 42 million euros of investment in 2013 compared with a total of 500,000 euros in 2010, according to Endeavor.

Around 15 percent of these companies have a good chance of growing into bigger firms, Makryniotis said, calling that a good performance “but not enough, and we shouldn’t put the burden on them to solve the problem.”

There are nearly 1.4 million unemployed in Greece and only about 10 percent of people who’ve lost their jobs are still getting benefits because their year-long benefit period has expired.

While increased focus on the industry is a good sign, “the negative side is this sort of obsession we have with start-ups,” said Emilios Markou, co-founder and Executive Director of Hellas Direct, an online car insurer.

“Even if we had a Silicon Valley, which we don’t, we wouldn’t suddenly see 200 million euros-worth of GDP from a bunch of guys,” he said.

Hellas Direct, which began operations in 2012, has raised 12 million euros from investors in the US and Britain, as well as from so-called angel investors. Hellas Direct employs only 35 people in Athens, Cyprus and London and has a strategic partnership with Germany’s Munich Re.

“It’s premature and over-hyped to say startups are the future of Greece and will turn the economy around,” Nikos Moraitakis, Chief Executive Officer of Workable, a start-up that makes recruitment software solutions for small and medium-sized companies, told Bloomberg.

“There’s an eagerness to overplay positive stories about Greece after a period of such tough times,” he said.