Country Focus
May 2010
Downturn in Greek economy creates need for extra support
Greece is facing an unprecedented economic crisis with rising unemployment and the lowest income per capita of the pre-2005 European Union countries. Judith Wojtowicz finds that direct selling companies are working hard to stay close to their people, supporting them through these very difficult conditions.
LOVED by tourists and locals like for its hot climate and sunny disposition, Greece has been overwhelmed by an uncharacteristically dark mood, a deep sense of unease due to the economic conditions that have reached crisis point.
A public deficit of almost 13 per cent has caused media commentators to talk of bankruptcy as families and businessmen alike find themselves squeezed between tightening credit conditions and a host of painful measures designed to reduce spending.
Fact FilePopulation: 10.5 million |
Under intense pressure from the European Union, desperate to safeguard the euro common currency, the government has taken drastic action that includes a cut in wages across the public sector, reforming healthcare and pensions systems and taking aggressive action on tax avoidance.
As Direct Selling News Europe went to press, the International Monetary Fund was expected to make a decision on whether to offer financial aid, and protests and strikes were adding to the uncertainty.
In such conditions the direct selling industry is taking a lead, supporting its Distributors and finding new ways to attract customers who are understandably having to re-prioritise their spending. Every company is engaged in activities to maximise visibility and build brand awareness.
While almost every company reports falling average order, inquiries from potential Distributors are increasing daily. People seek to supplement their income which is being swallowed up by increased VAT and taxation, rising fuel and utility costs and extra duty on cigarettes, alcohol and imported goods such as cars.
Tax and labour laws are changing, creating a complex legal environment. One example that could impact the industry is the government’s attempt to crack down on tax avoidance. The current tax-free individual allowance of €12,000 will now be approved only on the basis of submitted receipts. This could create a potential risk for some DSOs as customers start to ask for receipts from Distributors for goods purchased.
In reality this is unlikely to be a serious problem except for those companies selling high-ticket items but it shows how the current conditions are extending into every part of family life.
No one has been left unaffected and as a result, customers are more conscious than ever of where they spend their money. Consumer confidence remains low unlike many other European countries which are slowly starting to move out of recession.
Good quality products at affordable prices are still finding a market and direct selling companies have a massive opportunity to recruit and train new people ready for when the economy comes back to growth. With this in mind, the Direct Selling Association has been re-launched with a mandate to raise the profile and credibility of the industry at a time when families are looking for stability and reassurance.
New chairman Marianna Nanou believes this is an ideal time for direct selling organisations to come together as one voice, to take a proactive role and demonstrate the opportunities that exist. “Every single household has been affected and we can step in to offer them a way through this difficult time,” she added.
