They call it “Catastrophic job destruction” and it’s a salutary study that shows almost 90% of job losses in Portugal were due to the hammering suffered by small and medium sized businesses (PMEs) since the start of the crisis.
“Small and medium sized businesses were responsible for 87% of the destruction of jobs that occurred in 2010 and 2011, which corresponds to a reduction of 93,425 jobs,” reported Público newspaper.
The data comes from the government’s new financial development institute (IFD) which shows not only how important PMEs are “in the national panorama” but how harshly they have suffered.
According to Catastrophic job destruction, one of the reasons for the “enormous destruction of jobs” and high level of unemployment is “the severity of credit restrictions by banks”.
“The severity of the recession exceeded the resilience of the job market,” commented the study, adding “businesses that faced high financial costs left (the market) or destroyed jobs at a much higher level than those operating with better financial conditions.”
Now the hope is the IFD can help by offering PMEs the kind of long-term financial support that has been missing.
The new institute should be able to “play an important anti-cyclical role”, says Público, “reducing the volatility of financial costs” and “limiting the short-term vision” found in the private sector.
IFD will also set out to offer financial and accounting advice to PMEs.
