This week the Cyprus Weekly reported that some 100 bakeries in Cyprus were forced to close down over the last six months due to serious financial problems, citing the Cyprus Bakeries Association as saying that longer universal shopping hours and the economic situation had forced these businesses to close.
Apparently opposition party AKEL MP Andreas Fakontis stepped in to say that longer opening hours for all shops has created "unfair competition" while also encouraging abuse of the minimum age and working hours of employees - raised as an opposition argument against the Labour Ministry and its current decree on increased hours for shops.
I almost laughed when I read this article due to the political nonsense raised by this matter, although I feel bad for smallholders who have failed to make their businesses work through the economic disaster in Cyprus since 2013.
I would like to raise the following points -
1. How many bakeries are there in Cyprus, and indeed, how many were there before a whopping ONE HUNDRED of them closed down?
Is this a stupid question, or am I correct in asking? Cyprus has a population of less than a million people, and even during the prime tourism months, it seems unlikely to push well beyond double that during the current crisis. How many bakeries have been set up by enterprising smallholders in such a small island and its tiny market? Do many entrepreneurs have no imagination? Or is this simply a case of anyone setting up their own bakery because they think it is an easy and uncomplicated affair, despite the fact that there are already three bakeries and a supermarket in the immediate area?
2. Universal Increase in Shopping Hours benefits the Economy - and undermines AKELs grassroots supporters - the Trade Associations and Trade Union groups.
The directive issued by the Labour Ministry in July 2013 allows all shops to remain open much longer during both weekdays and weekends. Although I have long argued that over-regulation of the retail market is rife in Cyprus, I find this move to be beneficial. People want to go shopping when it suits them, and not when it suits the market rules. Finally we have seen the Labour Ministry of Cyprus move in favour of consumer interests and away from the old-guard power base of trade associations, who attempt to control their various markets through absurd regulations - like forcing supermarkets not to sell bakery products at certain times of the week so as to favour the independent bakeries during prime shopping periods.
3. Industry Diversification is essential, and the stranglehold of absurd market regulations must be removed
Competition is essential. The best businesses with the best business models, best management, best service and best products must be allowed to thrive, while the weakest and worst business that they are in competition with must be allowed to fail. This is the core principle of free market economy. If someone cannot run a business well enough to make it work, then they are either in the wrong business, or they are incompetent. For too long, Cyprus has rewarded welfare, incompetence and populist trade groups, whilst equally punishing entrepreneurs who, under the right market conditions, would thrive - creating new skilled jobs, new income for the economy, new ideas and innovation, and greater strength for Cyprus to trade with the outside world in the form of exports.
The fact that 100 bakeries have closed down as a result of the longer shopping hours and the economic situation is CONTRARY to what opposition party AKEL would have you believe - a shaking of the tree to remove the rotten apples that cannot compete with more successful businesses. How long did we expect such market conditions to last before the 2013 economic crisis? The Republic of Cyprus failed because of its own stupidity - not because of some absurd notion of Troika conspiracy, the Turkish military occupation or the global credit crunch. The country fell down onto its over-bloated ass because the Cypriot concept of free market is rotten at the very core of the country's ability to make money and keep money. Blaming the welfare state, obsolete communism and the populist politics of Cyprus is simply not sufficient. We must also lay blame at the feet of every person who decides to set up a common business (like a bakery) in an overloaded market with too few consumers and almost no conditions or willingness to diversify.
To put it simply, the bead is baked. But there is either no one to buy it, or you are not allowed to sell it.
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