MONTEBELLUNA, Italy (Reuters) - In Italy’s wealthy northern Veneto region, a new helpline is advising struggling entrepreneurs to kill their businesses before they kill themselves.
This deeply Catholic part of Italy, where work is an article of faith, is home to nearly half a million small companies and workshops, one for every 10 inhabitants and one of the highest business densities in Europe.
The euro zone debt crisis came as a bitter shock after the boom of the 1980s. More than 300 people took their lives in this region between Lake Garda, the Alps and the Venetian Lagoon in 2010, the latest state data show.
“If you concentrate all your energy and efforts on a business activity, a financial failure easily becomes a personal failure,” said Pietro Muraro, who oversees the Life Auxilium (Life Help) support project for entrepreneurs set up by small business association Confartigianato last month.
While the Life Auxilium project remains a local initiative, the worrying trend in suicides has prompted Italian politicians and national media to call for a free helpline nationwide.
But whereas the number of suicides in Italy as a whole increased by two percent in 2010, in Veneto they were 16 percent up.
Regional business associations say that trend has continued and that dozens of those who have taken their lives in the past three years have been entrepreneurs crushed by a combination of frozen bank loans, late client payments and high taxes.
“In Veneto, work is the essence of life and entrepreneurial activity is almost always a family affair,” said Muraro, a psychologist and co-director of Veneto-based therapy centre Eidos.
Mauro De Vincenti was part of the army of small businessmen and artisans who are the region’s economic backbone. In September, aged 47 and mired in debt, he hanged himself inside the car repair workshop he had set up three years before in Zelarino near Venice.
“The workshop would have never made us rich, but it was his dream. That dream killed him,” his 45-year-old wife Valentina told Reuters.
Suicides have increased in several of the worst affected euro zone countries since the debt crisis hit, but not in all.
In Greece, from where the crisis spread, suicides were up 18 percent in 2010, an increase which social workers blame at least partly on economic suffering.
The number of suicides in Ireland increased 24 percent in the crisis year of 2009 compared to 2008, but in Spain, they were at their lowest level in 18 years in 2010 and data from Portugal does not suggest any unusual trend.
The suicides in Veneto just the extreme tip of a crisis that extends across Italy and is hitting firms with less than 10 employees - which make up 95 percent of Italy’s registered companies - particularly hard.
The Veneto region, with a population of 4.8 million, has 460,000 companies and is second only to Italy’s industrial power house Lombardy in wealth, number of businesses and exports.
Its entrepreneurs are used to changing with the times.
In the 1990s, when leading Italian textile groups began to move production first to eastern Europe and then Asia, many reinvented themselves by turning to the-then booming construction business.
This time around, however, a combination of prolonged economic crisis, crippled internal demand and scarce liquidity is pushing many to the edge.
A sort of business euthanasia is often a less painful choice than hanging on to a faded dream, explains Stefano Zanatta, a regional representative of the artisan organization Confartigianato which set up the toll free helpline and support project for entrepreneurs overwhelmed by the crisis.
To survive, small firms may have to join forces.
“Until a while ago, small was beautiful. Today, the world has become our market. Like with the evolution of the species, we have to adapt,” said Zanatta, who heads the AsoloMontebelluna section of Confartigianato and is himself an entrepreneur.
“We have to change our mentality and understand that united we stand stronger.”
Bankruptcies in Italy rose to nearly 12,000 in 2011, equivalent to 31 companies per day. This is up 4 percent from a year earlier and 25 percent more than in 2009.
According to the World Bank, Italian companies face a total tax rate of 68.6 percent on commercial profit, the highest burden in the European Union. That can shoot above 84 percent if indirect levies such as a new housing tax, sales tax on goods and petrol and others are included, Confartigianato says.
De Vincenti, a father of two teenage girls, struggled with costs and taxes topping 7,000 euros a month after the economic crisis hit Italy last year. Not knowing where to turn, he stopped paying employees, creditors and bills until he ran up a 70,000 euro debt.
Late payments for goods and services averaging more than 120 days for the public administration and nearly 90 for large private firms, coupled with scarce bank loans, are another key problem for small firms, which struggle to generate enough cash flow to pay employees and keep going.
A study in February of 800 Veneto firms with less than 20 employees, carried out by research group PanelData, showed less than a quarter had managed to obtain a bank loan in the previous three months.
Eight companies out of 10 said they faced higher fees and longer waiting lists than before when trying to get a loan.
“The credit crunch exists. As the crisis intensified, banks have taken an extremely restrictive stance on lending. This, combined with a depressed internal demand is causing massive stress on entrepreneurs,” says Andrea Tomat, Chairman of Confindustria for the Veneto region and CEO of sportswear company Lotto Sport Italia.
Life Auxilium is based in the AsoloMontebelluna district, which thanks to the proximity of top brands Geox, Diadora and Lotto is a world centre for the manufacturing of sports shoes.
The many workshops dotted among vineyards in this area at the foot of the Dolomites mountains suffered as a drop in internal demand hit profit at shoemaker Geox. And textile group Benetton, hailing from nearby Ponzano, decided to delist after a 30 percent fall in 2011 results.
The businesses that proved more resilient were those with a strong export component, helped by historic ties with Germany and nearby eastern European countries.
The region makes up 13.4 percent of Italy’s exports, second only to Lombardy, and in the rich province of Verona, for example, exports grew by 17 percent last year in spite of the euro zone storm.
But for those entrepreneurs who are already deep in trouble, it may sometimes be better to close down and restart from scratch than prolong the agony.
Offering practical help to sort out financial and tax issues, as well as psychological counseling, Life Auxilium has received around 30 calls, some from outside Veneto, in just over a month. They are often from worried wives and mothers of struggling businessmen, with 15 cases actively treated so far.
“One has to learn to let go. If it doesn’t work, you have to let it go,” says bereaved wife Scaramuzza, who herself owns a bar.
“Initially, I thought I could carry on with my husband’s car repair shop, to continue his dream. But in the end I closed it. It would have destroyed me too.”
Additional reporting by Sonya Dowsett in Madrid, Axel Bugge in Lisbon and Deepa Babington in Athens; Editing by Barry Moody and Philippa Fletcher