Unemployment in Greece
The occupational structure of Greece has changed in the 20th century because of increased industrialization and urbanization. Since the 1960s, the number of rural workers has dropped considerably. Overall, the employment numbers reflect various sectors’ contribution to the GDP, with most Greeks employed in the service sector (59. 2 percent) and lesser numbers in industry (21 percent) and agriculture (19. 8 percent), according to 1998 estimates in the 2000 CIA World Factbook . Greece’s total labor force numbered 4. 32 million in 1999, when unemployment was estimated at 9. percent. Generally, more men work in the industry sector while women dominate the service and agriculture industries. Greek women tend to have higher unemployment rates than men and are on average paid less. For additional income many Greeks work in seasonal or nonpermanent agricultural or service industry positions. For example, a craftsman may also work at a tourist site during the summer. Public-sector employees may often take a second job in the evening. Second jobs often complicate the way employment and unemployment figures are measured within the various sectors of the Greek economy.
In the Greek workforce, labor unions have been active throughout the 20th century. But unions have been subject to legal restrictions by successive Greek governments who considered unions a threat to domestic economic stability. Organization is centered on a particular trade or craft within a community. Local chapters are generally affiliated with national federations, which in turn are organized under the umbrella of the General Confederation of Greek Workers (GSEE). While not popular with the Greek people or government, trade unions can yield considerable political power.
For example, when the New Democracy administration was in office in 1992, labor unions staged strikes following the privatization of the Urban Transportation Company, putting the government on the defensive. However, the GSEE has been instrumental in establishing pay increases and other labor benefits, which have benefited the country as a whole. One of the by-products of industrialization in Greece was the development of an underground economy , which includes unreported economic activities that are not subject to taxation.
Given Greece’s large service sector, there are a number of retail and small family businesses that are unregulated and untaxed by the government, and it is difficult to track the number of unpaid family members working in these businesses. Estimates of the Greek underground economy are at 50 to 60 percent of the officially reported economy, meaning that income and employment figures in Greece are actually significantly higher than the official estimates.
While this unofficial sector provides employment and income to many that would otherwise be jobless, it undermines the modernization of the country’s fiscal system and the development of an internationally competitive Greek economy. Current Employment Conditions In Greece: Employment in the Greek commerce sector shrank by over 12 per cent in the past year and there is going to be no improvement in 2013, a report by the sector’s main association claims. In a preview of its annual report, the National Confederation of Greek Commerce (ESEE) says the sector lost 93,500 jobs in the past year, or 12. percent, with the total number of employees in the sector, at 673,400, the lowest since 1999. The report says that most jobs were lost at bigger commercial firms; 8 in 10 small firms chose not to lay off personnel. According to the report, 7 out of 10 businesses expect sales and profits to slide further in 2013, while 6 out of 10 struggle to meet payments. However, tourism remains one of the main stays of the Greek economy, making up more than 15% of GDP. In the Greek islands, such as Crete, figures are much higher, with up to 40% of the local population employed either directly or indirectly in the tourism industry.
Each year Greece’s tourism industry employs thousands of summer workers in tourist related services and, although the number of jobs may be fewer compared to previous years, there is still a demand for English speaking workers, particularly during the height of the season in July and August. Greece’s jobless rate rose to a fresh quarterly record of 20. 7 percent in the last three months of 2011, reflecting the country’s deep economic malaise, exacerbated by austerity to repair public finances and emerge from a debt crisis.
Greece secured a new 130 billion euro bailout from its euro zone partners and the IMF this week, after agreeing further painful budget cuts. But the labor market’s sharp deterioration is feeding public discontent and hurting consumer confidence. Statistics agency ELSTAT data showed jobs being shed at a fast pace as unemployment rose from 17. 7 percent in the third quarter and 14. 2 percent in the last quarter of 2010. “The quarterly unemployment data reflect the deepening pace of the domestic economic contraction.
Considering that unemployment is a lagging indicator, we should not rule out a further rise in the jobless rate in the months ahead,” said EFG Eurobank economist Platon Monokroussos. Young people have been hardest hit by the country’s protracted economic recession. Almost four in ten people in the 15-to-29 age group were out of work, data showed, up from 28 percent in the same period a year earlier. One of the worst affected economic sectors is construction, where employment dropped 19 percent year-on-year.
Greece’s 215 billion euro economy slumped by 7 percent in 2011 and is projected to remain in recession for a fifth consecutive year in 2012. The economic downturn is making it harder for the government to meet revenue targets and cut the budget gap, raising the risk that further belt-tightening may be necessary. “It will be difficult to stabilize the trend in the first half of 2012. The main hopes for a slowdown in the trend rest on the summer months when there may be an improved picture because of tourism and exports,” said National Bank economist Nikos Magginas.
ELSTAT said the number officially unemployed reached 1,025,877 in the fourth quarter, an increase of 44. 1 percent year-on-year and of 16. 8 percent from the third quarter. Greece’s December unemployment rate was almost double the 17-country euro zone’s seasonally adjusted average of 10. 6 percent, but is still lower than 22. 9 percent seen in Spain in the fourth quarter. | | | [pic] Fig: Greece Unemployment Rate The unemployment rate in Greece was last reported at 25. 4 percent in August of 2012. Historically, from 1998 until 2012, Greece Unemployment Rate averaged 11. percent reaching an all time high of 25. 1 percent in July of 2012 and a record low of 7. 2 percent in June of 2008. The unemployment rate can be defined as the number of people actively looking for a job as a percentage of the labour force. Structure Of Employment In Greece: The structure of employment in Greece corresponds only roughly to the structure of the national product. According to the labor survey (1991), some 22 percent of the employed population worked in agriculture, 28 percent in industry, and 50 percent in services.
Comparison with the corresponding percentages for the participation of the three sectors in the national product indicates that agriculture is more labor-intensive than the other two sectors, but productivity is lower in agriculture and there is substantial underemployment in the agricultural labor force. An important characteristic of the Greek employment structure is the division of the working population into groups of occupational status. Thus, in 1989 about 5. 6 percent of the working population were employers, and 51. 4 percent were wage and salary earners. The balance was made up of 28. percent who were self employed and 14. 3 percent who were unpaid family members occupied in a family business. The relatively high percentages in the last two categories are typical of a society featuring many very small business firms run on a family basis together with a large service sector. The large number of individuals employed in seasonal or nonpermanent agricultural and service positions means that it is quite common for people to work at more than one gift. Thus, for example, a farmer or an urban craftsman may also provide tourist services in the summer.
Double occupations are even encountered among public-sector employees who take second jobs in the evening. Besides creating a certain fluidity in a worker’s social role, this tendency complicates the measurement of productivity and unemployment in various sectors of an economy. Unemployment During the Greek Economic Crisis from 2008 to 2011: There were 1,025,900 unemployed people according to the Greek Statistical Authority, as the unemployment rate reached 21%. Who are the unemployed and how has their composition changed in this crisis? pic] Gender: There are as many unemployed men (49. 5%) as women, even though the unemployment rate for women (25%) is higher than that for men (18%). Due to higher male unemployment, the ratio between female and male unemployment has changed: while males generally accounted for 40% of the total people who are unemployment, they now make up 50%. [pic] Age: Around 41% of the people who are unemployed are aged 30 to 44, bracketed on either end by the people who are 25-29 (20% of the total unemployed) and 45-64 (23% of the unemployed).
The rise in unemployment during the economic crisis has been driven by a big increase in the number of people aged 30-44 who are unemployed – in fact, around 42% of the people who have become unemployed between 2008 and 2011 were in this age group. There have been smaller but equally noticeable increases in the people who are unemployment aged 25-29 and 45-64. When it comes to unemployment rates for various age groups, however, the story is different.
The incidence of unemployment is highly correlated with age as younger groups have higher unemployment rates than older ones and with females having higher unemployment rates than men. For young people, the unemployment rate ranges from 48% to 59% for men and from 55% to 70% for women, underscoring the difficulty in finding jobs for people who are just starting their careers. [pic] Education: Around 37% of the people who are unemployed are people whose education extends just to a high school diploma. This group also accounts for 38% of the growth in unemployment between the end of 2008 and the end of 2011.
After people with only a secondary education, people with a vocational degree make up the second largest unemployed group, making up 20% of the total. Regarding unemployment rates, people with all educational levels have seen a marked increase in their unemployment rates, ranging from a 131% increase in the unemployment rate of people with a vocational degree to a 218% increase for people with only a primary education (the growth for people with no primary education is greater, but this is really due to the very small volume of people in that category, making up less than 0. 5% of the total). pic] Duration: Chronic unemployment (when someone has been looking for a job for over 12 months) has been a chronic problem for Greece. In fact, people who have been unemployed for over 12 months have always made up anywhere from 40% to 60% of the total unemployment pool. Since 2008, there has been a rise in unemployment duration for all types – from very short term (1 month), to medium term (up to a year) and long term. by the end of 2011, 55% of the unemployed have been so for over a year. Sector: In the three years from 2008 to 2011, the Greek economy has shed 657,000 jobs.
Three sectors which make up 34% of the country’s total employment (there are 21 sectors in total) accounted for 67% of the lost jobs, led by construction (160,000 jobs lost), manufacturing (146,000) and then wholesale and retail trade (111,000). There were also some sectors where employment actually grew through “financial and insurance activities” and “human health and social work activities. ” Region: Of the people who are unemployed, 40% live in the Attica region (which includes Athens), a share that is slightly higher than its population (36%).
Central Macedonia makes up another 18% of the total employed population, roughly on par with its 17% of the population. In terms of unemployment rates, the Peloponnese, Northern Aegean and Crete tend to (and continue to) rates below the national average, while Macedonia and Sterea Ellada are above the national average. [pic] Labor Costs: The average monthly labor cost has been declining consistently since early 2010 at an average rate of 3. 4% on a year-on-year basis. But in 2011, there was a much more significant decline of 14. 9% Relative to the eak, labor costs have come down by about 18%, thus correcting some of the competitiveness adjustment necessary to correct the imbalance that was created earlier in the decade. Overall profile: An unemployed person in Greece is as likely to be a man as a woman. There is a 41% chance that they are 30 to 44 years old, and there is a 37% change that they have only a high school diploma. They are 55% likely to have been unemployed for over a year, they are likely to have lost their jobs from construction, manufacturing or wholesale and retail trade, and they most likely live around the major urban centers in Athens or Thessaloniki.
As for the people who are employed, their cost to employers has gone down by about 18% on average as a result of lower wages or lower indirect payments. Reasons Of Unemployment Crisis In Greece: By the end of 2009, as a result of a combination of international and local factors the Greek economy faced its most-severe crisis since the restoration of democracy in 1974 as the Greek government revised its deficit from an estimated 6% to 12. 7% of gross domestic product (GDP). [pic] Fig: Greek public debt 1999-2010 compared with Eurozone average
In early 2010, it was revealed that through the assistance of Goldman Sachs, JPMorgan Chase and numerous other banks, financial products were developed which enabled the governments of Greece, Italy and possibly other countries to hide their borrowing. Dozens of similar agreements were concluded across Europe whereby banks supplied cash in advance in exchange for future payments by the governments involved; in turn, the liabilities of the involved countries were “kept off the books”. This had enabled Greek governments to spend beyond their means, while meeting the deficit targets of the European Union.
In May 2010, the Greek government deficit was again revised and estimated to be 13. 6% which was the second highest in the world relative to GDP with Iceland in first place at 15. 7% and Great Britain third with 12. 6%. Public debt was forecast, according to some estimates, to hit 120% of GDP during 2010. As a consequence, there was a crisis in international confidence in Greece’s ability to repay its sovereign debt. In order to avert such a default, in May 2010 the other Eurozone countries, and the IMF, agreed to a rescue package which involved giving Greece an immediate €45 billion in loans, with more funds to follow, totaling €110 billion.
In order to secure the funding, Greece was required to adopt harsh austerity measures to bring its deficit under control. On 15 November 2010 the EU’s statistics body Eurostat revised the public finance and debt figure for Greece following an excessive deficit procedure methodological mission in Athens, and put Greece’s 2009 government deficit at 15. 4% of GDP and public debt at 126. 8% of GDP making it the biggest deficit (as a percentage of GDP) amongst the EU member nations (although some have speculated that Ireland’s in 2010 may prove to be worse).
The financial crisis – particularly the austerity package put forth by the EU and the IMF – has been met with anger by the Greek public, leading to riots and social unrest. Despite the long range of austerity measures, the government deficit has not been reduced accordingly, mainly, according to many economists, due to the subsequent recession. Consequently, the country’s debt to GDP continues to rise rapidly. The Greek public sector continues to be bloated, but the government has been reluctant to make civil servants redundancies. Immigrants are sometimes treated as scapegoats for economic problems by far-right extremists.
In 2011 it became apparent that the bail-out would be insufficient and a second bail-out amounting to €130 billion ($173 billion) was agreed in 2012, subject to strict conditions, including financial reforms and further austerity measures. As part of the deal, there was to be a 53% reduction in the Greek debt burden to private creditors and any profits made by Eurozone central banks on their holdings of Greek debt are to be repatriated back to Greece. A team of monitors will be based in Athens to ensure agreed reforms are put into place and three months worth of debt repayments are to be held in a special account.
Consequences Of The Unemployment Crisis: Several consequences of the economic crisis in Greece are discussed below: • Greece’s depression Amid a debt crisis, a crippling recession and ugly levels of unemployment, Greece is now struggling with a rise in suicides and an HIV outbreak. Greece’s debt troubles have raged for about three years now, prompting its governments to take severe austerity measures that are choking the economy and driving up unemployment, which now stands at 25 per cent. About half of its young people can’t find work, and social unrest is widespread.
Amid these troubles, attempts of suicide climbed to more than 925 last year. By the end of August, this year’s rate was already at 690. Today, authorities cited the outbreak of HIV in Greece, particularly in Athens, and warned that the economic troubles plaguing the region will hamper prevention across Europe. “Since 2011, Greece has been experiencing a significant outbreak of HIV among people who inject drugs in Athens,” the European Centre for Disease Prevention and Control said in a lengthy report.
In the first eight months of 2012, for the first time the number of new cases reported among people who inject drugs exceeded the number of new cases reported among men who have sex with men. The outbreak among people who inject drugs is likely due to a combination of factors, the most important being low levels of preventive services prior to the outbreak. HIV in Greece has been “a pattern of low-level, concentrated epidemic,” the agency said. Since it was first reported in the 1980s, infections climbed by 2011 to 7. 3 per 100,000 people. The ongoing HIV outbreak is occurring at a time when Greece is experiencing a severe financial crisis,” the group noted. Although the extent to which the financial crisis has contributed to the outbreak is unclear, it is evident that the crisis has a significant social and health impact on the population of Greece. In addition, the response to the HIV outbreak by public authorities and NGOs is being managed in the context of social uncertainty, with exceedingly scarce financial resources. Prevention could be hurt in other parts of Europe by the “economic turmoil,” the agency added.
There is a continuous need to keep public health and preventative services on the agenda even in challenging economic times so that long-term, high-cost burden to the health system can be averted. • Euro zone jobless rate at a fresh high Unemployment in Europe continues to inch ever higher amid the debt crisis and recessions in some countries, such as Greece. The jobless rate in the 17-member euro zone climbed in October to 11. 7 per cent from 11. 6 per cent a month earlier, with almost 19 million people out of work.
In the wider, 27-member European Union, unemployment rose to 10. 7 per cent, also up a notch, with an estimated 26 million people struggling to find jobs, according to the Eurostat agency. Unemployment among young people also worsened, hitting 23. 9 per cent in the euro zone and 23. 4 per cent in the EU. As always, the differences among European economies was stark, highlighting how the periphery is suffering, in particular. The highest rates of unemployment were again in Spain and Greece, at 26. 2 per cent and 25. per cent, respectively, though the latter is an August reading. The lowest were in Austria, Luxembourg and Germany, at 4. 3 per cent, 5. 1 per cent and 5. 4 per cent. “This rising unemployment rate is likely to further weigh on the collective economies across Europe and further keep the pressure on bank balance sheets,” CMC’s Mr. Hewson said before the numbers were released. “We’ve already seen this week that Spanish banks will have to shed over 6,000 jobs putting further upwards pressure on the rate in that country, as well as further pressure on the non-performing loan rate. • Vulnerable Groups Hardest Hit Much of the media focus in recent years has been on ‘the new poor’. While it is undoubtedly true that many people who previously believed themselves to be secure are now falling into poverty, many of those who have been worst hit come from distinct vulnerable groups – in particular, people already experiencing poverty before the crisis, young people, people who are educationally disadvantaged, migrants and ethnic minorities, older people, children and lone parents.
Incomes of poor people have been squeezed from many directions, including reductions in employment incomes and income maintenance payments, tax increases, and retirement pension changes. Furthermore, the erosion of purchasing power as a result of increases in the price of basic commodities is increasingly seen as a major threat. In many countries, gas, electricity and water charges, as well as bank charges and the cost of food and rents, are rising. • Inequality – The Gap Widens
It might have been expected that the gap in income between richest and poorest would narrow during a recession, as the very wealthy lost out. It might also have been expected that ‘relative poverty’ might fall because of the lowering of overall income. In fact, however, there is increasing evidence of a widening gap between rich and poor, as the top 10 per cent emerge as clear winners. • Accommodation and Homelessness The downward pressures on rents in the recession should have provided some relief to people on low incomes.
In fact, evidence from EAPN members suggests that any rent decreases have been more than offset by higher utility and food bills, and so housing may be still unaffordable for many on low incomes. In many countries, people’s ability to access decent, affordable housing has lessened as statutory authorities have withdrawn from housing provision – a process which started long before the recession, but whose impact is made worse in the context of increased long-term unemployment. • Cuts in Services Waiting lists in the health services for treatments and operations have increased, for example in Ireland and the UK.
In Central and Eastern European countries, health care co-payments are becoming more widespread – accelerating a process which had begun following the ‘transition’ of these countries to a market economy. In some Western European countries also, users are now expected to pay a bigger proportion of the cost of treatment. These types of cost containment measures inevitably hit hardest those on low or modest incomes. In some countries subsidised access to services is being reviewed or has already been reduced or removed. Outlook Of Economists About The Crisis:
Economists said those Greeks with the skills will flea the country in search of better prospects – leaving behind them the low-skilled and damaging competitiveness further. Alan Clarke, an economist at Scotia Capital, said: “Countries like Germany are booming and they’ve got skills shortages. Labour mobility to Germany would redress the balance. To some extent, an exodus of skilled workers could be the legacy of youth unemployment in Greece. ” The net effect, according to Jonathan Portes, director of the National Institute of Economic and Social Research, is that Greece faces a “hollowing out” of the labour market.
The higher skilled will go somewhere else, like London,” he said. “But the long-term economic danger here is that the lower-skilled young people become semi to permanently excluded from the labour market. ” Katerina Rudiger, skills adviser at the Chartered Institute of Personnel and Development, said the longer a young person is out of work the greater the “scarring effect” on adult life. “If people don’t get access to the labour market it’s a huge knock to their confidence and has a huge pschycological impact that can effect health and mental wellbeing. Countries like Germany and Austria were historically good at helping young people bridge the gap between education and work, which is often why their youth unemployment rates are relatively low, she said. Greece, however, already has a notoriously inflexible labour market, with older workers tending to stay in jobs for longer and making it harder for young people to get a foot in the door. According to Portes, Greece, somehow, has to give its young people “hope” that it is worth staying in the country, and that jobs will return to the labour market.
The only way it can, he believes, is for the European Union to inject more money into it to kick-start job creation and “invest in education and training”. Persson said Greece should be allowed a “proper write-down of its debt” to give it some breathing space to sort out its problems. Pushing through drastic cuts forces the country to ignore its youth unemployment problems, he said. “Pro-growth measures in the system allows businesses to invest. The current package [to rescue Greece] has far too much austerity,” he warned. Remedial Steps To Be Taken: Exiting Eurozone Traditionally, countries would devalue their currency to make themselves more competitive. In the case of Greece, that would mean exiting the Euro. No one has done that before and there aren’t really any mechanisms that would allow the Greek government to convert all of the existing “Greek Euros” into Drachmas. As it is, Greece is no in a downward spiral of austerity which causes continual drops in tax revenue and creates more instability. Long term, Greece needs to restructure its economy to be more efficient, but short term it needs capital.
It’s best solution is unpalatable to the Germans – That would be the socialization of Greek debts by selling Euro bonds to cover its shortfalls. In the end, the solution will have to be dramatic – i. e. leave the Euro or socialize its debt. The middle ground of compromise is sure to be unsuccessful. • Reducing the size of government and public sector The other way to overcome its economic crisis is for Greece to reduce the size of its government and public sector, reduce taxes and regulation and allow a free market.
Based upon past historical experience in other nations (Chile, Estonia, the former Soviet Union, etc. ) only a free market can solve problems such as those Greece is experiencing. • Introducing six-day working week Greece’s eurozone creditors are demanding that the government in Athens introduce a six-day working week as part of the stiff terms for the country’s second bailout, which included: • Increasing flexibility of work schedules • Setting the minimum daily rest to 11 hours Delinking the working hours of employees from the opening hours of the establishment • Eliminating restrictions on minimum/maximum time between morning and afternoon shifts • Allowing the consecutive two-week leave to be taken anytime during the year in seasonal sectors. • There should be a permanent “single-rate statutory minimum wage”, seen as an incentive for getting people back to work in a country where unemployment has soared to over 24%. The Greek government is struggling to come up with persuasive policies to enact spending cuts of a further €11. 6 billion, which ere to have been implemented in June, to secure the next bailout tranche of more than €30bn due next month. Extending the deadlines would effectively require more eurozone help and a third bailout. There is little appetite for more rescue funds across the eurozone, meaning that Greece may ultimately be sacrificed. • Employment has taken a heavy blow in the face of downwardly rigid wages Total employment declined by over 6 percent in 2011 and an additional fall of 5 percent is forecast in 2012, with the unemployment rate projected to average 18 per cent in 2012 and to reach above 20 percent in some quarters.
The labour market reforms are expected to provide a significant contribution towards both saving, and creating new, jobs. Nevertheless, employment is not expected to stabilise before 2013, and the subsequent recovery in the number of jobs will be progressive. • The closure of the competitiveness gap is expected to accelerate Following years of continued growth, well in excess of its main trading partners, unit labour costs are clearly declining. After the inertia observed in 2010, wages in the business sector fell by around 5 per cent in the year leading up to the third quarter of 2011.
This was insufficient to help recover competitiveness, also due to continued cost reductions by Greece’s main trading partners. However, the latest labour market measures (see below), together with those legislated in 2011 are expected to contribute to reduce labour costs by at least 15 percent over the next three years. However, the product and service market reform have also a crucial role to play to increase internal competition and improve external competitiveness. The expectation of the debt exchange has weighed on financial market developments Since the European Council decisions on 21 July and 26/27 October 2011, financial sector developments were influenced by the expectation of the debt exchange. Yield and CDS spreads on Greek sovereign debt have skyrocketed and the Athens stock exchange index fell. Once the debt exchange is executed, there is an expectation of a progressive improvement in these indicators. Following the announcement of the debt exchange offer, rating agencies have further downgraded Greece. Conclusion:
Greece’s youth unemployment rate, on the other hand, has doubled in just three years. The country’s youth unemployment rate, at 51. 1pc, is now the worst in the eurozone. Such a high number of under-25s without jobs in Greece does not bode well for the country’s future and will have far-reaching consequences. So the Government have to take up proper initiatives to overcome such crisis as soon as possible.