Greece and Unemployment Trends
In May 2008unemployment in Greeceas a percentage of the labour force, was at a record low, for Greece, at 7.3%. In January 2013 it reached a record high of 27.2% of the labour force.
Alhough Greece, prior to 2008, had quite high unemployment at 11.3% in the first quarter of 1998, it had began to fall, reaching a low point in May 2008.
In March 2013unemployment across the whole Eurozonewas measured as being 12.1%, a record high. The countries with the highest unemployment were Greece, and Spain with 26.2%, followed by Portugal with 17.5%. While those with the lowest were Austria with 4.7%, Germany with 5.4% and Luxemburg with 5.7%.
After the record low unemployment of May 2008, unemployment in Greece began to rise again after the worldwide financial crisis in 2008, slowly, at first, though speeding up in early 2009, reaching 10% by the end of that year.
In 2011 unemployment in Greece passed 15%, reaching 16.7% in the second quarter of that year, it passed 20% by the end of 2011, and it continued to rise throughout 2012.
Rising unemployment in Greece has come about because offalling gdp growth. In the last quarter of 2012 the economy shrank by 5.7% compared to the same quarter in 2011. The Greek economy has shrunk by about a fifth, or 20%, since 2008.
The financial crisis of 2008 caused a worldwide recession, however the problems for Greece have been exacerbated by a government debt crisis. In May 2010 Greece sought afirst bail out loanfrom the European Union and International Monetary Fund. The first was for 110 billion euros, and a second of 130 billion euros, wassought in early 2012. The terms under which the loans were agreed required the government to massively cut public spending.
Prior to the financial crisis Greece was building up government debt for a number of reasons, including high public sector pay and poor tax collection. The scale of the debt had been hidden, originally to enter the eurozone, and afterwards to fit with the conditions of membership. It is estimated that debt is currently 190% of GDP, while the conditions under which the loans were made requires debt to be brought down to 120% of GDP. However falling growth exacerbates the problem of government debt as tax revenues have fallen.
Unemployment in Greece is particularly high amongst young people under 24, at around 50%. As a result, a large number of well-educated young Greeks have migrated. It isestimated that 26,300 workersleft Greece to move to Germany in the first 9 months of 2012, where an aging population means there are jobs available.
It is believed that there is something of a brain drain going on in Greece as well. Qualified professionals, including young scientists, who cannot find work, are leaving; the numbers are estimated to beabout 120,00, since 2010.
Unemployment in Greece has historically been quite high. Because of long-term unemployment together with new entrants to the labor market, many young people find it hard to find work. To remedy this situation, measures were taken early on to increase flexibility within the labour market. Though there is not much evidence of success, measures making it easier to dismiss people andreductions in the minimum wage, have been implemented, causing political controversy and widespread public protests.
In the second quarter of 2011 theregions of Greece with the highest unemploymentwere West Macedonia, with 23.3%, East Macedonia and Thrace with 20.9% and Central Macedonia with 18.8%. The region of Greece with the lowest unemployment in that period was Pelopponese with 13%. The Macedonia region of Greece is the second most populous region in Greece, with Thessalonika, in Central Macedonia, the second largest city in Greece. Farming and tourism are important to the economy, there. Theeconomy of Thessalonika, and the Macedonia region were affected by the conflict in former Yugoslavia and unemployment has been high for some time there.
Unemployment has risen in recent yearsacross all sectors, though male unemployment has increased more than female unemployment, though women have, historically, been less active in the workforce. In terms of qualifications both the least qualified and the best qualified have suffered most from unemployment, which is evidenced by both rising poverty and the brain drain, as the well-qualified leave.
The population of Greece is around 11 million. So farabout 75,000 public sector jobshave been lost. In the past there was a guarantee of a job for life which was intended to ensure that public sector workers weren't sacked for political views. It has, however, arguably created a bloated sector. There is also aneed to crack down on tax evasion, particularly amongst professionals, and other forms of corruption.
High unemployment and falling growth in Greece, and other southern Eurozone countries, haveimpacted on the transition economiesof the Balkan region, as demand falls. This could become a cause of concern, as Thessalonika, in particular, is important to the economy of that region.
The government of Greece will have a very hard job reforming the economy, and it is likely that the austerity measures have pushed up unemployment, as wages have fallen. The downward spiral of growth, and rising unemployment, makes it harder to reduce government debt, and the escalation of unemployment in 2013 may be a sign that a new assessment of how to solve the problems of the Greek economy, is needed.
