There are many visible signs in Greece that the economic crisis has taken hold of the country; dozens of shops are closed in every neighbourhood and fewer cars are on the road. But unemployment, one of the most serious consequences of the three-year recession and mounting debt crisis, is almost impossible to detect.
Despite the appearance of business as usual, Greece has just announced the worst unemployment figures since joining the euro. The jobless rate in March reached 16.2 per cent, which means some 230,000 people were sacked over the previous year. Unemployment soars almost 7 percentage points above the European Union average. Only Latvia, Lithuania and Spain show more depressing figures.
The Hellenic Statistics Authority indicates that those most severely affected are 15 to 34-year-olds, with unemployment hovering at 42.5 per cent. 25 to 34-year-olds are not significantly more fortunate. Among them, 22.6 per cent are without a job. Spain is the only EU country with higher levels of youth unemployment, though not by much.
Given that the austerity measures Greece adopted as part of its loan agreement with the EU and the International Monetary Fund had such a pronounced focus on employment, one might expect the signs of joblessness to be more visible. There are two serious reasons why this is not the case.
Firstly, Greece does not do social security in the same way as central European or Scandinavian countries. Benefits are only paid for the first 12 months of unemployment, after which they are on their own. So of Greece’s 811,000 unemployed, only 280,000 receive state benefits, which amount to less than €500 per month. Practically, this means the unemployed have to rely on friends and family for financial support.
A second reason for the apparent invisibility of the growing ranks of unemployed is that they simply have nowhere to go. Greece has no formal system for helping young people to enter the job market or for setting up newly unemployed middle-aged people with opportunities to retrain. Unlike in Germany, France and many other EU countries, there are no microfinancing programmes to help young Greek entrepreneurs start their own businesses, though European Commission funding exists for such schemes.
Greece is not expected to return to growth until sometime towards the end of 2012, and even this estimate looks optimistic. The government is currently embarking on another round of austerity measures, that include further tax hikes and cuts in public spending. It has also announced plans to fire 150,000 public servants by 2015. There are fears this will further undermine consumption, the rise of which is seen as critical in getting Greece back to growth. Meanwhile, unemployment is forecast to surpass 20 per cent next year.
Faced with diminishing opportunities and scant assistance in their homeland, many young Greeks are likely to try their luck abroad. A survey last August, when the crisis was still a threat rather than reality, indicated that three in four would consider leaving. Greece is no stranger to emigration, but the last mass exodus of workers was in the early 1960s when the unemployment rate soared at 25 per cent. Like then, Greece faces the prospect of losing sharp minds and able bodies just as it most needs these attributes to build a more competitive and dynamic economy.
This article appeared in the “Zero Edition” of the European Daily.