Signs of life in the Greek labor market

Now that Greece is on a slightly more certain footing following the June 15 agreement between the government and its creditors at Luxembourg’s Eurogroup meeting, as well as the decision last Friday by the European Stability Mechanism (ESM) to disburse the next bailout tranche of 7.7 billion euros, perhaps we can we start to look for signs of a recovery. On this issue, there is a substantial discrepancy between what the government would like Greeks to see and what public opinion actually believes.

First, let us start with something that everyone can agree on: An economic recovery that does not address Greece’s unemployment problem is a false dawn. More than 1 million jobs lost since the beginning of the crisis eight years ago have yet to reappear, youth unemployment stands at 45.5 percent and – among almost 11 million inhabitants – only 3.76 million are actually employed. Until the balance entailed in such data changes, it will be difficult for anyone in Greece to feel that an economic turnaround is happening.

Looked upon from a different angle, one could say that job creation is the single most important way by which to gauge the effectiveness of any recovery. The government wants to point to falling unemployment figures and households want to add to their incomes as well as see their jobless members return to work. Their motivations may be different but their goal is the same.

Pollsters working for MRB recently asked around 2,000 Greeks to name the three most serious problems facing the country. According to the results of the poll, published last Thursday, more than two thirds (68.4 percent) of respondents included unemployment in their answers, making it by far Greece’s biggest concern. The second on the list was the tax system with 41.6 percent.

This highlights how anxious Greek society is about job creation and retention. The government has been trying to emphasize this month that the situation has been gradually improving and is significantly better than during the depths of the crisis, when the official unemployment rate all but reached 28 percent.

“What we need to focus on is that since 2015, the unemployment rate has fallen by around 5 or 5.5 [percentage] points,” government spokesman Dimitris Tzanakopoulos said during an interview on Real FM last Friday. “These are numbers that show a certain momentum. They show a trend for recovery in the Greek economy.”

In fact, the seasonally adjusted unemployment rate has dropped from 25.8 percent in January 2015 to 21.7 percent at the end of April this year, according to data published by the Hellenic Statistical Authority (ELSTAT) last week. A drop of 4.1 points, rather than “around 5 or 5.5 points” but, nevertheless, a sizable decline.

It also needs to be pointed out that the unemployment rate did not begin to drop when SYRIZA came to power in January 2015. It peaked in July 2013, when it reached 27.9 percent and then started to ease slowly.

The problem is that this decline has hardly registered with Greek households and has produced no immediately visible change. One reason is that the unemployment rate remains exceptionally high by European standards. The eurozone’s average unemployment rate was 9.3 percent in May, while youth unemployment stood at 18.9 percent. Greece still sticks out like a sore thumb when the eurozone jobless rates are lined up. The nearest country is Spain with a rate of 17.7 percent.

Trying to convince Greeks that something positive is happening in such an environment is a thankless task. Understandably, what they see is that just over one in five of their friends and relatives are out of work, that no other country using the single currency is experiencing this level of joblessness and that prospects for young people are still poor.

To emphasize this last point, a report published last week by the Foundation for Economic and Industrial Research (IOBE) indicated that 36 percent of those who graduated from university since 2011 are currently unemployed, which means that the percentage of Greek tertiary education graduates who are employed is the lowest in the EU. Also, 73 percent of those who have graduated since 2011 earn under 800 euros a month, with more than a quarter making less than 400 euros a month.

It is no surprise, then, that the positive hiring figures published by the Labor Ministry on Friday have failed to register in Greece in any meaningful way. According to the ministry’s Ergani database, there were almost 100,000 net hirings (hirings over dismissals and departures) in June alone, which has been the highest figure seen for this particular month since 2001. The data also show that since the beginning of the year, there have been almost 256,000 net hirings.

However, another important factor in dampening what would otherwise be considered positive news is the precariousness of these jobs. Of the record hirings registered in June, for instance, 42 percent involved part-time work and another 17 percent shift work, so that only half of the new jobs were full-time ones.

There is also, understandably, a distinct seasonality to many of the hirings that were made in June. Food service, accommodation and retail were the three sectors with the biggest net contribution to the jobs made available. What is expected to be another record year for tourism arrivals has a significant part to play in this development.

So, if we try to take a balanced view of the Greek labor market at the moment, the encouraging signs are that the unemployment rate continues to drop and that there has been a rise in hirings. The reasons for caution are that the proportion of people in Greece without jobs continues to be exceedingly high, the working conditions for young Greeks who are able to find jobs are mostly poor, and many of the positions available to jobseekers of all ages are not full-time.

We can take heart from the indications that the situation in the Greek labor market appears to be changing for the better, but we should be aware that more job quality and quantity will be needed before the country can start to feel any sense of relief.