- June 14, 2017
Almost nine years since the outset of the Greek debt crisis, the deep and prolonged recession has led to substantial decline in ordinary financial activity and has swept away a quarter of the national Gross Domestic Product (GDP), an aftermath usually observed in times of war.
The ongoing crisis has had an extremely negative effect on labour market as well. In a country of 11 million people, more than one million jobs have been lost. Unemployment reached 27% (the highest within EU member states and more than double in comparison to the average rate in the Eurozone), a rate twice as high among ages 15-25 years old.
Besides the already existing structural problems of the Greek labor sector, austerity measures have definitely played a significant role in the rise of unemployment; namely, in an attempt to reduce huge budget deficits, Greece had to implement a severe fiscal consolidation programme, through reducing dramatically government and public spending and instrumenting important reforms and restructuring procedures in, practically, all sectors of social, business and economic life.
Extensive labour market reforms have been effected amid efforts to restructure labour market, improve competitiveness, boost economy and thus reduce unemployment. Prior to the debt crisis, the Greek labour market was a highly regulated market in comparison to the respective markets of other EU countries. Such enhanced regulatory activity continued post-crisis, asa series of legislative reforms were enacted in order to address market rigidities, pursue a higher degree of labour market flexibility, reduce the cost of wage and encourage businesses to employ more workers, especially of younger ages.
Such reforms included, inter alia, the following measures: reduction of minimum wage, which was even further reduced for young employees (ages 15-25), reduction of the overtime cost, increase of probation period, reduction in the severance payment upon dismissal, facilitation of part time and rotation work, increase of the retirement threshold and the abolition of governmental authorization for collective dismissals.
It seems that such measures have had little impact on the overall unemployment picture, the fundamental problem remaining the persistent lack of labour demand. On the other hand, budget constraints and cuts in public spending stand in the way of the expansion of temporary subsidized public work programmes (most of which are EU funded), the majority of which are targeted towards young people.
In light of the above, the situation seems bleak both for those who have managed to maintain their employment status as well as for the underemployed, floating in and out of low paid, temporary, part time, or uninsured jobs.
However,the worst and most worrying part is that unemployment is not simply an economic figure or an economic problem. It is foremost a serious social problem that tends to have a detrimental effect on individuals, whereas it tears into the fabric of society. Unemployment causes misery, poverty and indebtedness to families,is catastrophic for people’s self esteem, leads to depression, desperation and suicidal thoughts and wastes any potential they have. It is directly linked with crime rate increase. The longer people stay out of work, the more unemployable they become.
In contrast with the common pattern in other EU countries, in Greece, highly qualified persons holding university degrees have a higher risk of being unemployed or even underemployed. That leads to talented and highly skilled persons, especially young ones, to immigratein search for a better future. As a result, Greece is not only faced with serious economic problems but also with the so called “Brain Drain”, the suffering loss of the most significant factor for economic growth and development , namely its young, highly educated workf
In the absence of a rapid and dramatic economic turnaround, an entire generation needs to deal with a grim future that will keep them from supporting themselves and creating their own families. Despite measures taken in different levels, it is clear that unemployment will not stop or cease to increase,unless debt crisis is finally over and economy stabilizes and improves.