Download now: The Downfall of Cable, and the Rise of 5G!

Greece Warns of More Job Cuts

Youth Unemployment Above 50%

Written by Brian Hicks
Posted March 13, 2013

Greek unemployment figures have dropped slightly, but there are concerns that it is only a temporary dip.

Last December, unemployment decreased to 26.4 percent; however, that is not seen as the beginning of an encouraging trend. In any case, unemployment in that nation has hovered near record highs over the past few months. And some economists, and even a government-backed study, have indicated that it may go up as high as 30 percent over 2013, reports CBS.

Since the recession hit in late 2008, Greece has seen nearly a million people lose their jobs. As of now, its population of 11 million has a mere 3.7 million working individuals. Austerity was imposed on Greece by the Eurozone and the IMF, and the consequences have been uncertain at best. Even now, calls continue for further cuts to public sector employment, although the conservative government has shown some resistance to continued dismissals of civil staff.

But a “milestone” of letting go of some 150,000 civil employees by 2015 is the factor that will determine whether Greece can receive a $3.6 billion aid package this month. Thus far, talks have continued with international creditors for about a week with no real conclusion.

From Bloomberg:

“Public sector job cuts are a major part of the program and they are one of the most politically difficult parts to achieve,” said Holger Schmieding, chief economist at Berenberg Bank in London. “And for the Greek government, which has two left-of-center parties, it is extremely difficult to really implement those job cuts. I’m afraid this will likely stay a point of contention, review after review after review.”

Greece is not in a position of authority, since it was discovered that it had misled its Eurozone partners as to the true state of its national finances. Euro loans and IMF stimulus packages continue to be the lifeblood of Greece today, and to merely qualify for payments amounting to the 240 million euros ($310 million) necessary to pay its domestic dues, the country has to continue reducing staff levels. All of which means that the dip in unemployment cited earlier cannot be taken as an encouraging indicator.

Roughly half of the government’s spending goes toward wages and pensions, and there were 667,733 employees on payroll as of early October last year. Greece has, so far, insisted on attrition (one new hire per five or ten retirees) to try and meet the Euro/IMF goals, but that rate simply doesn’t appear to be working fast enough.

Political voices have protested that further public sector job cuts are merely going to worsen the national recession, which is now continuing its sixth year run. Last year, GDP fell by 6.4 percent, and the European Commission has indicated it could drop by another 4.4 percent over 2013. Youth are especially affected, with unemployment in the 15-24 age group at a shocking 57.5 percent.

Greece has essentially been locked out of the markets since mid-2010. Public sentiment against austerity has remained strong, despite two major bailout packages sent its way from the Eurozone and the IMF.

The opposition to austerity got so problematic at one point that all international loans were halted back in June. During the Greek elections, anti-bailout parties won a majority, and the result was a three-party coalition that elected to remain in the Eurozone.

Although Greece’s unemployment numbers are dramatic, austerity has been felt across Europe by the youth of other nations as well. Caritas, the global charity organization, has stated that nearly 3 out of 10 children in Greece, Ireland, Portugal, Italy, and Spain are living in, or on the verge of, poverty. Greece’s youth unemployment overall is now over 60 percent, while Spain and Portugal are seeing numbers nearing 50 and 40 percent respectively, reports Reuters.

The long-term consequences could be drastic, with Europe’s economic recovery delayed by years. Countries that have not been chosen for economic bailout packages, like Italy, are essentially creating a “lost” generation of ill-educated and malnourished youth who do not see good job prospects.

Reuters reports:

"This could be a recipe not just for one lost generation in Europe but for several lost generations," Caritas said, citing the European Union's own statistics.

Austerity-led cost cuts to welfare programs, unemployment support structures, raises in VAT, and steep fuel costs have all contributed to an extremely sour employment structure that is hostile to youth in particular.

 

If you liked this article, you may also enjoy:

Buffett's Envy: 50% Annual Returns, Guaranteed