COMMENT

The deadly spiral of unemployment

By Nikos Xydakis

The most recent report on unemployment in Greece comes like a bad prognosis from a doctor regarding a patient in intensive care. The numbers are so frightening that we almost automatically disassociate them from their human content – unless, of course, we have someone in our own family circle looking for work.

Only the worst predictions, the bleakest scenarios regarding the course of the country’s jobless rate, are believable any more, and according to those, by the end of 2013 one in three people in Greece will be out of work. As far as young people are concerned, meanwhile, the door to their future will remain shut for an indefinite period of time.

What we are looking at is a disaster of historical proportions. The chairman of the US Federal Reserve, Ben Bernanke, said recently that a high jobless rate over an extended period of time does not just eat away at the social fabric, but also undermines the economy in the long term.

In the case of Greece, where the demographics paint no less scary a picture, the damage runs even deeper: Within the space of a generation, the country will lose the vital momentum and rejuvenating spirit of a younger generation consigned to a life in the professional deep freeze, on the margins of society.

The only way out of this deadly spiral of recession and unemployment would be an amendment to the memorandum of understanding signed by Greece in exchange for bailout funding from its creditors. This would be possible on the condition that the architects of the agreement recognize it was based on false assumptions and that its effects have been devastating. They would have to agree that internal devaluation more than tripled unemployment and has killed off competitiveness completely.

However, to get any changes made to the memorandum, we would first have to sway the German mind-set away from monetary orthodoxy and the worship of austerity. It is true that Berlin is under pressure from the United States, but the months until the German elections in the fall are going by too slowly. The German obsession with austerity will only be overcome with a radical shift in the already tenuous balance within the European Union as a whole.

The Italian elections on February 24-25 may prove to be such a destabilizing factor, as a possible strong showing by the unpredictable Silvio Berlusconi or by the populist and euro-skeptical Beppe Grillo could completely change the balance of power in the bloc and accelerate developments.

The fate of Greece lies beyond its borders more than ever before.

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