Recession-battered Greece scores yet more record unemployment

Greece’s jobless rate hit a record high of 27.9 percent in June, data showed on Thursday, as the labor market continued to buckle in a deep recession with austerity policies linked to the country’s bailout.

Unemployment rose from 27.6 percent in May, and was more than twice the average rate in the euro zone of 12.1 percent in July. The latest reading was the highest since Greek statistics service ELSTAT began publishing monthly jobless data in 2006.

Such data, however, tends to lag other growth indicators, which Eurobank economist Platon Monokroussos said were painting a slightly less bleak picture.

“Recent data for the annual change in employment and new private sector hirings suggest the jobless rate may be approaching a cyclical peak,” he said.

The government has also suggested that there are tentative signs of Greece having hit bottom.

Prime Minister Antonis Samaras said last week he believed the 2013 slump would be smaller than forecast and economic pain would ease next year.

Financial daily Naftemporiki reported on Thursday that the finance ministry is now looking at a 3.8 percent contraction this year versus the 4.2 percent forecast by international lenders.

The unemployment rate, meanwhile, has more than tripled since 2008, the start of a six-year recession which has wiped out about a quarter of Greece’s economy.

Joblessness is a major headache for the government as it scrambles to hit fiscal targets and carry out structural reforms demanded by its international creditors.

Monokroussos said temporary hirings in the tourism sector and recently initiated short-term public works programs were likely to provide support for employment over the second half.

Tourism, which accounts for about a fifth of Greece’s economic output and one in five jobs is having a bumper season. Revenues are seen rising 10 percent in 2013, to 11 billion euros, with more than 17 million visitors – a record – expected.

But correcting Greece’s economic imbalances has come at a very high cost. Data showed those aged 15 to 24 remained the hardest-hit as the jobless rate in this age group, excluding students and military conscripts, registered 58.8 percent.

With the economy in its sixth straight year of recession and 1.4 million people officially without jobs, the pain is felt across the board with borrowers falling behind on loans and fewer workers paying into state pension funds.

A turnaround will take time to be felt in the labor market even if recovery sets in next year as authorities project. The central bank sees unemployment peaking at 28 percent before it starts to decline in 2015.

The European Union and the IMF, which bankroll Greece, expect unemployment will average out at 27 percent this year and ease to 26 percent in 2014. Greece’s largest private sector labor union GSEE has a more grim outlook, expecting it to climb to 29-30 percent this year and hit 31.5 percent in 2014. [Reuters]

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