ECONOMY

The real threat of unemployment

It goes without saying that employment is the single most important factor shaping people’s daily lives. In the 1998-2002 period, the total number of jobless fell by 58,600, but at the same time the number of those employed also fell, by 13,000; in other words, unemployment was restricted «not because of a rise in the number of new jobs but because a large number of unemployed exit the work force,» according to the Foundation of Economic and Industrial Research (IOBE) in its latest quarterly report on the economy. A Greek paradox? Evidently; the number of economically inactive people in the population rose by 337,000 when the total population rose by only 265,000. This reconfirms an extremely important problem which we have often drawn attention to: that the much talked-about high growth rates of the Greek economy are not accompanied by more jobs. Naturally, in any economy, any reduction in employment means lower total income and less money to go around for households. The problem is worrying, because if the Greek economy is not in a position to absorb the labor supply with today’s high growth rates, obviously a slowdown in the growth rate of investment, which is quite likely in the years after 2004, will have far worse repercussions. The slowdown in the feverish construction activity will mean job losses for tens of thousands of immigrants who will be willing to compete for cheap labor in other sectors with the less willing natives of this country. Greek unemployment is not the result of an unfavorable economic period; it is «structural» and thus very difficult to solve, for it is closely linked with distortions in the economy, the giant size of the public sector, low competitiveness and incomes out of step with consumption standards. It is therefore very likely that in coming years Greece will face accelerating unemployment, accompanied by a deterioration of conditions on the job. And if the prediction for stronger pressures on available income materializes, leading many more to seek employment, the problem will become explosive. In 2002, the work force represented 48 percent of the population; that is, in a population of 9 million (above 15 years of age) those at work number just 3.9 million, while 4.6 million belong to the economically inactive population. If the percentage of those willing to work approaches the European average, now at 56 percent, the problem of Greek unemployment will evidently acquire huge dimensions. The country’s biggest employment sector is industry, despite the fact that it comes systematically under attack from anti-globalization forces, labor unions and government regulation. Together with commerce, the second largest employer, they comprise a much smaller segment of the economy compared to the non-competitive public sector, the result being that they do not exercise any significant weight in the formation of pay structures. Those are mainly influenced by procedures in the public sector and in the protected segments of the economy. In this way, pay is little influenced by the economic cycle, creating obstacles to adjustment in difficult periods and restricting the ability for workers to tap new opportunities in the competitive segment of the economy. The other key development is the continuous fall in the number of jobs in the agricultural sector, a natural trend given Greece’s still disproportionately high number of farmers compared to the rest of the EU. Without a doubt, the developments in the new Common Agricultural Policy will accelerate the exodus from the sector. The industrial sector is not expected to offer more employment opportunities, even if the negative attitudes toward entrepreneurship in society and government were to change tomorrow. Construction is at the height of its dynamism; moreover, self-employment, which traditionally has been a refuge for large numbers of Greeks, has ceased being so and will continue to decline as the concentration of economic activity increases. And despite electoral and political considerations, the State cannot offer more jobs. The only sector that has done that in recent years is services, but its necessary adaptation to pressing competition conditions is expected to wipe out this beneficial role in employment. So, where and how will Greeks find jobs?