ECONOMY

Employment too low

Brussels – In its «Report on the Implementation of Broad Economic Policy Guidelines,» officially released yesterday, the European Commission remarks on how difficult it will be for Greece to fight unemployment and increase the number of actively employed, given the disheartening foundation of an economy lacking in competitiveness and suffering an extensive debt burden from squandering resources which threatens to undermine whatever progress was achieved in recent years. Concerning the rate of employment and the rate of unemployment, both crucial to Greece’s quest to converge with the economies of its European Union partners, and also crucial to the survival of the social security system, the Commission report finds that the measures taken, even when in the right direction, have not yet produced the expected results and that «further efforts» are needed in almost all aspects of the economy. It should be noted that the data on employment is part of a report prepared by the Employment and Social Affairs directorate, presided over by commissioner Anna Diamantopoulou, a prominent member of the Panhellenic Socialist Movement (PASOK), which has ruled Greece continuously since 1993 and was also in power from 1981 to 1989, meaning that it has been in power, or shared it, for 219 of the last 267 months. This report, along with Finance Commissioner Pedro Solbes’s report, which will include changes in Greece’s main economic indicators in 2003, will be submitted in March at the Brussels spring summit for approval by the leaders of the 15 member states. The facts, as described in the employment report, are not very encouraging. The unemployment rate, at over 9 percent, is one of the highest in the EU and is dropping at a very slow rate. Also very low is the employment rate, that is, the percentage of population between the ages of 15 and 64 either working or actively seeking work. In Greece, this rate remains stable at 56.7 percent, the second lowest figure in the EU, with only Italy trailing. It simply means that 43.3 percent of Greeks of working age are either not working or, worse, not willing to work. There is a great discrepancy between men and women: Among the former, the employment rate is 71.4 percent, still among the lowest in Europe, while among the latter, it drops to 42.5 percent, by far the worst number in the EU. Employment among the young, aged 15-24, is even worse, at only 26.5 percent (it should be noted that school and university students are not included), less than half of the number in most EU countries. On the other hand, the employment rate among men 55-64 is above the EU average but that of women of the same age is again the lowest. The low employment rate poses a direct threat to the pension system that is starved of much-needed contributions and could collapse, dragging down the rest of the economy. As the Solbes report remarks, the reforms attempted in 2002 were insufficient and fail to take account of the enormous public debt, while the abandonment of plans for a second, more radical stage of reforms creates «very high risk for the viability of public finances.» Concerning unemployment, the most worrying element is that 5.1 percent of the total active population are long-term unemployed. This is the second highest figure in the EU, where the average is about 3 percent. A related index is that of «poverty endangerment,» which refers to the percentage of people living just above the poverty line and in imminent danger of falling below it. In Greece, this represents 20 percent of the population. Even finding a job, difficult as it is, does not mean the end to one’s problems. Beyond the already high number of unemployed, we have a significant number of «employed poor,» a condition that first became apparent in the mid-1990s and refers to people with a full-time job at very low wages, less than 60 percent of the average. In Greece, 13 percent of employed people, two or three times more than in the majority of EU countries, fall into this category. It is expected, then, that Greek employees are the least satisfied with their employment. Their productivity is the second lowest in the EU, at 83 percent of the EU average. It has to be said, in mitigation, that productivity has risen fast in the past few years, leading to a reduction in the real unit labor cost. This rise, the fastest in Europe, is combined with a very fast rise in investment in new technologies and research. But despite this, the base was so close to zero and the distance separating Greece from the rest of Europe so large that it will likely take several decades of continuous effort to bridge the gap. As for part-time employment, the Commission finds that measures taken thus far have not produced results. It remarks that «part-time employment, through employee placement offices, must become more attractive for both employees and enterprises.» The general picture of the economy is especially unfavorable: Excessive indebtedness, public spending out of control, a shrinking primary deficit, «sluggish» businesses and low productivity of the largely unskilled labor force compose a disturbing picture. Thus, the so-called miracle of high GDP growth in recent years, mostly due to generous EU inflows as part of the Third Community Support Framework and the income generated by Olympics-related projects, appears increasingly vulnerable. The government stands accused by the Commission of failing to take advantage of high growth to put public finances in order. Spending got out of hand, especially concerning wage policy. Primary spending in 2003 alone exceeded budget estimates by 475 million euros or 0.3 percent of GDP. The country’s enormous public debt, over 100 percent of GDP is, according to the Commission, the greatest threat to the country.