ECONOMY

A new threat of joblessness

In the big European Union member states, jobs and unemployment are among the prominent policy issues. It may be recalled that Chancellor Gerhard Schroeder feared about his election because the number of jobless had exceeded the limit he had promised. In France, the presidential election was greatly influenced by the ability of the far-right candidate to convince a large section of the electorate of his xenophobic views. In fact, the quality and maintenance of employment has been a major policy issue since the mid-1970s. This is not surprising; the effectiveness of a government’s economic policy is usually judged in terms of its impact on employment. The same is true of the welfare state, as the cost of maintaining minimum living standards for the unemployed and the financial health of social security funds are closely related to the structure and size of employment. In Greece, the problem is old and has proved difficult to solve. Unemployment remains high, particularly for an economy growing at rates of more than 4 percent. The total level of employment is among the lowest in the EU, limiting disposable income and total production. Politicians systematically refuse to deal with the real nature of unemployment. In Greece, it is a primarily structural problem; it is precisely for this reason that it is not directly influenced by the swings of the economic cycle. Until recent years, an extensive farm sector accounted for a large chunk of the national economy. The movement of the population from agricultural to the urban sectors of the economy continues. Combined with lagging regional development, the «conversion» of farm supports and subsidies into income supports and the absence of structural policy initiatives in rural areas, with a large number of the newcomers to urban centers – college graduates, for instance – boost the lists of the unemployed. This structural development will continue for many years to come until employment in the farm sector falls to «normal» levels for a European country, around 2-3 percent of the active population. The low level of employment, exacerbated by the large influx of immigrant workers – compared to other countries – is a serious weak point. It demands immediate solutions, imagination and boldness for measures that surpass a hazy «social democratic» model. Not just for economic reasons but also for deeply political reasons that can easily become explosive. Apart from the transient effect of hirings in the large public projects, it is the low level of the economically active population that mostly keeps the unemployment figure low. If the percentage of the economically active population rises to the European average of 56 percent, unemployment is bound to become a much more serious problem. The truth is that the government’s purported «strong» economy does not have the strength to maintain present employment levels. Casual glimpses at the many public projects under way that make everyday life difficult give the impression of small armies of workers. But this does not solve the problem of the low level of employment. One of the main indications of low productivity and competitiveness is that the Greek economy is not in any position to translate growth into jobs. For such reasons, the recent idea by the new leader-in-waiting of the ruling PASOK party, George Papandreou, for the hiring of young people without covering them with social insurance for a limited number of years could be effective, notwithstanding any other important problems that could accompany its implementation. The firms needing specialized and well-trained workers would have no problem paying social insurance contributions and taking proper care of the new hirings. For larger enterprises in particular, the real obstacles are the business environment and labor regulations, the role of labor unions and the hostility they meet from the bureaucracy. So the only ones who stand to benefit from Papandreou’s plan would be those with no more to offer than illegally employed immigrants. Furthermore, rehabilitating the public sector requires a restructuring of employment patterns. Even if, ultimately, the employment levels remain steady, their composition must change if we want to see any improvement in services to the citizen and a State that strictly limits itself to the role of coordinator. Thus, if we take into account that industry is not expected to contribute to any reduction in unemployment, that self-employment is becoming increasingly costly to start up and that public administration will have to «change,» the supply side of the labor market acquires a clearly problematic dimension.