ECONOMY

IT employment struggles

Employment in the Greek information technology and telecommunication sectors has fallen about 30 percent in the past two years as a result of the economic downturn and delays in implementing the European Union-subsidized Information Society investment plan, according to a survey prepared by Knowsys company. The survey, based on a sample of firms of all sizes and public sector agencies, shows that the decline is continuing and has been especially marked in the IT segment of the market. In contrast, alternative telecoms operators have created jobs in the last few years. Many IT firms consider that their employment levels are above what would be justified by their current turnover and say there are no prospects for improvement over the next 12 months. The survey says a major reason for the decline was the cultivation of excessive expectations during the period of the dot-com boom in the 1999-2000 period, which coincided with the Greek stock market frenzy. The impact of the implementation of the Information Society (IS) plan on market activity was also overestimated. The delays in implementing the plan were due to inefficiencies in the public administration and to stronger competition among the prospecting companies, the survey notes. «Characteristically, in a total of expenses in the order of 300 million euros in the framework of IS, only a very small number of projects have created business… A large part of this otherwise high expense has been devoted to studies and administrative costs such as for the Citizens’ Information Bureaus,» says the survey. But IS officials are promising that the pace of projects is accelerating. Mergers among companies in the sector are cited as another reason for layoffs. The number of majority-controlled IT and telecoms firms fell from 20-30 in 2000 to fewer than 10 today. A further factor has been a decline in disposable income, the survey notes. The effects of this development have not been marked so far but are expected to intensify in coming months, affecting mainly distribution and retailers. Already, a number of retail chains have suspended operations or are in the process of reducing them. The relatively low rate of IT and Internet penetration in Greece has also had a negative effect. Despite the generous European Union subsidies, Greece has one of the lowest rates among members of the EU and the Organization for Economic Cooperation and Development. Further, Greek IT and telecoms firms made a number of misplaced investments in neighboring Balkan countries in the 1998-2000 period, few of which have proved successful. Finally, the survey notes encouraging indications of countervailing factors such as the spread of e-commerce and 3G mobile telephony services, which may slow down the decline in jobs in the sector.