Greece’s long-term jobless rate still among EU’s highest

The unemployment rate in Greece has dropped slightly but is still higher than the EU average, while long-term unemployment remains high. Greece’s jobless rate in the second quarter of 2005 was 9.8 percent, second highest in the eurozone, down from 10.4 percent in the same quarter in 2004. The long-term unemployed – those actively seeking a job for at least 12 months – also declined, to 5.2 percent of the work force from 5.7 percent in 2004, allowing Germany, also the leader in the overall unemployment rate, to take the lead from Greece. Greece’s overall employment rate increased slightly. The number of people employed or actively seeking work accounted for 66.8 percent of the population aged 15-64, up from 66.5 percent of that age group in 2004. In the eurozone, the average unemployment rate in the second quarter of 2005 was 9 percent (down from 9.1 percent in 2004) while long-term unemployment remained unchanged at 4 percent. Among all 25 EU members, the respective averages are 9.1 and 4.1 percent. Ireland boasted the lowest unemployment rate among the 12 eurozone countries (4.3 percent). In absolute terms, Greece had 465,000 registered unemployed in the second quarter of 2005, of which about 250,000 were long-term unemployed. The statistics confirm that unemployment hits women much harder than men: In Greece’s case, the jobless rate among women was 15.3 percent, compared to 5.9 percent for men. The long-term jobless rate for women reached 9.1 percent, compared to 2.5 percent for men. Europe lags Most European Union countries are plagued by highly rigid labor markets that stifle economic growth. Greece does enjoy high growth, thanks in part to EU fund inflows and the continuing positive impact of the Olympic Games, although the government’s inability to absorb more EU funds and to push ahead with infrastructure projects has had a negative impact on growth. A study released yesterday by Alpha Bank shows how the eurozone lags behind the USA, the UK and other countries in labor market flexibility and how this hurts economic growth. Countries with more flexible labor markets attract more foreign investment, have lower unemployment rates which, in turn, boost consumer confidence and, therefore, consumer spending and GDP growth. Rigid Greece Greece has high demand growth rates, mostly because households are increasingly indebted, but also has one of the most rigid labor markets and a social security system that urgently needs reform. The most important factors contributing to the rigidity of the labor market in Greece are the following: – The combination of a high minimum wage, determined at national level, with very high non-wage labor costs make it very difficult for new entrants into the job market to find employment. – Jobs for life in the public sector plus the high cost of layoffs reduce the number of new hirings and the number of available long-term jobs. – Labor mobility between enterprises, economic sectors and locations is extremely limited. – There is very little flexibility in work hours and very few options to set more flexible schedules. – Part-time employment is not developed and there is little incentive for its expansion. Self-employment On the other hand, the degree of self-employment in Greece is very high, mitigating the labor market rigidity. The self-employed (including farmers) account for 40.2 percent of the work force, compared to 15.6 percent in the EU. Other mitigating factors include the number of economic migrants and the high percentage of employment in the parallel economy. Still, other studies have found that there is little incentive to increase productivity in Greece. A study by the World Economic Forum ranked Greece 64th out of 104 countries in 2004 in connecting salaries with productivity.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.