Greece, also known as Hellenic Republic is located in Southern Europe, bordering the Ionian Sea and the Mediterranean Sea. As of July 2019, Greece is 128,900km big with a population of 11.1 million. The official language, Greek is spoken by 99% of the population. Minority languages such as English, German, French and some Greek dialects are spoken as well (Language of Greece, 2019). Drachma used to be the currency of Greece between the 1832 and 2002 until it joined the European Union in 1981 and adopted Euro as its official currency in 2001.
The country has many mineral deposits, namely oil, marble, clay nickel, iron ore etc. The Greek economy used to flourish on agricultural however as time passed, the main source of income became industry, such as tourism, mining and agricultural processing. Agriculture contributes 5% of GDP while industry sector contributes 20%. (Greece Web Travel, n.d.) The mining industry was a small but important part of the national economy of Greece. With mineral resources being readily available in the country, the Greek Mining/Metallurgical Industry (GMMI) contributes 2% of the Gross Domestic Product (GDP). (Tzeferis, 2015)
Greece has succumbed to a high unemployment rate ever since the financial crisis hit them in 2009. This has caused many people to turn homeless and live in poverty. There was a significant experience of depressive symptoms in Greece. This vicious cycle of unemployment, financial hardships and poor mental health might become entrenched with a prolonged economic crisis in Greece. (Geitona, n.d.)
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In order to discuss the unemployment in Greece, we need to look at the GDP rates in the country first. In the last 2-3 years, there has been GDP growth suggesting that the unemployment rate should decrease.
There are a few different unemployment rates to further analyse the unemployment rates in Greece. There is the general unemployment rate, the long-term unemployment rate and the youth unemployment rate. In all of the three unemployment rates mentioned above, the trend is declining. However, the youth unemployment rate continues to contribute to more than 40% of the total unemployment in the country.
We will now discuss the reasons why youth unemployment rates remain high. The Greek debt was one of the primary reasons. Many potential investors did not want to enter the Greek economy which caused substantial hurt to the growth of its GDP. Looking at its unemployment rates, it can be seen as cyclical unemployment due to its recession arising from the Greek debt. Coupled with that was the Greek austerity programmes that were initiated which significantly reduced the minimum wage for the younger workers in Greece. As productivity among the Greeks are very low, it does not give much growth for the minimum wage in the country. The lack of competitiveness has led to a fall in demand of Greek goods which has caused many companies in Greece to close down, reducing job vacancies.
Looking into the Labour Force Participation Rate (LFPR), it is at a low of 51.8% versus normal rates of 65% or higher in other countries. Given that the unemployment rate is high in Greece, it indicates that the LFPR is affected by the mismatch of skills within the country. Studies have found that there are shortages in certain occupations while there is a surplus in some others. Generally, the shortages arise in areas of business services and administration managers, ICT operations and user support technicians, sales, marketing and development managers. This could be a reason as to why the unemployment rate is high as people are not having skills in areas where there are job vacancies. (Greece: Mismatch priority occupations, 2016)
The labour market and social policies have a key role in preventing the risks of a sharp increase in unemployment by promoting a quick reintegration of job seekers into employment and enhancing their skills to move into more productive jobs. Greece has stepped up in efforts to help the unemployed by focusing its policies in the efficient use of resources and allocation of resources particularly in the youth market. Their main rationale is to boost job creations and job retention by reducing non-wage cost. There is also a set of measures aimed at facilitating access to the labour market for young individuals and newcomers. These include
- a work experience program in the private sector,
- a program to subsidize enterprises for the recruitment of young graduates up to the age of 35,
- counselling and career-orientated services to enhance job prospects,
- programs to enhance youth entrepreneurship and
- vocational and educational programs in priority areas of economic activity such as tourism, building, etc. (Uk Essays, n.d.)
Despite Greece’s policies being put in place to improve unemployment rates, it has not increased significantly since the country experienced the financial crisis. The Greek economy continues to face 2 major challenges. The country needs to plan for a strong economic recovery to increase job opportunities specially to facilitate the youth unemployment.
Secondly, a policy needs to address issues to increase the matching of job seekers to the skills of new job openings so as to prevent its unemployment to a structural unemployment. A change in the monetary policy can help Greece to recover. However, as they are part of the Eurozone, the decision is not made by the government. Although the idea to leave the Eurozone may be beneficial in some ways, it will cause great disruption in the lives of the people given that there’s a fear that all the Euros will be devalued upon Grexit. (Pettinger, 2014)
