Greek Economy and Employment Annual Report 2013 Author INE/GSEE The main objective of the report on Greek economy and employment 2013 has to do with the evaluation of applied policies 2010-2013 and their impact on Greek economy and society, developments in wages, labor costs, productivity and competitiveness of the Greek economy, employment and unemployment, the conditions and prospects of a documented alternative economic and developmental policy, financial developments, labor relations, child care policies and developments in social security in Greece and the European Union. The central objective means the comprehension that followed policies of internal depreciation, austerity, unemployment, controlled bankruptcy and also the planning of policies for the reconstitution of order in social needs, strengthening of wages and public and social expenses, in the frame of a new developmental model and modern program of economic and social reconstruction of Greek economy has come to a dead end. In this frame of alternative strategy for the dealing of economic crisis, recession and the prospective of wage led growth in Greece, the most important conclusions of the report are the following: • The fall of domestic demand since 2009 and then has been dramatic and amounted to a total of 31,3%. The level of domestic demand returned to the level of 1999. • The cumulative decline in GDP the last six years of recession (2008-2013) compared to the corresponding change in the 36 more advanced countries of the world, amounts to about 25%. The actual deviation of the Greek economy from the European Union average has already canceled the process of real convergence that has taken place during the period 1995-2007. • The increase in the unemployment rate from 7,7% to 27% (European Commission 2013) within the five – year period 2009 – 2013 is attributed not only to the reduction in the number of employees but also to the stabilization of the workforce, i.e. the number of people aged from 15 to 64 years that participate in the labor market (either have jobs or actively seeking work). During the period 2009-2013, workforce in Greece increased cumulatively by 1,2%. • During the four – year period 2010-2013, the average nominal earnings per employee fell by 16,3% compared to 2009 under the pressure of unemployment and structural reforms in the labor market, while labor productivity decreased by 2,6% due to a reduction in the degree of capacity utilization. This resulted in the reduction of labor costs per product unit by 13,9%. • The GDP of the Greek economy shrunk by 6,4% in 2012 after decling by around 14,6% during the four years of recession 2008-2011. So the cumulative decline in GDP at constant prices, during the period 2008-2012 rose to 20,1%. Once again the annual European Commission forecasts proved inaccurate. According to which GDP would have fallen at constant prices by 4,7% in 2012, while in reality decreased by 6,4%. The cumulative deviation of failed predictions from reality is now about 11 percentage points of GDP. • Labor productivity will have declined at the end of this year, compared to 2008, by 5,1% and will have returned to the level of 2003. So in Greece a strong tendency has been employed, to return to lower productivity and a lower standard of living so as to balance the external balance of goods and services and the primary public balance. • Labor productivity in Greece followed, as early as 2004, a deceleration route (the development of the years 2004-2007 was not based on increasing productive investment but in the extension of low capital – intensive production). In this slowdown compounded the effects of the crisis and in the six – year period 2008-2013 the decline in labor productivity over 36 more advanced countries of the world amounted to a total of 8,4%. • Public consumption rose by 4,8% in 2009, allowing Greek economy not to sink into deeper recession. At the same time, this increase also contributed to the dramatic widening of the public deficit. The correction of the deficit that started in 2010 caused a dramatic decrease in the volume of public consumption so that at the end of 2013, will have retreated to the level of 2001. • Since 2010 has begun the process of divergence in the productivity between the Greek economy and the 15 more advanced countries of European Union, and as a result it has declined from 91% to 83%. • Average annual earnings per employee in Greece in 2013 were smaller than those of Slovenia and Cyprus (where the real wage has also been reduced). Amounted to 22.325 euros versus roughly 34.000 in Spain, 38.000 in Germany, 49.000 in France and 45.000 in Ireland. • The limitation of financial deficits and the creation of budget surpluses were not achieved with the increase of public revenue, resulting in a higher than expected level of expenditure cut. The structural weaknesses of fiscal policy have not been encountered either. On the contrary in 2012 employees and pensioners were almost exclusively loaded with all the burden of fiscal adjustment. Indeed, while the average declared income of salaried workers and pensioners decreased by 18% (2011) in comparison with the previous year (2010) and their average tax burden decreased by 52%. On the other hand it is noted that the average declared income of self – employed persons decreased (2011) by 38,5% in comparison with the previous year (2010) and their average tax burden decreased by 17,7%. • The number of employees in 2008 and 2009 amounted to 4,8 million people while in 2013 was just 3,9 million. After a continuous fall for eight years (2001-2008), the unemployment rate rose dramatically during 2009-2013 to 27% in average level (based on Eurostat definition). According to European Commission forecasts, the unemployment rate is to be reduced by 2014 to 26% (an average annual level) and according to OECD forecasts (July 2013) the rate of unemployment in 2014 will grow at 28,2% (fourth quarter) from 26,8% (May 2013). Estimations of INE/GSEE are more pessimistic, predicting unemployment in 2013 to grow by 24,2% in 2012 to 29%-30% and 31,5% in 2014. The fraction of unemployed today exceeds the 1/3. • For the period of economic crisis and recession in Greece (2009-2012) the uninsured and non-declared work has shown a significant increase, the rate of which exceeds (2012) 36%. During the same period operational employment contracts have increased (from 238 in 2010 to 976 in 2012), of which 72,6% signed with associations and only 17,4% signed by business associations, resulting in operational contracts in conditions of economic crisis, recession and high unemployment to constitute one of the key factors for imposing salary reductions. • In Greece the collective services of care and upbringing of preschool children are limited. According to data available this kind of services cover only 10% of children between the ages of 0 and 2 years old and only 61% of children from 3 years old and up to the age of compulsory educatiom. Therefore, what should be done by the Greek economy in order to halt the recession and emerge from the crisis? The answer (given by INE/GSEE) consists in implementing an alternative macro-economic policy, economically and socially effective. This policy will include the immediate increase in the minimum wage from 586 euros to 751 euros (abolition of the legislative act of February 2012) which contributes to an increase in domestic demand by 0,75%, of GDP by 0,5% and employment by 7.000 new jobs, during the first year. The halting of the recession and the recovery of the Greek economy through the increase of minimum wage assisted by the debt restructuring (drastic because mild restructuring prolong recession and removes development prospects), the liquidity of the economy, the effective and successful fight against tax evasion and investment (public – private) activity, under a European funded project on European South and Greece (10% of GDP total investments of which 7,5% productive and 2,5% residences, P. Thomopoulos 2013) will contribute additionally to GDP growth by 1,7% per year and to increase employment by 25.000 new jobs. At the same time, the dynamic of the new recovery conditions of the Greek economy (strengthening demand through the creation of incomes, increasing investment, activation and reconstruction of production) will penetrate in restoring democratic functioning of collective bargaining and collective agreements and the reconstitution of the welfare state. This course of recovery (3%-4% per year) of the Greek economy, in a five – year period will put into use the productive potential that today is slow and amounts to 15% of GDP. Also it will contribute to increase employment by 7%-10% or in other words by 250.000 persons, assuming therefore twenty years for the creation of a million jobs lost in the period 2010-2013 the creation of which requires a decade with annual GDP growth of 7% - 8%.
Posted on: Tue, 24 Sep 2013 10:12:55 +0000
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