Scarring vs Permanent Loss – The Two Youth Related Dangers on the Greek Labour Market

Austerity and economic stagnation during the recent crisis, mainly during the 2010-2012 period, has strongly affected all Greek youths, independent of gender, educational status or regional concentration. Before the crisis there were traces of different patterns of youth unemployment by region and gender in relation to the economic specialization across the country. These patterns were generally abolished during the hectic development of the crisis and the discrepancies have shrunk due to the faster deterioration of some regions which previously had enjoyed more intensive investments. Thus, all age categories in Greece today face a dramatic increase in the youth unemployment rate. Partially due to the developments from previous periods, female and foreign young workers remain among the most seriously exposed to youth unemployment.

The official statistics in Greece define ‘youth’ as within 15-29 years of age. If applying the EU definition of ‘youth’, the age category of 15-24 year olds, youth unemployment scores much higher. In the last quarter of 2011, the unemployment rate for 15-24 year olds was 50%, compared to about 40% for the age category of 15-29 year olds and an average rate of 21% for the whole country. This record high youth unemployment, however, happens against the backdrop of a past period of relativelly well-managed youth unemployment. For the period between 2000-2010, 15-24 year olds were highly involved in education and had an diminishing NEET (Not in Employment, Education and Training) sub-section.

Meanwhile, during the crisis, 25-29 year olds have shown almost the same pace of increasing unemployment as youths between 15-24 years of age. Thus, although scoring about 9% less than the unemployment rate for the age category of 15-24 year olds, the employment rate for young Greek adults between 25-29 years has also suffered a dramatic fall of 10% for the period 2010-2011, compared to the change of only 6% for the overall population. The age category 25 – 29 year olds is also the typical age of education-to-work transition for young highly educated workers as new entrants into the labour market. This means, that in Greece the most skilled young adults who are in the generally sensitive education-to-work transition period are also suffering the strongest blows from firing and joblessness during the current crisis. Yet, while the youth (15-24) have certain chances for educational involvement and requalification, the already highly qualified young adults (25-29) are exposed to the effect of the crisis without significant sources for support. Thus a double threat of ‘scarring’ and hampering the employment history of the young generation (15-29 year olds) in Greece exists: first due to belonging to the group that looses jobs at highest speed and second due to the additional exposure of the generally sensitive education-to-job transition period group (i.e. young adults between 25-29 years of age).

These economic tendencies of youth unemployment are happening against the backdrop of a particular situation with youth entrepreneurship in Greece. Compared to their EU 27 peers 1% more than average Greek youths are already involved in entrepreneurship. The group of already entrepreneurially active youths and the youths willing to get involved into entrepreneurship, taken together, represent the same share of Greek youths as the share of those in the EU 27. However, while the EU 27 enjoys a reserve of 10% still undetermined youths who might possibly be motivated to start entrepreneurial activities, Greek youths are already largely demotivated. Young people in Greece who are inactive but not firmly disinterested in entrepreneurial activity represent less than half the EU 27 average. This means that entrepreneurship, which is believed to be an important engine for self-employment, creativity and growth, is less attractive for Greek youths under the current circumstances.

Moreover, unemployed Greek youths are not only growing in numbers and are largely demotivated to engage in entrepreneurship or take advantage of self-employment opportunities, but are also more and more dissatisfied with the inability of local institutions – educational and vocational training institutions in particular – to provide sufficient support in the current crisis. This can lead to an increase in the NEET group and further discourage unemployed youths. On the other hand, 64% of Greek youths are expressing a willingness (to different degrees) to emigrate from the country. This number is over 10% higher than the EU 27 average. In addition, the intention for emigration among Greek youths seems to be mainly long-term oriented, those willing to emigrate for a long period being 10% more than the short-term oriented ones. Meanwhile, the general share of the young population in Greece is declining.

The summary of the above observations opens a two-fold line for further analysis and policy actions:

• Negative convergence of youth unemployment between regions and genders in Greece registers an overall worsening of the situation for young Greek workers. This necessitates immediate structural changes to support job-creation and entrepreneurship targeted at young people. Also, special support measures are required for the youth category of 25-29 year olds, who are the group exposed to the fastest unemployment growth among adults and are most seriously threatened by experiencing ‘scarring’ of their  employment history, resulting in low wages and a poor work track record.

• Meanwhile, Greece faces the threat of losing many ‘high potentials’ among its youths due to the self-selection process of emigration. Those who will remain in the country will face high internal competion for jobs. The possible result is more tension among Greek youths which has already started to escalate. This is additional to the threat of depopulation in those areas with the highest female unemployment rates.

In short, unless we see immediate measures for: a) job-creation targeted at young people, b) empowering the young Greek unemployed in the category of 25-29 years olds, and c) special measures for female youth unemployed, Greece faces the real danger of scarring and literally losing a whole generation of youths. This generation is above all the one which could and should be the main resource for economic recovery of the country through enterpreneurship and creativity, against the backdrop of the world economic crisis and ageing problems across all Europe.

This article is part of a project on youth unemployment in Europe run by the Friedrich-Ebert-Stiftung and Social Europe Journal