Youth Unemployment in Crisis Times – Who has Failed in Greece?

What was the case with youth unemployment in Greece before the crisis? 

The inactivity of Greek youth increased with almost 10% (from 63% to 72%) in the period of 2000-2008. This means that for the last decade, over two thirds of Greek youths were not involved actively in the labour market. In addition, Eurostat data show that a decade ago female YUR in Greece was almost double the female YUR in both EU15 and EU27, while male YURs almost converged. And while during the period between 2000-2010 male YUR increased much more significantly due to simple scaling problems, still the pattern of 2:1 between female YUR in Greece and in EU countries remained. Thus, one can assume that youth unemployment is particularly troublesome due to the Greek labour market managment.

Before making this hurried conclusion, however, it is important to consider that for the period of 2000 – 2008, the involvement of young people in education and training increased from around 50% to around 80%. From this perspective, youth unemployment in Greece today cannot be considered a product of Greek employment policy alone.

What happened during the crisis?

Apart from the third quarter of 2010 the downturn in youth employment has been a persistent trend. For the whole country the employment rate changed from 48% to 42%, and the same percentage change was encountered by the age category 15-24 years, whose employment rate fell from 31 to 25%. Genderwise, during the period 2010 – 2011, according to the official statistics in Greece, female youth unemployment reached the record level of 44,9 %; and this figure reflected the youth category 15-29, while the unemployment figures for the youth 15-24 are usually much higher. At the end of 2011, while average unemployment rate for the country was at 21%, Greek youth unemployment for the age category 15-24 scored 51%.

What else happened meanwhile? 

Austerity measures forced several changes in Greek labour law. As a result, it became significantly more cost efficient to fire the workers with least work experience – among whom are naturally many youths. As a result they were most exposed to the firings. Severe and poorly coordinated changes were also introduced both to the field of unemployment benefits and to minimum wage levels. Thus, according to the current basic economic incentives, it is more worthwile for young people up to 25 with work experience between 0-3 years to remain on unemployment benefits of 270 Euros rather than accepting a wage of 255 Euros for a part time job. This means that due to the austerity measures young people in Greece are currently given an incentive to remain unemployed rather than to start part time work.

So what are the options for young people in Greece today?

If youths want to stay in Greece:

Either as employees or self-employed (entrepreneurs):

• An obvious treath for them is long term unemployment. According to official OAED statistics, for the first quarter of 2012, in all regions the so called NEET youth, i.e. the number of Greek youths who are long term unemployed and have given up looking for employment as a share of the total number of youth unemployed, is going straight up indifferent to the territorial discrepancies.
• The alternative to being an employee – entrepreneurial activity – is: a) limited by the economic environment and b) challenged by the entrepreneurial development of youths in Greece; Greek youths who are already involved or are willing to get involved in entrepreneurship are the same share of total youths as in EU27. However, while EU27 has a group of 10% still indetremined youth, who might possibly be stimulated to enter into entrepreneurial activity, Greek youths are already largely demotivated and the young people who are inactive but not firmly disinterested in entrepreneurial activity are less than half the EU27 average – at only 4%. 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 severe austerity and crisis situation.

The other option remaining is to leave Greece. According to Eurobarometer, in 2011, 64% of Greek youths were actually expressing different degrees of willingness to emigrate from the country. This number is over 10% higher than the EU27 average. In addition, the intention for emigration among Greek youths seems to be mainly long term oriented with those willing to emigrate for a long period being 10% more than the short-term oriented ones. This could be due to persistent emigration tendencies in Greece over time, but the end effect is the same – exsanguination of the Greek labour market from youth inflows.

What could be done now for Greek youths?

Adequate economic incentives (salaries higher than unemployment benefits) should be provided to secure part-time youth employment stimulation. Moreover, in order to stimulate youth entrepreneurship, combined measures for the alleviation of the co-investment criteria for youths entrepreneurual grant projects, preferencial taxation treshholds for young entrepreneurs, holders of entrepreneurial, research and development grants and the self-employed should be introduced.

Otherwise?

Otherwise, no matter if we will conclude that the situation is Greece’s own fault or the fault of the austerity measures, the end results is the bleak future of a whole generation of Greek youths, who face only two life options: severe unemployment or the deprived status of immigrant workers.