Friday, August 06, 2010

The Greek economic crisis's 600lb gorilla in the room

I'm sure than you have that old medical joke, "the operation was a success but the the patient died" a thousand times but I can't help but recall it when I see on the state - run ET1 and NET news bulletins reports of how quietly optimistic the IMF/EU/ECB are about the progress Athens has been making in implementing the economic reforms needed before they approve the latest installment of the bailout package.

However, nowhere in the constant round of self - congratulation and back slapping are you going to hear anything about the issue that is most worrying to Greeks, namely unemployment. Currently, the official figure is 570,000 or 11.7% however, behind these numbers hide some truely horrifying facts. In some areas such as the Attiki region and Ionian islands the number of those looking for work has risen by up 50% in just one year. According to the latest OECD predictions unemployment is set to reach nearly 15% in 2014 whilst the Greek Trade Union Conference or GSEE (ΓΣΕΕ) is talking about a million jobless by next year out of a total labour force of 5 million.

Even this figure may be an underestimate since unemployment figures only include those signing on, which does not include many of those who have been unemployed more than one year who are considered to be "economically inactive" rather than unemployed or simply do not bother signing on as their benefits have run out. Nor are those working in the black economy (tourism and construction and even education are rife with employers who refuse to pay contributions) without national insurance who cannot claim unemployment benefit.

No provision has been made by the government for the tremendous social disruption likely to be caused by having one in five or even one in four of the work force unemployed, a number which is going to be higher if you happen to be a woman, disabled, under 25 or over 50. No mention was made of unemployment in the joint European Commission, European Central Bank and IMF upbeat press announcement concerning Greece's latest installment of the bailout package.

It's hard to consider any economic plan which produces joblessness on a scale not seen since the Great Depression as a success, yet that is exactly what the Greek government representatives and their supporters in much of the media are trying to do. There seems little awareness of the degree of social dislocation unemployment of such a scale is bound to produce. instead we are feed a steady diet of statistics and projections which are based on economic modela which do not take into account the conditions on the ground nor the fact that many official economic indicators are little more than educated guesses, the product of a state apparatus that does not even know how many people it employs.

On the other hand whilst hundreds of thousands of pensioners face cuts in their incomes to get permssion to borrow 9 billion euros the Greek government has found 25 billion to give to banks in order to improve their credit worthiness, which in addition to the 26 billion given in 2008 amounts to 15% of GDP or nearly four times the amount Greece spends on education per annum

NB the picture is NOT real but a piece of photoshopped fun. Just a reminder for those who had their sense of humour removed instead of tonsils when young.

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