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Greece employment

Greece needs to address risk of a prolonged social crisis

A new ILO report calls for additional measures to support jobs and enterprises, plus social protection and a stop to further wage cuts in the country.

News | 24 November 2014
GENEVA (ILO News) – Greece faces a prolonged social crisis unless action is taken, warns a new report by the International Labour Organization.

The ILO study entitled “Productive Jobs for Greece” describes the pace of job creation in the country as “anaemic,” and says that more than 70 per cent of the almost 1.3 million unemployed have been out of a job for more than a year. This is the result of one in four jobs being lost since the beginning of the crisis in 2008.

Meanwhile, the number of Greeks at risk of poverty more than doubled in five years, rising from just above 20 per cent in 2008 to over 44 per cent in 2013.

Urgent measures to support people and firms are needed."

Guy Ryder, ILO Director-General
“Greece is at a critical juncture and to set the country on a sustainable recovery path, urgent measures to support people and firms are needed. Such measures should be defined in a tripartite setting bringing together government, employers and workers,” ILO Director- General Guy Ryder says.

According to Raymond Torres, Director of the ILO’s Research Department, the recovery strategy has been largely built on the premise that lower wages and fiscal consolidation would on their own restore competitiveness and boost economic growth. However, the report shows that a range of other issues – not wages – are at the origin of the competitiveness problem.

“The strategy so far, while it has helped restore public finances, has not achieved the expected results in terms of a sustainable economic and employment recovery,” explains Torres.

Need for more comprehensive growth and jobs strategy

In addition to the recent steps of the government to address the most acute social problems, the ILO report calls for a more comprehensive employment strategy that includes a range of measures to support job creation, tackle the most pressing impacts of the crisis and put the economy on a sustainable track.

The strategy covers both emergency measures and more sustained action.

The emergency measures include an activation guarantee to all young jobseekers and groups most in need, the nurturing of “social economy” enterprises as avenues for job creation, improved access to credit for small businesses, and a review of the pace and policy mix of fiscal consolidation so as not to undermine recovery efforts.

In the longer term, the study advocates the following measures:
  • Broadening the economic base by facilitating the expansion of sustainable enterprises, boosting the linkages between tourism and agro-food, and fostering employment-enhancing investments;
  • Tackling undeclared work and working poverty through a broader tax base and improved incentives for low-paid work while shifting the tax burden away from labour, small firms and consumption of basic needs towards other bases like property. This, along with much-needed mobilisation of the resources of the European Investment Bank, would also widen the policy space for the growth and employment strategy;
  • Ensuring adequate coverage of the social protection system;
  • Enhancing human capital by designing skill programmes in partnership with firms, workers and education providers; leveraging further apprenticeships and work-related experience for youth; and reinforcing public employment services and active labour market programmes;
  • Rebuilding social dialogue between government, employers and workers and addressing fragmentation of collective bargaining and gaps in coverage, so as to nurture a balanced recovery.

“The proposed shift to a new growth and employment strategy is based on an analysis of best international practices adapted to the specific situation of Greece. A more comprehensive approach is possible. To make it a reality, the ILO stands ready to cooperate with the Greek government and social partners, and with the European Commission, as key actors of an urgent job-rich recovery,” concludes ILO Director-General Guy Ryder.