In January 2005, a report by the Foundation for Economic and Industrial Research (IOBE) indicates a poor outlook for employment in Greece. The report states that, four months after the end of the 2004 summer Olympic Games in Athens, the Greek economy has entered a phase of slower growth, and as a result many industrial enterprises consider that they are operating with surplus staff. This trend towards job losses is underlined by recent figures on the rising unemployment rate and the increasingly negative balance between recruitments and dismissals.
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In January 2005, a report by the Foundation for Economic and Industrial Research (IOBE) indicates a poor outlook for employment in Greece. The report states that, four months after the end of the 2004 summer Olympic Games in Athens, the Greek economy has entered a phase of slower growth, and as a result many industrial enterprises consider that they are operating with surplus staff. This trend towards job losses is underlined by recent figures on the rising unemployment rate and the increasingly negative balance between recruitments and dismissals.
The danger of mass redundancies in the immediate future is a distinct possibility, according to a recent report by the Foundation for Economic and Industrial Research (IOBE) on the Greek economy and employment. The findings of the report appear to be confirmed by data on recruitments, dismissals and unemployment published recently by the Labour Force Employment Organization (OAED) and the National Statistical Service of Greece (ESYE).
IOBE report
IOBE’s periodical report on employment and the labour market, published in its quarterly bulletin, draws conclusions based on research carried out during 2004 among enterprises in three sectors of the Greek economy (industry, retail trade and services) aimed at a comparative evaluation of trends in Greece and other EU Member States. The first conclusions of the research to be published, regarding industry, indicate that:
74% of enterprises believe that they have the right number of employees in relation to their current level of sales;
24% of enterprises state that they have surplus staff, suggesting dismissals in the coming period; and
only 2% of enterprises believe that they are in need of staff and must therefore recruit additional employees.
As indicated by table 1 below, enterprises planning to carry out dismissals cite the negative impact on production costs of higher labour costs (direct and indirect), the price of oil and a slowdown in their economic activity. They also state that they have a more general need to implement schemes to rationalise and restructure their production units. It is worth noting that the percentage of enterprises that state that they employ surplus staff has fallen by 30% from 1999 levels, which indicates that in recent years many enterprises have carried out significant internal restructuring.
For 65% of the enterprises reporting surplus staff, lower profit margins are the basic reason for dismissals planned for the near future. On the other hand, 65% of the enterprises that stated that they are planning to hire staff in the coming period estimate that they will have more customers and a higher turnover in the future. These data suggest a strong climate of pessimism and uncertainty currently prevailing in the Greek economy.
| Low profit margin due to: | Category of enterprise | ||||
| < 200 employees | 200-500 employees | 500-1,000 employees | >1,000 employees | Total | |
| Insufficient demand | 50.0 | 26.3 | 17.1 | 0.0 | 23.1 |
| International and domestic competition | 57.5 | 78.9 | 73.7 | 78.1 | 73.1 |
| Level of wages and salaries | 55.0 | 78.9 | 55.3 | 78.1 | 67.3 |
| Level of non-wage labour costs | 72.5 | 60.5 | 21.1 | 50.0 | 53.8 |
| Level of other cost elements | 17.5 | 22.4 | 21.1 | 0.0 | 17.3 |
| Restructuring/rationalisation | 42.5 | 72.4 | 59.2 | 100.0 | 23.1 |
| Increase in outsourcing | 20.0 | 25.0 | 0.0 | 50.0 | 23.1 |
| Institutional framework | 27.5 | 25.0 | 0.0 | 0.0 | 15.4 |
Source: IOBE.
Some 26% of the enterprises in the sample (ie more enterprises than those estimating that they have surplus staff) stated that they plan dismissals for the immediate future, while, 54% of enterprises stated that they do not intend to change the number of staff they employ, and 24% intend to recruit new staff - see table 2 below. The risk of dismissals is greater in larger enterprises (with more than 25 employees) and almost exclusively involves unskilled workers who have completed primary education only and who are approaching retirement age.
| Category of enterprise | Increase | Decrease | No change | DI ('difference indices')* |
| < 200 employees | 24 | 20 | 56 | 4 |
| 200-500 employees | 23 | 38 | 39 | -15 |
| 500-1,000 employees | 9 | 38 | 53 | -29 |
| > 1,000 employees | 16 | 16 | 68 | 0 |
| Total | 20 | 26 | 54 | -6 |
* Difference indices refer to the differences in the positive (increase) and negative (decrease) rates for each category of enterprise.
Source: IOBE.
OAED and ESYE data
Also giving rise to concern are data from OAED and ESYE on the recruitment/dismissal balance in the private sector and the trend in unemployment. According to official data from OAED, in the three months following the Olympic Games (September-November 2004) a total of 70,226 jobs were lost. If December losses are also taken into account, the reduction in employment amounts to nearly 100,000 jobs, a fact that underlines for some commentators that the Greek economy has entered a process of fast-growing recession and inability to combat the problem of unemployment. As shown by table 3 below, the recruitment/dismissal balance in the private sector of the economy for the period from September to November 2004 was more negative than in the same period in 2003. Thus, during the relevant quarter of 2004, enterprises announced on the one hand that they would be hiring 8.1% fewer employees, and on the other that dismissals and voluntary redundancies would increase by 3.4% and 7.4% respectively, compared with the same period in 2003.
| . | September-November 2003 | September-November 2004 | % change |
| Recruitments | 324,429 | 300,026 | - 8.1% |
| Dismissals | 239,516 | 248,010 | 3.4% |
| Voluntary redundancies | 113,786 | 122,242 | 7.4% |
| Balance | -28,873 | -70,226 | . |
Unsurprisingly in this context, ESYE estimates that the unemployment rate for the second quarter of 2004 rose to 10.2%, from 9.3% in the same period of 2003. The trend is still upwards, if account is taken of the abovementioned data on the period during and after the 2004 summer Olympic Games in Athens. It should be noted that the Olympic works and the influx of special funds for their completion have been important in fuelling employment in recent years. As a result, the Games have played an important role in shaping the country’s macroeconomic indicators and economic growth rates. The end of the Games appears to have caused substantial gaps in employment, basically centred around the construction industry, where it is estimated that thousands of workers have been dismissed recently: a significant proportion of the skilled and unskilled workers employed on the Olympic works is expected to be out of a job in a short time.
Commentary
The IOBE report reveals that a wave of redundancies and drastic staff cuts is expected in the coming period. The adverse economic climate and the high level of uncertainty force employers to become more hesitant to hire staff or create new jobs, thus hindering efforts to combat unemployment, which according to data from OAED and ESYE is expected to increase substantially during 2005. In this context it would be no exaggeration to say that pre-Olympic euphoria has gradually given way to post-Olympic scepticism regarding the future of employment. (Lefteris Kretsos, INE/GSEE-ADEDY)
Eurofound recommends citing this publication in the following way.
Eurofound (2005), Post-Olympic period marked by major job losses, article.
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