Government proposals for reducing unemployment

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In statements made following the Greek general election in April 2000, the Minister of Labour recognised the importance of economic growth in increasing employment, contrasting with the Ministry's former position that the Greek economy was going through a period of "jobless growth". In addition, the Minister promised a policy leading to "employment for all", implying full employment.

The Pan-Hellenic Socialist Movement (PASOK) was returned to power in the general election held on 9 April 2000. As part of the new government's statements on its programme, on 25 April the Minister of Labour presented the "main areas for action" which the Ministry will pursue in the next four years with regard to employment and unemployment. The most important area is "employment for all" – a phrase which seems to be used interchangeably with the concept of full employment. Supplementary objectives are: creation of jobs that are not substandard and that will ensure a satisfactory quality of work; and the alleviation of the regional, local or sectoral inequalities caused by the concentration of unemployment in certain areas of the country.

In justification of the policies that the government intends to pursue in order to achieve the abovementioned goals, the Minister of Labour presented to parliament his views on the main characteristics of the labour market in Greece:

  • employment in Greece, in contrast to many countries of the European Union, has been rising uninterruptedly during the last two decades; and
  • the growth in the labour force has been even more rapid than the growth in employment, resulting in higher unemployment.

In short, whereas unemployment in the other EU countries has been caused to a great degree by a decrease in the number of jobs, in Greece it has been caused exclusively by the increase in the labour force. In periods of growth, it is claimed, the Greek economy creates many jobs – it has a high "employment intensity of growth". Thus, for the next four years, during which annual GDP growth of 4% is anticipated, a rise in employment should be expected, amounting to about 300,000 new jobs. The number of unemployed people in Greece today stands at about 450,000, a rate of 11.7%.

Structural reforms to be continued

These estimates by the Minister of Labour are a recognition of the importance of economic growth for increasing employment – in contrast with former positions of the Ministry which embraced the theory that Greece is going through a period of "jobless growth", whereby economic growth does not create many jobs. Nevertheless, the new Minister does not reject the policy of intervention in the labour market aimed at structural changes, pursued as a priority by the former government. He has announced the government's intention to: go forward on the road to reform through social dialogue and the pursuit of broad acceptance of change; step up training policy to increase unemployed people's knowledge and skills in order to reduce structural unemployment; devote attention to the issue of infringement of basic labour market regulations and the accompanying informal labour market; and restructure the Labour Force Employment Organisation (OAED) "in depth". In particular, with regard to infringements of legislation, the Minister announced that the new Labour Inspectorate created in 1998 (GR9807181F) will supervise implementation of the rules of labour law and will combat the infringement of rules on social insurance and statutory working conditions, for Greek as well as foreign workers. The most important tool for implementing employment policies will be the National Action Plan for employment (GR9906134F).

The Minister of Labour stated that the government believes that all social groups, especially the weakest ones, must have a share in the country's progress. Major government objectives include support for economic growth potential and its connection to the welfare state.

In conclusion, the government believes that a stable macroeconomic framework has been created in Greece, and that the country is entering a new "cycle of growth", because: investments are increasing at a rapid rate; GDP is growing at an annual rate of 4%; the restructuring of the system of production is boosting the competitiveness of the Greek economy; and productivity is increasing. In the light of this progress, the government anticipates that employment will increase at a rapid rate, aided by employment policies, training and labour market reforms, so that unemployment will be significantly reduced in the years to come.

Commentary

This is the first time in years that the government has talked about full employment and acknowledged the importance of speeding up economic growth in order to increase employment. This is a shift of its positions towards what the trade union organisations, particularly the Institute of Labour (INE) of the Greek General Confederation of Labour (GSEE), have been supporting for years. However, the government does not appear to understand at this time that the rapid growth of the labour force, the exclusive cause of the rise in unemployment, is related to the policy of holding down workers' incomes: Although households' needs are growing, consumption patterns are changing and new expenses are being added (for the purchase of services such as healthcare, education and insurance) due to privatisations, the purchasing power of the average wage remains at levels comparable to those of the 1980s. This obliges households to supply more labour, either by overtime worked in excess of maximum working hours, by the "breadwinner" taking on a second job, or by an increasing percentage of the female population seeking paid employment. However, an increase in employment of 300,000, even if achieved within the next four years, will not be able substantially to reduce unemployment, because the Greek economy has a very large "reservoir" of potential labour which is drawn into the labour market each time the employment level rises and each time the purchasing power of wages falls. (Elias Ioakimoglou, INE/GSEE-ADEDY)

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