“Dire” is no longer the right word to describe the situation in Greece. Unemployment hit 23.1% in May, according to ELSTAT, the Greek statistical agency, which released the report on August 9. That it takes over two months to do a job—producing unemployment numbers—that other countries accomplish in a couple of weeks may be symptomatic of Greece’s calamity economy.
And a calamity it is. Youth unemployment (15-24) jumped to 54.9%—but even before the crisis, during the boom years so to speak, it had been high, ranging from 22% in 2007 to 32% in 1999. The number of people with jobs dropped to 3,816,900—of a total population of 9.9 million! Only 38.5% of the people work! In the US, where the jobs situation is dismal enough, the employment population ratio is 58.4%. No country can succeed when only 38.5% of the people contribute to the economy and pay taxes to feed their government and service its debt. To get to 50%, the Greek economy would have to create 1.2 million jobs, a 31% jump! Impossible under the regime of Greek politics, bureaucrats, and state-owned enterprises. So the people are reacting with their feet.
“Thousands upon thousands of Greeks are on the move, leaving the larger cities for the countryside or smaller provincial towns or abandoning the country to try their luck abroad,” writes Teacher Dude in his blog from Thessaloniki, Northern Greece. “The steady rhythm of friends, neighbors, and colleagues gradually slipping away,” he laments. “In every apartment block in every street, no entrance hall is complete without a handful of For Rent or For Sale signs.” And it’s personal: “Thomas, who’s now in Germany, trying to start a new life, Anne and Makis who have decided to go back to Makis’s home town of Alexandroupolis, Panos who is off to Crete to try his hand at farming after losing his job in the latest round of job cuts….”
And sales of new passenger vehicles plunged in July 42.1% from prior year and 41.4% year to date. Only 5,757 units were sold in July, the worst July since the beginning of the data series in 1990, and a collapse of 82.4% from July 2009 when 32,627 new vehicles were sold. Mind-boggling declines. People stopped buying cars! And switched to bicycles: 200,000 were sold in 2011, a 25% jump from 2010! Bike shops are cropping up in neighborhoods. Something is working….
Meanwhile, the government, which is desperately trying to keep the country glued together, was just dealt another setback: it seeped out that the next bailout payment of €31 billion, to be paid in June, then delayed till September, would be delayed once again, and this time till October.
Or was it a setback?
The Troika—the gang from the European Central Bank, the European Union, and the International Monetary Fund—made bailout payments conditional on the implementation of “structural reforms,” from laying off civil servants to privatizing state-owned enterprises. But during the election, Greek politicians backed away. And the Troika, instead of sending money, sent its inspectors to check on what had been accomplished.
The first wave in early July painted an “awful picture.” The second wave finished last Sunday, and suddenly the tone changed; words such as “cooperation” and “progress” emanated from all sides, and there was agreement by the Greeks that greater efforts would be necessary. A veritable praise fest. And suspicions arose immediately that the Troika was laying the publicity groundwork for something that bailout-leery Germans would oppose.
That was Sunday. Now the leak of the delay till October. And of a mega inspection in September, not for a few days, but for the entire month. Of the still needed €11.5 billion in austerity measures, €7 billion have been identified with the government, but they’re still looking for the rest. They have to be “concrete” and “implementable,” the source told the Wall Street Journal, and “not just warm words.” The meeting when Greece’s fate will be decided is rumored to be on October 8.
Alas, one of the bailout conditions is to cut 15,000 civil servants by the end of 2012 and 150,000 by 2015. Given the unmitigated jobs fiasco, such cuts—if the coalition government can even agree on them—may trigger another revolt in the streets. And that could start at the end of August.
Just then, Greece will be out of money. Default date: August 20. A €3.2 billion bond matures. Europe is on vacation. It will be mayhem. And somebody will get blamed. But they found a solution, one that violates the underpinnings of the Eurozone.
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.