It’s not like the hapless Greeks—and by extension their foreign sponsors—don’t already have enough problems on their hands. Now comes the Hellenic Statistical Authority with its just released Labor Survey that showcases a job market and unemployment issues that were the ugliest ever. And within this sobering picture there was one number that knocked the breath out of hope itself.
The overall unemployment rate in January jumped to 21.8% from 21% the prior month (before revisions). Youth unemployment—those 15 to 24 years old—was a shocking 50.8%. But the real fiasco for the Greek economy, and at the same time the unvarnished truth, was the number of people who actually have jobs. That number is less subject to murky statistical manipulation and beautification, if that word can even be used in this context, and hasn’t been seasonally-adjusted out of existence: the number of employed dropped by 20,600 in January to 3,880,120 people—35.9% of a population of 10.8 million!
No economy in the world can service a growing mountain of debt that is 160% of GDP when only 35.9% of the people work and contribute to the economy. The comparable US employment population ratio is a lamentably low 58.5%, down from 64.7% in 2000, a horrid number that causes all sorts of fretting and handwringing in the US—yet, in Greece, it would represent a veritable jobs nirvana.
In January 2007, before the financial crisis could be blamed for every evil, only 4,485,734 Greeks were working, a paltry 41.5% of the population. That relatively few Greeks have jobs even in good times pinpoints one of the fundamental problems in the current Greek economic system. Spending funded by external sources has become a primary motor of the economy, while production has been throttled back. It’s not an economic model that can remain functional for long. And piling new bailout billions on top of it just kicks the can further down E. Venizelos Avenue.
The fact that only 35.9% of the people work, as opposed to, say, 55%, sinks any kind of hope that the growing pile of bailout debt can ever be serviced, much less be paid back, without an endless stream of yet more bailout debt offered by mostly unwitting taxpayers in the Eurozone and around the world—a scheme that will at some absurd level encounter its day of reckoning.
To get to a point where 55% of the people have jobs, a rate that might make the economy viable, about 6 million people would have to be employed. It would require the creation of over 2 million jobs in a relatively short amount of time—a 54% increase in the number of jobs! An impossibility for any economy. And Greece is still bleeding jobs.
This calculation is so basic and yet so brutal that it simply isn’t done. It’s better to look the other way. People who talk about reforming the Greek economy—the Troika and the ever successful Greek political elite—don’t have a plan on how to restructure the economy to where it can create 2 million jobs in the medium term, because that’s what it would take for the country to be able to carry this kind of national debt. Instead, they’re trying to fine-tune something that is broken. But now that the flow of bailout money has started again, the wily Greek political elite have figured something out.
This leaves the taxpayers in Germany and elsewhere who are ultimately paying for the bailout nothing but hope that Greece will be able to deal with its debt—when in fact, they need to write off the bailout billions even as they hand them over.
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.
