Demographics: A “distinctive sign” of unemployment falling below 10%

With more than half a million unemployed people recorded in the official figures of the Hellenic Statistical Authority (ELSTAT), the unemployment rate remains “stuck” above 10%, causing a chain reaction in the development path of the national economy and suppressing the expectations of the private sector. Employees especially those who are “building up” their first three years from January 2024.

For 2024, the growth rate will be reduced to 2.1%, while the unemployment rate is expected to move to 10.3%.

Under the law, if unemployment remains above 10% on January 1, 2027, the provisions will be suspended and the three years will remain “frozen” until the rate falls, eliminating the possibility of a wage increase.

For 2024, the IOBE lowers growth to 2.1% from 2.4% and puts the unemployment rate at 10.3%. Looking at the state budget forecast, the unemployment rate will approach 10.6%.

Psychological limit 10%

Therefore, based on current data and the growth of the Greek economy, it seems very difficult to bend the hard core of unemployment and for the indicator to fall below the psychological limit of 10%.

Looking at the numbers, Panti’s doctor, Vassilis Petsis, points out that “the lowest unemployment rate, about 9%, was reached in 2009, when the number of unemployed reached 390,000 people.” Today, he notes that “their number increases by 100,000, about 500,000,” and concludes that “to reduce the percentage, even marginally, to less than 10%, the number of unemployed must decrease to 430,000.”

Under the current circumstances, achieving this goal is very difficult.

We only have to take into account that the unemployment rate is not only related to investments and productivity.

The future is bleak.

Demographics also play an important factor in returning to “normal life,” and here the equation becomes difficult.

All updated studies of key demographic indicators show that by 2050, one in six inhabitants of the planet will be older than 65 years. Births are decreasing, the proportion of the economically active population is shrinking, and with it the workforce that supports their production and development. The result is that more and more jobs remain unfilled.

One requirement of a healthy economy is to create new jobs without reducing the workforce. This means, according to Dr. Panty, that “the smaller the workforce, the longer unemployment will remain high.”

In Europe, the entire continent is facing this major problem, with Spain recording the highest unemployment performance in the European Union, followed by Greece in second place, followed by Finland and Italy.

An estimate of the evolution of key demographic variables in Greece, as provided by Eurostat, expects the population to decline from 10.438 million in 2022 to 7.777 million in 2070.

Fertility is declining almost everywhere, for women at all levels of income, education and labor force participation, and falling birth rates have dire consequences for people’s lifestyles and the growth of economies.

Many politicians consider this issue urgent, putting humanity in a state of emergency. They worry about a shrinking workforce, slower economic growth, underfunded pensions, and ultimately a society with fewer children.

Greek reality

Greece is one of dozens of countries suffering from population collapse due to low birth rates. As demographic development entails, and based on expectations for the not-so-distant year 2050, the age group 15-64, which is the productive category of the total population, will not be sufficient to cover the needs of people over the age of 65 years.

It is ominous that the ages currently considered “unable” to work, such as those over 65, will in a few years constitute a “reservoir” of the labor force, a fact that acts as a deterrent to reducing unemployment.

The IOBE expects a slight improvement in the labour market in 2024, with clear signs of a slowdown in the positive trend. According to the institute, the scope to continue reducing cyclical unemployment is narrowing, while the challenge is to reduce structural unemployment and increase labour market participation.

State interventions

With the upcoming difficulties, new terms and conditions for granting unemployment benefits are expected to be set, which will be separated from the minimum wage amount, based on the planning of the Ministry of Labor.

The goal is to act as an incentive rather than a disincentive to job search. “We do not want people to get addicted to some benefits, so that they do not work,” the Prime Minister stressed in a recent interview.