Tuesday, 16 January 2018

The forgotten ones: Greece's ultra long-term unemployed

Unemployment in Greece has been decreasing these past 4 years but I'm afraid that this only means it went down from ridiculously high levels to what can be charitably characterized as pretty damn high levels. Still, it is a start (hopefully) and it is definitely better than nothing. 

source: ELSTAT, own calculations

It is interesting to drill down a bit deeper than headline figures and take a look at long-term unemployment and contrast its behaviour with that of short(er)-term one.

First of all, it should be noted that in Greece, the long-term unemployed (defined as those people that are unemployed for more than 12 months) account for a much higher share of total unemployment, than they do in the Euro Area as a whole. What's more, the spread between the two figures has grown during the current depression, while at the same time long-term unemployment's share even seems to be increasing in Greece.

source: Eurostat, own calculations

Eurostat publishes a detailed breakdown of unemployment figures according to the length of the unemployment spell. If we re-base those separate series to each one's respective peak we can assess a couple of different things. First, if shorter-term unemployment peaked earlier than longer-term quintiles and second, if unemployment duration is correlated to how fast each series decreased after it reached its peak.

Here's the relevant chart. I apologize for it being a bit bungled up but I guess that in order to make visual comparisons "possible", it couldn't be any different.

source: Eurostat, own calculations

The answer to both questions posed above is more or less positive. Short-term unemployment (less that 12 months) did indeed peak first and decreased faster after that. At the same time, ultra long-term unemployment (more than 48 months) peaked last with 2017 being the first year during which it has posted a hesitant decrease. Interim long-term unemployment cohorts broadly follow along these lines (12-17 months unemployment peaked and started decreasing faster than 18-23 and 24-47 but on the other hand, 24-47 unemployment decreased faster than 18-23).

If one wants an alternative representation of unemployment in Greece based on how different duration cohorts evolved here it is.

source: Eurostat

The chart makes more than obvious how ultra long-term unemployment (> 48 months) is not really budging.

It would be interesting to try and compile the profile of the people that find themselves locked into that seriously detrimental state that is ultra long-term unemployment.

While international and local media make a lot of noise about youth unemployment, the elephant in the room, as far as long-term unemployment is concerned, is old-age unemployment. People over 45 years old account for about 40% of the long-term unemployed with their ranks having swelled considerably after the depression broke out. To be precise though, the trend towards older-age unemployment accounting for a bigger chunk of long-term unemployment has been there for quite some time and is more structural in nature.

source: ELSTAT

The sectors from which the long-term unemployed come from are all over the spectrum. This makes sense since, especially before the crisis, virtually all sectors of Greece's economy were mostly inward-oriented meaning that the sudden-stop and ensuing collapse in domestic demand hit all of them.

source: ELSTAT

On top of the rank one finds "persons that cannot be classified" which probably stands for people that either refused to answer the relevant question or for younger people that have yet to hold their first job.

To wrap this up, while everyone is going on about youth unemployment a thought should be spared for the older-age unemployed too. These people face considerable challenges, namely skill-sets that have become obsolete, social exclusion, a lower probability of having family to support them through this etc. Also, the most-efficient re-allocation mechanism (i.e. the market) has chucked them out and they mostly have to depend on active labour market policies (ALMPs) and the Greek state's limited financial means to fund these. Fingers crossed for all the people that find themselves in that psychologically (and potentially physically) scarring situation and let's hope that an investment boom (now how improbable does that sound?!) will lift all boats and get them back into the fold.

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