Greek unemployment reaches record high at 17.7 per cent, seen rising further

Construction, manufacturing, retail, wholesale hit hardest
By Ingrid Melander
|hrreporter.com|Last Updated: 12/15/2011

ATHENS (Reuters) — Greek unemployment hit a record high this summer despite a rise in tourism, with the International Monetary Fund (IMF) forecasting a further rise in jobless numbers into 2013 as austerity and recession squeeze employers.

Construction companies, manufacturers, retailers and wholesalers have been particularly hard hit, shedding nearly 180,000 jobs in the last year alone as tax hikes and spending cuts have weighed on an economy facing a fifth year of recession in 2012.

Unemployment jumped to 17.7 per cent in the third quarter from 16.3 per cent in the previous three-month period, the Greek statistics service said — the highest quarterly unemployment rate recorded since the series started in 1998.

An IMF report this week projected jobless numbers would keep rising over the next two years to peak at 19.5 per cent in 2013, versus 7.7 per cent in 2008, before the explosion of the debt crisis that spread turmoil across the euro zone.

Greek workers angry at the relentless austerity have been staging almost daily strikes to protest against the impact of tax hikes and public spending cuts prescribed by the EU and the IMF in return for loans that have saved the country from bankruptcy.

Most expect their economic situation to worsen next year as the government applies more belt-tightening to slash deficits, an opinion poll showed earlier this month.

The IMF said that Athens needed to step up the pace of reforms and to look at "taboos" that could include laying off more state workers.

"Public support for austerity and reforms will be difficult to keep with the economy in a deep recession and unemployment at a record high," said Diego Iscaro, at IHS Global Insight. "Support for more drastic actions — i.e, a 'coercive' default — may go up, but we still believe Greece will remain in the euro zone, although the risks of an exit will increase the longer the economy remains in the doldrums."

The rising numbers of shops and businesses firing staff or shutting down makes it harder for the government to collect taxes and plug the budget gap, raising the risk that even further belt-tightening may be necessary.

Unemployment will slowly start decreasing from 2014 but will still stand at just over 13 per cent in 2020, the IMF said in a report published on Tuesday, raising the prospect of many more years of pain.

Greece has already published monthly unemployment figures through to September. The quarterly data are based on a bigger survey sample and provide detailed data for each sector of the economy.

The number of unemployed reached 878,266 in the third quarter — more than 40 per cent higher than one year ago.

Greece's unemployment rate is much higher than the euro zone average of around 10 per cent in the three months to September. But it is lower than in Spain, which registered a 21.5 per cent unemployment rate in the third quarter.

"Austerity alone will not rescue Greece from its dire position," Iscaro said. "If Greece wants to stay in the euro zone, it will need to make its economy more competitive."

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