Invigorated Joblessness and a Government Deficit despite growing arrears: Greece’s Non-Recovery continues

No recoveryWhile the international press continues to celebrate Greece’s recovery, the reality on the ground becomes bleaker, less sustainable, and nastier than ever. In this post I shall be conveying the grim news from two fronts: the labour market and the government’s finances.

Fewer jobs, fewer people: A labour market in steady decline

Unemployment fell in Greece in February to 26.5%, for a fifth consecutive month. Excellent news, surely. Not in the slightest. In January there were 3 million 614 thousand Greeks in paid employment. In February there were 5 thousand fewer people with jobs (3 million 609 thousand employed). (See here.) So, how come the unemployment rate declined? Simple: The unemployment rate is the ratio of those out of work (but seeking work) and the labour force (those in work and the unemployed looking for work). The continuing crisis has, once more, shrunk the denominator, as Greeks continue to leave the country in droves and others become discouraged and stop looking for work. So, even though employment has dropped, the labour drop has declined even faster. Rather than a cause for celebration, this is a genuine reason to grieve for Greece’s labour market. (Unless of course you are a speculator, or an establishment politician, making a mint from the rumour of Greek-covery…)

Greek Government Deficit

Regular readers will recall my recent exchange with Eurostat, in which I accused Eurostat, Athens and Berlin for conspiring to bring back Greek Statistics. The bone of contention was (A) the creation of fake white holes in pension and local authority balance sheets and, of course, (B) the ongoing ‘tradition’ of under-reporting the state’s (permanently rolled over) arrears. It is now official: In March, the general government’s balance sheet went into a small deficit (a little over €1 billion) while officially acknowledged arrears (mostly owed to social security and hospital suppliers) went up from €5.07 billion, in February, to €5.20 in March.

So that you can smile ironically when you read, elsewhere, that Greece is on the road to an impressive recovery…

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15 Comments

  • Not sure why we are playing the same game year after year. The Greek economy always enters a deficit period (in current account terms) between November lasting until April of each year(sometimes it exits during April but sometimes for sure by May). Then tourism revenues come in and create the surpluses the country needs . So to use the March figures (i.e. the last month before Greece emerges into positive territory during this very predictable pattern) is akin to crying wolf. If you really want to prove that Greece’s economy is in a bad trend then let’s wait until October before we enter the negative period again like clockwork. If by October we haven’t created the foundation for strong yearly performance then we are in trouble.

    You see here the problem Yani is that we confuse the government and the people. The people are doing horribly but the government as a performing entity is doing just fine. It’s designed that way to just do fine. That is its European mission and you are wasting your time attacking government performance. You may argue that the government which is responsible for all the ills did not deserve to survive and I think many should agree that in 2010 the correct action would have been to declare the public sector bankrupt. But as you know such would not have been allowed under the euro survival plan. So a version of the old corrupt government has survived artificially, a fact which irritates quite a few citizens.

    But attacking this government is a losing game. It has Merkel’s approval written all over it and is also grounded on the fact that Merkel can’t see any Greek alternative government to support her game. So you want to launch an attack on Merkel’s policies like the great majority of Europeans do? Go right ahead but stop attacking the Athens dealership because it has all the outside support that you could possibly imagine. Also an attack on Berlin’s policies if far more intellectually honest. These poor local fellows you are attacking are confused beyond description. They basically do all the bad things fully convinced that they are doing the right thing. You ought to have pity towards such fellow Greeks not animosity towards them.

    http://www.macropolis.gr/?i=portal.en.economy.1155

    • Greece has a long tradition of collaborationist governments that enjoyed, at least for a while, crushing support from foreign capitals. The fact that, as collaborators, they enjoyed this support does not make them less liable. Quite the opposite. Unlike you, I believe that we Greeks have a moral duty to aim our slings and arrows at our fellow countrymen and women who people these collaborationist regimes. While, as readers of this blog will testify to, I offer pointed, continuous critical pieces aimed at Berlin, Brussels and Frankfurt, my primary duty is to make as uncomfortable as possible the lives of our own Quislings.

    • o.k. I understand. But if we are all part of the same One (per Heraclitus of Ephesus) then an attack on them means an attack on part of your own self. There has to come a time that all of us must give such internal struggle a rest. I wouldn’t stop from your duty but you may want to consider that those attacked don’t know any better. Under such circumstances the whole exchange has various degrees of sadness because of the internal struggle involved. Be well.

    • But they do Dean, they do. How do I know? Because they tell me. And why do they do it, if they know? Because they have a great deal to gain, at the individual level. This is why I shan’t let them rest…

    • @Dean, word for word this is the worst argument I have read in a long time!

      What is this “European mission of the Greek Government” thingy, which absolves the G.G. of responsibility for its wrongdoing? What on earth are you talking about?

    • @Dean,

      It’s not just the Greek government that is lying to the people it was sworn in to serve and protect. And it is also not just them justifying their lies and deceptions, if they are ever discovered, as a means to an end for the greater good.

      It may not be as obvious, but german governments have been doing it for quite some time now, so have US administrations and propably most of all the other governments in the world, wether they were democratically elected or not.
      People – like many germans for example – tend to overlook that fact, although they are quite aware of it, while they remain under the impression that things could still be much worse, especially if the current course of action were to change significantly. To put it bluntly: any ruling class can lie and cheat their way through anything as long as they can convince their subjects of the old saying that there is no alternative, be it through speeches and media campaigns or by brute force.
      This especially holds true ever since the recent collapse of the financial markets threatened to pull the european banking system down with it. Does that mean we have to bite the bullet and accept their notion of ‘no alternative’?

      You might even be right suggesting that the people running the greek government really don’t know any better. I for one am convinced that Angela Merkel really believes she is doing the right thing by forcing the eruozone under the yoke of austerity. After all, politicians tend to succumb to their own propaganda by repeating the same lies over and over again untill they are genuinely convinced that they were telling the truth all along –
      even more so if they base these claims on the expertise of advisors who disguise their biased insinutations as the results of scientific reasoning.

      Shouldn’t we – especially people who actually know better like you or our host – do everything we can to remind our politicians that they do not own exlusive rights to define what is true and what is not?

    • The accusation that this article is “crying wolf” is just absurd. Moreover, the claim that the current mishmash of Greek politicians allegedly running the country “are confused beyond description” is nothing less than bizarre. If indeed they are so confused, then they should not issue statements claiming that they have engineered an economic recovery, or presided over a nonsensical “primary budget surplus”. At the same time, they celebrate a declining labour force employment rate as a success story of “reduced unemployment”. This is not confusion: it is deliberate propaganda and an attempt to deceive the people.

      No, the sad truth is that the government politicians are cynical and conscious Quislings, who put their own personal interests before those of the Greek people. They are collaborators with foreign powers, and are openly hostile to Greek democracy. Doubtless, we shall learn in some time how much money was made by each politician from the systematic betrayal of Greece. I suspect that they will make Tsochatzopoulos look like an amateur.

    • Hubert:

      I am not sure I know anything and as such that I deserve the honor you bestowed on me (as someone in the know). I consider myself a practical person and what I am trying to say is as simple as this.

      Greek politics have a great deal of theatrical element to them and lack about 90% of substance. If one wishes to bring the fight to what Yanis perceives as a collaborationist(quisling), corrupt and somewhat inept government, one must choose targets of substance. Otherwise before you know it, one’s arguments are embroiled in the same theater of the absurd which characterizes Greek public discourse. To simply want to attack because you are convinced that the other side is bad or deserving criticism might not be the most persuasive way for the wider audience. In Greek politics one is running the risk of being labeled passionate but lacking the ability to persuade.

      Here is an example of a ridiculous if not bogus claim which one might wish to discredit.

      “According to calculations the ministry published on Thursday, the total state revenues from oil reserves of 100 million barrels would amount to 6 billion euros.”

      http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_08/05/2014_539561

      There is no way that after a barrel of oil costing about $50-$60 to extract and then sold at $90 (approx. market rate) could generate state revenues of the magnitude indicated. Typically an exploration company uses all revenue from extraction to reimburse itself first for all associated costs, overhead and equipment and then share a portion of net profits with the state ( a good 10-15 years elapse with the state having zero revenue during such period since all profits go to reimburse the driller).

      In any event this quote is clearly a false statement based on a grossly wrong projection by the ministry especially given the fact that all 3 companies mentioned only get for a relatively small fee an exploration license lasting 3 years and extendable to 8 years. During such time the state benefits very little as in the case of the gold mines in northern Greece(a give away – the gold deposits are estimated to be in the 2-3 Bil. euro range and the government sold the license and rights to exploitation for 14 Mil. euros only which then the license holder sold to a Canadian company for 10 times more and a quick profit).

      So this is a case of would be and uncertain future benefits, nevertheless calculated on the wrong basis and in a manner that makes the future over exaggerated projection sort of ridiculous and absurd. In which case you have every right to question this PR on steroids and demand that the government apologizes for the false claim and for misleading the people.

      This is an example of a winnable contest against the ministry which not only made a wrong projection but it also attempted to presell the best case scenario outcome of provable oil reserves when the whole purpose of awarding these licenses is precisely to prove that such reserves exist in the first place and are indeed commercially exploitable (not yet proven and in any event some 15-20 years away from producing any conceivable revenue for the state).

    • @Dean
      You are setting me a lofty task, to describe things as they really are in my view. I cannot do so, as it would take a book-sized text.

      Still, your argument that we should pity the GG because it has some “European mission” (issued and approved by … whom, Merkel?) and that it is fulfilling it well, yet causing terrible suffering to the country (which is what we should pity it for, instead of reproaching it) is really a very bad argument.

    • Vassili:

      You perhaps misunderstood. The present Greek government has 100% Merkel’s support. This does not mean that the mission is good or beneficial to Greece. Quite the opposite. “European mission” = lack of control by Greece = undemocratic process.

  • Not to mention the steady increase of taxpayer arrears, at a rate of 0.7 billion/month…

    The new memorandum has just been voted, increasing further “projected” tax revenues
    for the next 4 years. The plan of orchestrated deflation proceeds on track.

  • Moral responsibility, a certain German (Kant) held, is personal, as duty is, aswell. Collaboration may e forced, but acceptance, yielding to it, is a personal choice, morally blameworthy.

  • What’s a balance sheet deficit? (“the general government’s balance sheet went into a small deficit”)