Thursday, September 16, 2010

Focus on Unemployment: The Chronically Unemployed

As the Greek economy contracts, unemployment has risen from a low of 6.6% in May 2008 to a high of 12.1% in February 2010. But this overall figure masks several important sub-trends. In the second of a series of posts on unemployment, I look at structural unemployment and the duration that people spend looking for a job.

The first trend that becomes clear is that the majority of those unemployed in Greece are chronically unemployed, which means they have been looking for a job for 12 months or more. On average 53% of unemployed Greeks fall in this category (based on averages of quarterly data since 1998). A further 16.6% has been unemployed from six to eleven months. 
In other words, if a Greek is unemployed, there is a 70% probability that unemployment will last at least six months and a 53% probability that it will last over a year. To put a slightly different spin on it, 2.8% of the Greek population in Q1 2010 had been without a job for over a year (and this number is similar to previous years, so it is not skewed by the economic crisis). 

What is interesting – and somewhat depressing – is that Greece is no outlier in Europe. Compared to the European Union average, Greek structural unemployment is worse, but it is not off the charts. In 2009, for example, Greek long-term unemployment was 40.78% of total unemployment – in the EU as a whole, it was 33.1%. What this means is that if a Greek and a European were both unemployed in 2009, the Greek was 23% more likely to have been be chronically unemployed (over 12 months). 

Against the context of Europe more broadly, however, Greece is in the second quartile when it comes to long-term unemployment as a share of total unemployment (Greece was ranked 9th of 27 in 2009). It had better numbers than countries such as Germany, Italy and Portugal, but it had more structural unemployment than countries such as France, Ireland and Spain. In that sense, Greece’s challenge to integrate a large portion of people who struggle for long periods of time to find work is similar and only slightly worse than the challenge of other countries to do the same

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