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Greek Unemployment Still at 25%

The Greek statistics bureau Elstat reported that unemployment dropped to 25.0% in May, compared to 25.6% in April. It would be misleading to call this change progress. In a county that owes sums it cannot pay to the European Union, European Central Bank and International Monetary Fund, and where gross domestic product (GDP) is spiraling down, the level is a certain sign that Greece cannot escape the cycle of more debt, lower GDP and more negotiations to save it from default.

A reasonable comparison of the unemployment is the U.S. figure during the Great Depression. The comparison stops there. The U.S. government was able to partially spend its way out of the Depression, and the breadth of industries in America was incomparable. Greece has neither of those advantages.

Authors of the CIA World Factbook recently observed:

The Greek economy averaged growth of about 4% per year between 2003 and 2007, but the economy went into recession in 2009 as a result of the world financial crisis, tightening credit conditions, and Athens’ failure to address a growing budget deficit. By 2013 the economy had contracted 26%, compared with the pre-crisis level of 2007. Greece met the EU’s Growth and Stability Pact budget deficit criterion of no more than 3% of GDP in 2007-08, but violated it in 2009, with the deficit reaching 15% of GDP. Austerity measures reduced the deficit to about 4% in 2013, including government debt payments, but the deficit spiked to 12.7% of GDP in 2014.

The Greeks do not have many places to turn. A fifth of the Greek economy is based on tourism. That will not improve as travelers avoid a country in such turmoil that strikers sometimes close large airports. Even if the industry had a 25% increase, it is not enough to made a dent.

In a world in which most of the major EU nations and the United States have unemployment that is in the 5% to 7% range, the Greek jobless rate makes a recovery impossible.

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By Douglas A. McIntyre