Precarious Employment and Working Poverty in ‘Post-Crisis’ Greece

In a September post on the Social Europe website, Syriza MEP Dimitris Papadimoulis claimed that Greece is now ‘exiting the crisis.’ To support his claim, he cites data suggesting that investment is ‘back on track’, exports have risen 18% – the highest rate since 2001 – and that unemployment has fallen to 21%, down from 27% in 2014.

However, these statistics do not present an adequate portrait of the social and economic conditions of Greece. In contrast to Papdimoulis’ claims, the Greek economy has not experienced any significant reversal of fortune of its labor market woes.  Between 2000 and 2008, employment levels in Greece were steadily rising as the economy experienced levels of expansion above the EU average.  When the financial crisis hit, employment levels began to drop from 2009 onward.  After the 2012 labor market reforms, employment levels continued to drop, bottoming out at 48.5% in the third quarter of 2013.  From there, they rose back to their pre-reform levels, topping out at 52.3% in the third quarter of 2016.  Since then, the employment rate has stagnated.  Not only is this rate well below the EU and Euro Area averages, it is also significantly lower than the pre-crisis high of 61.5% reached in 2008.

Furthermore, in all age categories, we see disturbing employment trends.  Youth employment (15-24 years) rose slightly in 2014, reaching a high of 13.91% in the third quarter.  While it dropped down to 13.46% by the end of 2016, this is still less than half of what it was back at the start of the millennium, and 41% of the EU19 average (OECD).  In fact, Greece’s youth employment rate exceeds only that of South Africa in the OECD league tables.  Similarly, the employment rate of 55-64 year olds is second to last, exceeding only that of Turkey, at 33.6%, which is two-thirds that of the EU19 average (OECD).  Finally, employment rates for 25-54 year olds exceed only those of Turkey and South Africa, at 66%, or 85% of the EU19 average.  At the same time, the size of the labor force shrunk from 2009 onwards – contracting by 4.6% between 2009 and 2015, in contrast to the 1.3% expansion of the labor force in the EU19 (OECD:  Labour Force).  The percentage of 15-34 year olds that comprise the labor force and the population has declined since the onset of the crisis.  This means that the decline in youth unemployment that started in 2013 may have been a result of young people either dropping out of the labor market by either choosing to live longer with parents or stay in school; or it may have been the result of increased youth migration to other parts of Europe – or both.

Labor market reforms have also not had a positive effect on long-term unemployment.  While Greece has typically had a higher rate of long-term unemployment than most European countries, by 2015 it stood at 73.1% – second only to the Former Yugoslav Republic of Macedonia.  This represents a significant increase from the pre-crisis low of 40.3% in 2009.  In fact, it is the only category of unemployment by duration that has not declined in the context of the crisis.  Thus, three years after the introduction of significant labor market reforms intending to promote job creation, the Greek labor market has been demonstrating significantly unimpressive employment growth, and persistently high levels of long-term unemployment.

So the unemployment rate is dropping, but it is still unacceptably high, and significantly higher than the pre-crisis rate. The employment rate is also rising, but still well below the pre-crisis rate. At the same time, the labour force has shrunk, as Greeks have migrated abroad to find work. But even if we do accept Papadimoulis’ claims regarding unemployment, we need to acknowledge that the nature of the labour market has fundamentally changed in Greece.

Part-Time Employment

First of all, part-time employment has increased as a portion of employment since the onset of the crisis. In 2007, part-time employment sat at 7.7% in 2007.  By 2015, the part-time employment rate reached 11.1%.  While this is relatively low compared to countries like the UK and is significantly below the EU average, it represents a high point in contemporary Greece.  In the Greek case, part-time employment growth has outpaced full time employment growth, suggesting that it is replacing full time employment.  More importantly, the growth of part-time employment during the crisis period has been dominated by the growth of involuntary part-time employment.  The percentage of involuntary part-time employment rose from 41.6% of part-time employment in 2008, to 68.8% in 2015.  Higher incidences of involuntary part-time employment points to problems of underemployment that may be characteristic of growing precariousness.  The disproportionate growth of involuntary part-time employment represents either a structural deficiency of full-time employment in the labor market (particularly for those with higher levels of education or skills), or a preponderance of poorly educated, low-skilled underemployed workers.

Figure 1: Part-Time Employment

Source: OECD

Temporary Employment

In the initial months of the crisis, temporary employment levels dropped from 12.6% of employment in 2010 to 10.1% at the beginning of 2013.  In the aftermath of the changes to labor market policy in 2010 and 2012, the temporary employment rate rose to 11.95% by 2015.  Part of this is the result of the above-mentioned changes to labor market policy that has made it more attractive for employers to hire workers on a temporary basis.  If we break down temporary employment by age we see that, not surprisingly, young workers comprise the largest portion of temporary workers (see Table 1).  However, the incidence of temporary employment has increased in every age category, with young people and workers in the 64 and over age category accounting for the bulk of the increase (6.9 and 12.4 percentage points respectively). There has been a significant divergence in Greece’s and the EU’s temporary employment rates for 55-64 year olds. Greece is 2.74% above the EU average.

Table 1: Temporary Employment by Age Group

It seems that austerity – in particular, the changes to labor market policy and to collective bargaining – is reversing the general decline of temporary employment that occurred in Greece from the late 1990s onwards.  Greece is seeing a return to 1980s levels of temporary employment.

Wages and Working Poverty

Another aspect of precariousness as defined by Standing is the decline in income security.  The percentage of jobs classified as low-wage jobs – defined by the OECD as jobs with earnings of two-thirds or less of median earnings – has increased significantly since the implementation of the above mentioned labor market reforms in 2012.  While the percentage of low-wage jobs has been typically high in Greece, they began to decline significantly between 2006 and 2008, from 20% to 13.5% respectively.  Low-wage jobs bottomed out at 11.8% in 2012, but have since climbed back up to 17.9% in 2014, as a result of both the decline in minimum wages, the introduction of a sub-minimum wage for under 25s, and the general downward pressure on wages due to the transformation of collective bargaining. 

The rise of low-wage employment has resulted in a subsequent increase in what Eurostat classifies as in-work poverty.  While in-work poverty slightly declined for full-time workers between 2003 and 2015, it has increased for part-time workers.  According to Eurostat, in-work poverty for part-timers increased by 2.5 percentage points before the first austerity legislation between 2009 and 2010.  Between 2010 and 2011, in-work poverty for part-timers actually dropped 8 percentage points, perhaps as a result of the tripartite Economic and Social Council’s (OKE) decision to increase overtime payments for part-time workers by 10%.  However, between 2011 and 2012, in-work poverty increased by 6 percentage points and has now reached a high of 28.2% for part-time workers in 2015.

Labor Market Insecurity

All of the above-mentioned reforms have laid the foundation for increasing labor market insecurity in Greece.  The OECD has developed a metric for labor market insecurity that combines unemployment risk with earnings loss.  Unemployment risk is calculated by relating monthly unemployment flows with the expected duration of unemployment. Earnings loss is calculated in relation to existing social protection policies.  In this sense, the weakening of EPL in a context of high unemployment, coupled with the significant cuts to unemployment benefit should result in increasing levels of labor market insecurity over the course of the crisis period.  This is indeed the case:  by the OECD metric, Greek workers have experienced a dramatic rise in labor market insecurity since the onset of austerity in 2009-2010.  When categorizing workers by age and educational attainment, we see some very significant trends.  As Tables 3 and 4 below indicate, young Greeks (15-29) with secondary or post-secondary non-tertiary education are entering a labor market characterized by extraordinarily high levels of insecurity.  Labor market insecurity, therefore, is not merely a form of precarity that is experienced by the unskilled, rather, it is a condition that is increasingly experienced by young workers with medium levels of educational attainment.

As a result, a growing percentage – over a quarter – of Greeks have transitioned into jobs characterized by weaker employment security than that of their previous employment (Figure 2). At the same time, a declining proportion of Greeks – 73.1% in 2014, down from 88.3% in 2009 – transitioned into jobs with the same or higher employment security.  By far the worst hit are the recently unemployed:  85.8% of Greeks transitioning from unemployment to employment take up jobs with less employment security than their lost job.

According to the OECD’s own data, then, increasing employment insecurity is a characteristic of the current Greek labor market under conditions of austerity.  While no data exists after 2013, the trajectory is clearly one of increasing insecurity, and given the implementation of reforms designed to increase the flexibility of labor markets and to cut back on public spending on social protection, it is reasonable to conclude that the levels of OECD-defined labor market insecurity are continuing to rise.

However, the OECD’s definition of labor market insecurity only provides a partial measure of insecurity and precarity, as it does not take into account other important aspects of labor market insecurity, such as the absence of what Standing (2014) calls representation security, skills reproduction security, work security, and income security.  For our purposes, we can take two of these into account:  skills reproduction security and income security.  In terms of skills reproduction security, we have seen how the implementation of AMLPs in Greece has been insufficient:  Greece has prioritized employment subsidies over long-term vocational and educational training programs (VETs), thereby limiting the opportunities available to workers – employed and unemployed – to upgrade their skills in order to adapt to changes in the labor market.  Income security, as we have seen, has been significantly weakened both by both the dramatic reductions in the minimum wage, but also by the proliferation of firm-level collective agreements that have imposed wage concessions on workers in light of the abolition of the favourability principle in Greece’s multi-level collective bargaining system.  In this sense, labor market insecurity should not merely be understood in terms of expected earnings loss in light of unemployment, but also the loss of employment-based income as a result of increasing liberalization and the subsequent change in the nature of employment relations.  While this is not the place to attempt to quantify these forms of insecurity that are not factored into the OECD’s indicator, it becomes evident that the OECD understates the degree of labor market insecurity in Greece.

Figure 2: Labour Market Transitions

Source:  Eurostat