What is happening in Greece? "For young females, the unemployment rate is 65.0%"

14th March 2013 by The Harried House Hunter

Last night I spotted a Financial Times headline which looked as thought it ought to have come from Greece.

Insolvency Service on verge of insolvency

However it did in fact come much nearer from home as it was the UK which is responsible for this bizarre example of the credit crunch era and an early entry to the competition for headline of 2013! But let me move onto another example of such insanity which is the way that financial markets have decoupled from real economies. This is happening in Greece right now.

Greek financial markets

If we look at the Greek equity market we see that the Athens Stock Exchange has more than doubled from its low of 471 last summer and now stands at 974. So if the pundits who argue that stock markets are prescient are correct we should be able to find signs of recovery in the Greek economy. Also her government bond market has rallied strongly with the benchmark ten-year government bond yield falling from over 30% last June to 10.74%. So there is a thought for you investment in Greek financial markets overall has been extremely profitable over the past 6/9 months.

Thus the proverbial Martian once he or she had pushed that peesky Mars Rover out of the way might reasonably expect to see signs of recovery in the Greek economy.

Greek public finances

This is the line in the sand for the bailout effort for Greece where austerity was supposed to whip her fiscal or budget deficit into shape in short order. In fact anything but has happened but this has not stopped regular cries of “victory” being emitted by those who should be ashamed of themselves. If we look at the latest numbers we see a familiar issue as my eyes immediately alighted on this bit.

the State Budget deficit for the 2 months of 2013 amounted to 813 million Euros against … the deficit of 495 million Euros for the 2 months of 2012.

Yes up is indeed the new down! They try to hide it by comparing with a target of 2630 million Euros but lets face it there have been so many targets that have come and mostly gone.

The essential problem is the collapse of tax revenue caused by the economic depression forced on Greece partly by an attempt to raise tax revenue. This is a bit like a dog chasing its tail although to be fair to dogs they usually tire of this game fairly quickly whereas those in charge of Greece do not. This is illustrated by this number below.

Tax categories showing a decrease against the target are the following:

a)     the VAT, in all of its categories, by 213 million Euros or 8.1%,

So all the rises in VAT (Value Added Tax is a sales tax) have led to less revenue as Greece gives us a (presumably unintended) demonstration of the work of Arthur Laffer and his curve. Actually if we read the section again we see that this bad situation is a rose-tinted one as the phrase “against target” rears its ugly head again. You see the overall revenue target was some 14% lower than last years outcome. We could all beat a target defined like that! Well not quite all as Greece’s government and the troika have failed and as you can see they did so by a wide margin.

In fact state revenue dropped from 9.258 billion Euros in the first two months of 2012 to 8.616 billion in the same period this year.

If we move to the expenditure side we see that there has been some progress as it has been cut by 331 million Euros to 9.14 billion. The problem the more thoughtful immediately face is that such “success” is yet another contractionary influence on the Greek economy.

Also looking into the detail tax refunds seem to have dropped by an inordinate amount (from 331 million to 96 million) and I hope this is not yet more manipulation. Even more serious in terms of scale is the unpaid debts of the Greek government which for example total some 1.9 billion Euros to the pharmaceutical industry. There are estimates that they total some 8.7 billion Euros which is chilling when you consider that the revenues for January and February combined were less than that.

Actually there is a flicker of hope as all the pain has left Greece in a position where she has a small primary surplus and could therefore escape all this by leaving the Euro. Also somewhat ironically with all the spinning going on with these numbers the effect of the PSI or debt haircut meant that February was disproportionately affected.

What about her economy?


From the Greek statistics office this morning.

In the 4th Quarter of 2012 the number of  unemployed amounted to 1,295,535. The unemployment rate was 26.0% compared with 24.8% in the previous quarter, and 20.7% in the corresponding quarter of 2011.

Simply horrible numbers with a fast rate of climb that speaks for itself. Sadly as we look into the detail we see even more troubling figures.

the highest unemployment rate is recorded among young people in the age group of 15-24 years (57.8%). For young females, the unemployment rate is 65.0%.

Remember European Commission President Barroso and his interest in young people? It looks hollow and shallow now.


If we now look at my leading indicator we see that as of the end of 2012 there were some 3,681.926 employed people in Greece but that the trend was definitely downwards.

The number of employed persons decreased by 1.5% compared with the previous quarter, and by 6.4% compared with the 4th Quarter of 2011.

So a fall which is substantial and steady so we have a response to the financial market optimism as our leading indicator still points downwards.

Also a debate which has arisen elsewhere is present in Greece too which is the subject of underemployment as opposed to unemployment.

The percentage of part timers who choose to work part time because they cannot find a full time job is 63.9%,

If Greece is going to grow her way out of trouble then a fall in manufacturing employment from 388,100 to 349,800 seems unlikely to help to say the least.

Industrial Production

The falling numbers employed in manufacturing does appear to have been a prescient indicator of this.

The Production Index in Industry (IPI) in January 2013 compared with January 2012 recorded a decline of 4,8%. In January 2012, the annual rate of change of the IPI was –6,8%.

We have had what seemed shocking numbers from the UK and France over the past two days but they are minor compared to what has happened here. The underlying index where 2005=100 is at 66.3 for Greek industrial production and an even worse 63 for manufacturing.

For perspective let us go back as far as this data series will let us to a new dawn for this century where we see that Greek industrial production was at 92.9 in January 2000. So not only has it now collapsed in the Euro era we are discussing several lost decades.


Hard as I try there are no signs of hope here which if you consider the scale of the fall is extraordinary as falls on this scale tend to seed the recovery. So there has been quite an anti-achievement here as this disaster goes into the record books. As ever there is plenty of empty rhetoric from her rulers. The troika has declared this.

Greece is making significant progress in reforms

So significant that they have this to do.

additional technical work will be necessary

And in fact they have taken a break and departed from Athens, presumably incognito as the advice these days is for them to be in mufti and try to dress like the locals.  My understanding is that there are quite wide differences between the troika and the Greek government as “additional technical work” goes into my financial lexicon.

Another way of considering this is to use the measures we apply to China. So if we look at electricity consumption by industry we see that it was 4.4% lower than the year before in February. If we look at credit growth we see that it was -4.9% in December according to the Bank of Greece.

There is a way out of this and it is to leave the Euro and default and devalue. Where are all those who claimed it would lead to “economic destruction” now?



23 thoughts on “What is happening in Greece? "For young females, the unemployment rate is 65.0%"”

  1. max says:

    nothing surprising but thanks for the analysis. Not that anybody in the financial markets or MSM seems to care anymore.

  2. Justathought says:

    Hi Shaun,

    I sometime wonder if the Greek experiment might be citizenry stress test for the all of the EU, in order to find the “revolution’s threshold”.
    So far … so good as emphasis by the latest statement from El Emperor Barosso…”We will carry on with the austerity’s measures…”

    1. Anonymous says:

      Hi Justathought
      I was asked the same question earlier and gave the same reply which is that whilst I think many of the individuals in the Euro institutions are low quality I do not think that there is a plan to actually destroy things. What is taking place is happenstance and incompetence.
      I do agree that we must be on the cusp of revolutionary thresholds though…

  3. DaveS says:

    Ok Shaun – I’ll respond to the “where are they now” ?

    I am still here.I believe that a Greek exit followed by devaluation will lead to an even worse economic outcome. Just because things are bad now, it doesn’t mean they can’t get worse.

    The evidence from the UK is that devaluation is not succeeding at restructuring the economy towards exports – it is succeeding at stoking inflation. And the UK has a much bigger manufacturing sector with several world class companies. Why if its not working for us – would it work for Greece ? Why are the economic theories not working here ?

    The main argument for Greece seems to be that it would boost tourism. This seems a dangerous gamble, not least because I suspect the European tourism industry (a function of European surplus wealth) is in long term decline.

    Devaluation means making the citizens poorer in the hope of a recovery in the future. But the West is not going to recover – it is going to default. This isn’t a cyclical downturn – its a fundamental downward shift in the wealth of the West.

    1. Andy Zarse says:

      Hi Dave, I’m not sure I follow you, are you saying Greece shouldn’t default now because the rest of the West is going to end up defaulting anyway? If you are right, why would it matter. Indeed, it might well bring your prognosis closer to fruition.
      And surely Greek tourism is in decline because it’s too damn expensive. Sharm el Sheik seems to be doing okay and a dozen places in nearby Turkey, because they offer what people want at a price they can afford. Greece clearly doesn’t. (Insulting Germans doesn’t help either, but that’s another issue).

      1. DaveS says:

        Hi Andy

        I am questioning the assumption that Greek default will be followed by a Greek recovery, I think the entire West is now in a slow and painful default which will lower everybody’s living standards. I don’t think Greece can recover in that context – devaluation will just reset them at permanently lower living standards – probably below where they are now in the Euro (they can still buy oil with Euros for instance).

        And tourism is perhaps the only hope, but to compete (and particularly to persuade Germans to come back) they will have to be cheaper than Turkey, Egypt – i.e wages will have to be lower than Turks or Egyptians. Is that a better option ? – maybe for Greek hotel owners, not sure about Greek workers.

        Admittedly its a very gloomy view but then the last 5 years has provided some evidence that this is no normal recession.

        1. Andy Zarse says:

          Last 5 years? You are correct about that!
          I’m not sure Greece has to be cheaper than Egypt, or even Turkey. It competes on other merits, such as civility, quality, beautiful islands, etc. It simply has to offer decent value for money to the tourist. At the moment, partly because of the strong Euro, it can’t do this. Their only hope is to get out. As to the ret of its industry, I’d simply say, what industry? It hasn’t got any, and won’t whilst it’s stuck in the Euro doomsday machine. I do take your point about inflation though. It’s a case of name your poison!

      2. pavlaki says:

        You are right about Greece being expensive! I normally visit a few times a year for both business and holiday but due to the strong Euro, business has dried up and I holiday in Portugal which is cheaper (though 10% more expensive than last year!). I still believe that Greece could enjoy a massive tourist boom (at the expense of other Euro holiday destinations) out of the Euro and it could also position itself as a low cost, low tax manufacturing base on the edge of Europe. If I could see any future inside the Euro I would support it but I (and everyone I talk to in Greece) can’t. Oddly enough they still want to stay with the Euro as they believe that constant bailouts are the only hope.

        1. DaveS says:

          I suppose if you believe that Europe will recover, then perhaps Greece can do so better outside the Euro.

          Although only by competing on labour costs with countries e.g. Turkey that currently have lower living standards than they do.

          But what happens if Europe can’t recover ? I don’t think you will have a tourism or manufacturing boom even if you devalue to levels that throw your population into poverty.

        2. Justathought says:

          Hi Pavlaki,

          According to the latest survey …. The survey, carried out for Skai and Kathimerini, indicated that only 59 percent of Greeks have a positive view of the euro compared to 70 percent last month. Six in 10 said the government should continue talks
          with the troika to reduce the country’s debt.

          1. Anonymous says:

            I dont know about you but I find it amazing that 59% still have a positive view of the Euro.

        3. Anonymous says:

          Hi pavlaki

          Would you be able to itemise the price rises please or is it the currency? You have piqued my interest in inflation and inflation measurement. The official Portuguese CPI was out on Tuesday and is 2.2%.

    2. Anonymous says:

      Hi DaveS
      I did not mean you or those who have this belief. That is a debate we have had before on here and of course it is legitimate to disagree. What I meant was the pundits and so called experts who in 2010 then 11 then 12 then 13 have claimed that my views would lead to economic collapse whereas theirs would lead to recovery next year,whereas they have caused an economic collapse.
      My way would I believe give Greece a fair chance and used to be part of IMF programmes which did not always work but often did as opposed to Euro austerity which so far has always failed.

    3. Anonymous says:

      I’ve suggested before that Greece can keep the euro and default on the debt. Greece has a veto that can be used against any attempt to legally eject Greece. Greece can also join Kosovo, where the euro is the default currency without eurozone membership responsibilites.

      The main drawbacks are

      1) the need to run a balanced budget without debt repayments.
      2) the inability to prevent the probable bank failures

  4. forbin says:

    hello shaun

    makes you wonder if the Greek government are either malicious or incompetent doesn’t it?

    perhaps the Icelandic solution is too late now – I suspect that Greece will not be allowed to leave the EU and when the civil war starts aid in the for of EU troops will be sent in .

    I doubt that the rest of the EU will allow a military junta or right wing government in – and it wouldn’t surprise me at all if the votes were already rigged .

    on another note I guess all those unemployed greek girls are supposed to relocate to Germany ………well the pretty ones can always have the oldest profession to fall back on ! /sarc

    so its the road to civil war or suffer intolerable pain until – what?


    1. Anonymous says:

      Hi Forbin
      I favour the incompetence route as in so many places those of the sort of people who are in charge. One shouldn’t welcome civil war as people are likely to get hurt but they are being hurt by what is taking place…

    2. Anonymous says:

      Hi Forbin,

      I’d suggest that the Greek civil service is neither. Maybe they are just trying to supplement inadequate wages with the odd backhander. Possibly they have to payoff their bosses to get/keep their jobs. Corruption – just look at Greece’s lowly position on the transparency international’s corruption perceptions survey.

  5. Anonymous says:

    Hi Shaun,

    here’s a microeconomic curiousity for Greek retailers in Bulgaria. M&S have allowed a Greek company the Francise in Sofia, with the resultant prices much higher than M&S in Camberley and online. We also had a Greek company build an Ikea in Sofia – the Bulgarian press reported the prices were higher than Western Europe.

    Strike 3 was at my local shop. They were trying to stock heinz baked beans & the proprieter told me it was a Greek firm, to which I replied they came from England. She checked the can and it was English. The Greeks wanted a crazy price (maybe 2.99 leva – over a pound)

    It’s only a small snapshot, but there is a definite trend of overpricing …..

    1. Anonymous says:

      Hi Expat
      There is at least the good side that Greek businesses are being active. But the overpricing is interesting,what do you make of that?
      I am a bit confused by the M&S reference, I have been to their shop in Camberley but wasnt aware that shops abroad were run by others?

      1. Anonymous says:

        The M&S shop in Sofia is run by a franchisee. My wife went to buy some kids clothes, complete with 12 quid price sticker, and a Bulgarian label asking for 65 lev (33 euro / 28 quid). She found a package forwarder in Slough who can receive shopping parcels and deliver it to us cheaply. M&S / Tesco or Asda could dominate the childrens clothes market in Bulgaria because the locally sold clothes are very poor quality.

        The question – why do Greek retailers overprice ? – is a microeconomic challenge that the undercover economist might try to solve. I can only guess that barriers to entry limit competition.

        It’s an ugly mix for Greek consumers – low wages and high prices.

        1. Anonymous says:

          I’ve heard that gas prices in Greece are highest in Europe, and that this is because gov has collaborated with the major gas distributor to create an effective monopoly. Could be related. It’s my belief that this sort of crony capitalism is the root cause of the economic malaise we are seeing globally.

          1. Anonymous says:

            Fuel prices – http://www.theaa.com/motoring_advice/fuel/

            Greece is high, but not highest. Greeks near the border nip across to Bulgaria to fill up & shop.

            The AA report hides variations to average – in France diesel is 20 or 30 cents cheaper in supermarket compared to motorway service area, Austria 6 to 10 cents cheaper.

            Greece’s problems are related to poor administration, as noted by transparency international. http://www.transparency.org/cpi2012/results

          2. Anonymous says:

            I was actually referring to this article which talks about heating fuel rather then motoring fuel – http://www.bloomberg.com/news/2012-12-18/greeks-can-t-find-euros-to-buy-heating-oil-with-winter-economy.html

            “Greece’s oil prices are high because of laws that protect the country’s two refining companies and prevent competition, said Pavlos Eleftheriadis, a lecturer in law at the University of Oxford in England, who studies monopolies.”

            “Greece’s problems are related to poor administration” -> That only explains the state of Greek’s government finances, it doesnt explain the failure of the private sector to compete internationally, despite falling unit labour costs:

            “The Production Index in Industry (IPI) in January 2013 compared with January 2012 recorded a decline of 4,8%”

            … despite this…

            “unit labour costs have fallen by 14.7 per cent in Greece”


            And we’ve seen the same thing in the UK, where the eggheads all expected a boost in exports from a lower exchange rate, but it hasnt happened – anywhere.

            Answering that riddle is the key to solving the crisis, and i think it has less to do with fiddling numbers and more with the actions of real people.

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