PATHETIC BUT TRUE - GREEK LABOUR MARKET TURNS A CORNER

ELSTAT released today the quarterly findings of its Labour Force Survey for Q2 2013. For the first time in four years, there are some things to celebrate in the LFS release. Tiny things, mind you.

First of all, unemployment appears to have fallen. This is due to the fact that quarterly LFS figures are not seasonally adjusted, and in Greece Q2 employment and GDP are always a lot stronger than in other quarters. The seasonally adjusted monthly figures, on the other hand, suggest unemployment is still up. I suggest you trust those.

As veteran readers will know, I am particularly interested in two sets of LFS figures. The first is the percentage of unemployed people who turn down job offers. This figure is now predictably very low - barely a quarter of its boom-time peak. When unemployment is sky high, after all, passing up jobs is suicide. But some of the movement of this total cannot be explained by rising unemployment, at least not through a naive linear fit: we have an 'excess' number of 'voluntary unemployed,' and have done since late 2012. I find this more interesting than other parts of the release because this 'excess voluntary unemployment' figure (which is of course my calculation, not ELSTAT's) is in fact a leading indicator of GDP growth. You can see the relationship between the two in the scatterplot below. Just to clarify, the 'excess' voluntary unemployment figures are residuals left over after comparing the actual percentage of unemployed people turning down jobs with the percentage predicted by a naive linear model using only unemployment as a determinant.

In any case, since late 2012 the Greek labour market appears to have reached a turning point and I am willing to predict positive yoy growth by Q2 2014. Barring of course a civil war.

However, the dislocation in the Greek labour market is only deepening - and this leads us to the second set of LFS figures I like to keep track of. This one concerns the gap in unemployment rates between school leavers and graduates, which is huge and widening still. I'm specifically restricting the comparison to men because comparisons between female postgraduates and school leavers do not have the same meaning - gender roles, sexism, personal preferences, all could distort the interpretation of the gap in unemployment rates as a 'skills premium'.

The 'skills premium' of postgraduates closely mirrors the 'national premium' of Greeks versus non-Greeks. In fact the unemployment rates of male school leavers and foreigners are almost perfectly correlated. One reason of course could be the fact that many foreign workers trapped in Greece are precisely that - male school leavers. But it also paints a picture of a bifurcating labour market, divided between insiders and outsiders, within which the seeds of conflict are sown. After all, nationalism and religious animosity are much more common among school leavers and the unemployed, and when the jobs they compete with foreigners for are drying out, it is only going to get worse (more details here and here).

Anyway, enjoy (?) the figures below.