Youth Unemployment in Greece and the integration of NGEU funds into the new National Strategy

Introduction

Unemployment is a multivariable problem with different drives that impacts marginalised and sensitive social groups asymmetrically (Wanberg, 2012). More specifically, youth unemployment refers to unemployment that impacts young individuals, typically within the scope of 20-29 years old. Due to several factors like susceptibility to seasonal unemployment, lack of expertise, and socioeconomic barriers affecting the entry into the labour market, youth unemployment is generally higher than regular unemployment (Freeman & Wise, 1982). The index of  “NEET” (Neither in Employment, nor in Education or Training) is used to measure these barriers that hinder youth from entering the labour market despite having already finished their education. Higher results can also be attributed to societal social norms or structural characteristics. For example, although drastically reducing the prospect for long-term unemployment, higher tertiary education attendance is a factor that can temporarily increase the number of unemployed youth.

Greek youth unemployment on average fluctuates at one of the highest percentages amongst the European Union. This effectively reflects the fragile economic situation the country has been in since the Eurozone crisis. According to Eurostat, the youth unemployment rate in Greece was more than twice the national average in 2020. During Q2 of 2020 and amidst the COVID-19 crisis,  the Greek youth unemployment rate for people aged 15-24 years was 45.8%, while the overall unemployment rate for 2020 was assumed at 29.8%; this constitutes a decrease from the peak of 55.9% in 2013 (Eurostat, 2021a). Moreover, the gender gap in youth unemployment is quite significant, with the youth unemployment rate for men being 36.8% in 2020, while climbing up to 53.7% for women. Furthermore, there are very stark regional inequalities, with the youth unemployment rate being 49.1% in rural areas in 2020 and 43.5% in urban areas. Additionally, in the same year, the percentage of  unemployed youngsters who have been out of work for more than a year was 72.7% (Eurostat, 2021b). This is known as long-term unemployment, and it can often create a negative spiral effect, in which social exclusion and psychological effects can significantly diminish a young person’s ability to enter the labour market the longer they are unemployed.

Youth Unemployment in Greece 

Data shows that long-term unemployment among young people has been a persistent problem in Greece, especially in the aftermath of the economic crisis, which has led to significant cuts in public spending and caused businesses to lay off workers.

The current labour market in Greece is characterised as an environment with lack of job opportunities, intensified structural problems like inflexibility, high regulation, and strict rules for firing and hiring workers, making the creation of jobs as well as the transition from one job to the other more difficult. Moreover, limited vocational training means that young people may not have access to certain sectors, such as construction and engineering, while the lack of entrepreneurship in youth results in less start-ups. Lastly, a historically very high level of informal economy calculated at 26.9% of GDP in 2022 (World Economics, 2022) undermines formal employment through the lack of proper work insurance and the lack of contracts guaranteeing a legal framework for the protection of workers (Danopoulos & Znidaric, 2007).

Despite this, Active Labour Market Policies (ALMPs) can be used to correct asymmetries and enhance employability in youth. Caliendo and Schmidl (2016) identify 4 different types of ALMPs that are used to address unemployment: labour market training, job search assistance, wage subsidies, and public work programs. Their comparative analysis finds job search assistance through counselling and/or monitoring, and wage subsidies to be the most effective strategies overall. Additionally, labour market training appears to be a viable option that delivers positive results in minimising unemployment but ultimately leads to less formal education participation rates. Last, public work programs seem to be a very specific and limited policy (found only in 2 countries), which also yields near minimal results (Caliendo and Schmidl, 2016). 

This trend seems to be confirmed for the Greek case in a 2016 report by the Hellenic Statistical Authority, which shows that 47.9% of correspondents found counselling services to be the most useful tool when finding a job, followed by labour market training. However, it is of concern  that in the age group of 15-19, only 1.1% declared they received support, while the same number for the age group of 20-24 was 5.8%. The same report also showed that, on average, 79.8% of youth from 15 to 29 have never been employed while in university (paid or non-paid)  (ELSTAT,2016). This is a very problematic situation, as it indicates a clear lack of a transitory framework from education to work. The importance is aggravated when we consider that social networks and personal acquaintances are proven to be crucial in reducing the number of NEETs (Robson, 2008), something that is backed by ELSTAT’s (2016) survey, which finds that approximately 50% of correspondents found their work through personal acquaintances. 

Furthermore, evidence shows that the elevated number of NEETs in Greece is mostly related to the rising levels of youth unemployment (meaning that it is not a choice but a necessity), and the mistrust in public institutions by youth at a ratio of 91.4%, has created a de facto regime of social exclusion for unemployed youth. In light of the Greek economic crisis and COVID-19, more than 39.4% of  young people (42.9% of NEETs and 38 % of their peers) feel marginalised and do not identify as supporting a specific political ideology, thus showing enhanced political apathy which, in turn, can be interpreted as self-marginalisation (Drakaki et al., 2022).

Additionally, there is also a high disproportion of youth unemployment among young women compared to men: for 2021, youth unemployment in men was 24.8%, while the same number was 32.9% for women (Eurostat, 2021a). Although this is a positive evolution from 2017, when the gap was around 11% (30.3% for men and 41.6% for women), the gender gap still constitutes a serious structural issue that is also related to societal norms and different models of economic activity. Taking 2021 as an example, statistics show a higher difference between young women’s unemployment and that of men in rural/ non-urban areas like Voreio Aigaio (18.7% to 35.6%), Kriti (22.8% to 42.9%) and Sterea Ellada (32.5% to 48.7%); on the contrary, the urban Attika region has the small deviation between the two indicators, with 18.5% for men and 23.6% for women (Eurostat,2021b).

Indeed, the data for rural and urban environments implies differences concerning not only the gender gap but also youth unemployment overall. The rural regions of Anatoliki Makedonia-Thraki, Dytiki Makedonia, and Sterea Ellada all have very high general youth unemployment rate, ranging from 45.1% to 38.9%, in contrast to the urban areas of Attika and Kentriki Makedonia, where youth unemployment sits at 20.9% for the former and 28.9% for the latter. Interestingly enough, the island areas of Ionian Islands, Northern, and Southern Aegean score considerably good overall youth unemployment rates of 21.4%,24.4%, and 29.9% respectively, despite being non-metropolitan; this can be explained by seasonal employment as a result of tourism.

Integrating NGEU  in the National Strategy

The crisis of COVID-19 and the subsequent negotiations for  solidarity in the form of common debt-issuing and burden sharing was labelled by Greece already from the beginning of the discussions in May 2020 as coming with “a lot of economic benefits” and marking a “historical moment to change the economic growth model” (Miro, 2022). Indeed, Greece’s National Recovery and Resilience Plan “Greece 2.0” pays special attention to, among other factors, addressing unemployment and youth unemployment. In fact, the theme of unemployment has a separate pillar out of the four  in total, titled “Occupation, Skills, and Social Cohesion”. This pillar procures a total amount of 4.1 billion Euros in grants, corresponding to 25% of the National Recovery and Resilience Plan funding of 16.4 billion euros. 

These funds were integrated into the National Strategy for ALMPs, which runs from 2022 to 2030 and sets the goals and means for reducing youth unemployment by 2030. Providing more than 4 billion in grants for the pursuit of minimising unemployment and social cohesion has greatly upgraded the scope of the National Strategy. The Strategy is divided into four different Strategic Goals (SGs) and two Horizontal Goals. Youth unemployment and the problem of youth NEET are addressed under SG2. Consequently, SG2 is divided in 2 sub-goals and includes facilitating access in the labour market, promoting youth entrepreneurship, enhancing mobility and training, finding ways to approach NEETs, and lastly integrating NEETs into the labour market.

The goal here is to map and assess the new Active Labour Market Policies that are sponsored by the Recovery and Resilience Facility.

In Greece, all ALMPs are planned, communicated, and executed through DYPA, which is the Public Occupation Service. DYPA is collaborating with independent Life Learning Centres (KDVM) and Life Learning and Research Centres (KEDiViM) to deliver two different programs offering reskilling in digital and green skills for 120.000 unemployed persons, and upskilling in the same area for 150000 employed persons. These programs are subsidised, giving 4.5€ per hour to the executing centres and 5€ per hour to the participants. Although not confined to age, the program is served on a first-come-first-served basis (FEK/5961(2022)). Taking into consideration the issue of youth unemployment, a possible upgrade would be to alter the selection mechanism, so that participants could be pooled in two different bases depending on age, to ensure the maximum entry capacity of young unemployed people. Nevertheless, these programs have a robust basis that can help ensure feasibility: the previously criticised lack of incentives (Galata and Chrysadakis, 2016) has been addressed, while, at the same time, European legislation under the form of a regulation obliges the receiving centres to engage in active advertisement and dissemination of the programs digitally ((RRF 241/2021, L. 4822/2021), thus addressing the fundamental issue of the self-enforcing marginalisation of the youth. As clearly stated in the National Strategy, there is a national consensus regarding the fact that  it is the government that needs to approach the youth, and not the opposite. Still, a lot of the advertisement and dissemination by these centres is done in the form of digital content. While that is in line with the goal of digitalization, it is not necessarily good. Despite 96% of youth (19-24) using the internet on a daily basis (Statista, 2020), Greece has the 3^rd lowest score in the Digital Economy and Society (DESI) index among EU Member States (European Commission, 2022). This means that choosing a digital-dissemination strategy provides asymmetrically less information to disconnected members of society. Since these are more likely to come from low-income families, which are also more likely to foster unemployment, this strategy is counterintuitive.

The other big RRF-funded program involves a subsidised labour engagement program aimed at including up to 10,000 unemployed youth. The program subsidises the receiving companies and additionally rewards young workers with a minimum wage (FEK 4530/2022). As showcased by Caliendo and Schmidl (2016), working subsidies are one of the most efficient policies for reducing unemployment. Concerning youth, the ability to enter a working environment ideally bypasses the network marginalisation effect, wherein a lack of the right connections for finding a job leads to further marginalisation, thus limiting the capacity for job seeking further. Last, DYPA is executing an employment program for 10,000 unemployed who are facing barriers in their (re-)entering the labour market. This program is materialised in two phases. The first phase includes 3000 positions for a wide range of marginalised groups, including women victims of domestic violence, youngsters who are classified as being under “social danger”, transgender persons and others; the second phase is addressed to mothers returning to work and bearing children that are younger than eight years old, and persons unemployed for more than 24 months, unemployed persons who have not concluded mandatory education, unemployed Roma, and unemployed members of single-parent families. This policy program is clearly a generous step towards an inclusive policy. The critical aspect of these programs is scrutiny. According to legal provisions of a joint ministerial decision no. 2/82850/0022/2013, the Public Occupation Service (DYPA) is tasked with enforcing the legal application of the program and is obliged to make at least two ad hoc visits to ensure the terms and conditions are met before issuing a certificate of the knowledge gained (FEK 4530/2022). The 2013 decision is drafted for completely different conditions that do not correspond to the size and volume of the RRF-funded program in 2021. Plainly, possible overburdening could result in scrutiny becoming a dead letter; this would jeopardise the mechanism and risk diminishing the results.

Conclusion and Policy Recommendations

Overall, it appears that the structure of the current NGEU-funded ALMP is structured better than previous attempts, and has managed to tackle serious gaps, like the lack of dissemination, and the need for the state to take the initiative in approaching youth actively. At the same time, the decision to streamline NGEU funds to reduce youth unemployment into an incentives-based approach with a mix of working subsidies is seen positively, as it is a tested model with proven positive outcomes. However, as pointed out the dissemination of the up- and re-skilling courses has two main issues: lack of emphasis on youth and digitalization. Additionally, the subsidised labour engagement program, with a capacity of only 10.000 people, is generally limited and small, yet still potentially difficult to enforce due to inflexible procedures. Lastly, there is an obvious lack of any measure addressed to counselling, which ELSTAT’s 2016 analysis has found to be highly efficient in helping reduce youth unemployment and NEETs, and the high regional asymmetries of youth unemployment are unanswered. In light of these acknowledgements,, the following is proposed:

1. Keeping the first-come-first-served basis and creating a separate pool of candidates for the up-and re-skilling programs based on age, to enhance the participation of youth in the programs; or alternatively abolishing the first-come-first-served basis and prioritising youth and marginalised people in danger of long-term unemployment;
2. Maintaining the digital dissemination strategy and coupling it with the creation of “Employment Ambassadors” in local regions, especially in rural regions, to raise awareness and inform citizens about the possibilities of subsidised work, training, and counselling;
3. Boosting the number of vacant positions for the subsidised work from 10.000 to 20.000, increasing the budget of DYPA to allow for smooth functioning, and additionally draft new legislation for a more flexible enforcement of the working agreements;
4. Setting up regional offices for counselling and networking, especially in rural regions with high youth unemployment, as part of an effort to enhance entrepreneurship skills, knowledge of the Greek market, and social skills of youth.

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