Greek Unemployment Rate Dips Slightly

Figures released by the Greek National Statistics Service (Hellenic Statistical Authority) earlier today show that unemployment rate in the debt-ridden country has decreased, but only slightly.

From a rate of 26.6 per cent in November last year, the number has gone down to 26.4 per cent in December. Even with the decrease, Greece remains as the country with the highest joblessness rate in the euro zone, compared to an average of just 11.8 per cent in the region. This means that the European Union’s (EU) woes are far from over.

The country is currently waiting to receive its aid tranche from the EU and the International Monetary Fund this month amounting to 2.8 billion euros.

With 110 billion euros of aid already given in 2010 and a further 130 billion further agreed last year, this financial assistance comes at a price. Greece is expected to implement reforms to reduce its debt, which include cutting down its public sector workforce to 150,000 by 2015. This year, about 25,000 employees will be transferred via the so-called mobility scheme. This involves pay cuts for a year, or a job dismissal for those that the government cannot provide an alternative job.

The required austerity measures have created a massive firestorm in the country where citizens are constitutionally-protected from being laid off their jobs.

What the Current Crisis Means to the EU

Greece is now on its sixth consecutive year of recession. It currently faces a vicious cycle of needing to be able to pay its debts and then requiring financial assistance to make it happen. On a wider scale, the situation in the country could create a domino effect in the region. For one, it could diminish confidence in Eurozone banks as struggling countries are forced to write off more of their loans. With that, these banks could have more difficulty borrowing, and consequently find it more difficult to lend, which could then swing the entire region to another credit crunch.

Again, the EU’s woes are far from over. But whether or not the Greek government would take the difficult measures to ease its problems and that of the region, and if it chooses to stay with the euro or return to the drachma are issues Euro traders should constantly monitor.

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