Youth jobs crisis breaks Greek spirit
GREEK youth unemployment has soared to a record 64.9% as the country’s downward spiral goes on almost unchecked.
“Nothing as devastating as this has ever been seen in my country before,” said Professor Yanis Varoufakis of Athens University.
“The spirit of the Greek people has been broken. They’ve stopped demonstrating, and are licking their wounds at home or leaving the country.”
Latest data from the Greek statistics agency showed the overall jobless rate rose to 27.6% in May, despite an exodus of the best-educated young workers to the US, Australia, Britain and Germany.
The figure is likely to rise further as Athens lays off 15 000 government workers by the end of next month to comply with European UnionInternational Monetary Fund demands.
“The manic attempt to keep Greece in the eurozone under conditions that are not sustainable is turning the country into a sort of Kosovo, an EU protectorate that produces little but surplus labour,” said Varoufakis.
EU economics chief Olli Rehn said Greek austerity was “difficult but necessary”, and should bear fruit next year.
There are at last signs the eurozone is bottoming out after the longest recession since World War 2, but this Thursday the European Central Bank poured cold water on hopes for full recovery. Its survey of forecasters cut its long-range predictions.
The European Monetary Union economy will contract by 0.6% this year and eke out growth of just 0.9% next year and 1.5% in 2015, too little to curb unemployment. The jobless rate will ratchet up to 12.4% next year.
Fitch Ratings warned that Europe did not go far enough with plans for a banking union to lower the risk of bank defaults.
The new resolution fund would scare off funds by concentrating losses on senior bank creditors. Investors were “likely to differentiate more between weak and strong banks” if they could not be sure of state backing in a crisis.
This will make it harder for weak banks to raise capital, forcing them to deleverage by selling assets, further crimping lending. Roberto Gallo of RBS said small banks might have to slash assets by à2.6- trillion over the next three to five years to meet new rules.
Greek think-tank the IOBE said Greece’s econ- omy would contract 5% this year. It accused the troika of paying lip service to reform, relying instead on crude austerity to cut the budget deficit. This has proved self-defeating.
The scale of economic contraction has overwhelmed any gains from budget cuts.
Brazilian Finance Minister Guido Mantega has called for the Greek rescue programme to be “revised and improved”.
The IMF expects public debt to spiral to 176% this year, and warned EMU creditor states that they will have to provide substantial debt relief to put the region on a viable path. — ©