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Thread: More Greeks and Spaniards in employment now than in the 1980's and 90's.

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    1 out of 1 members found this post helpful.

    More Greeks and Spaniards in employment now than in the 1980's and 90's.



    Over the last few years the news have been assailing us on a nearly daily basis about the woes of the Greek and Spanish economies. The way unemployment has been skyrocketing in these two countries has grabbed people's imagination and filled many Europeans with fear and apprehension about the future.

    Looking at the employment rate figures, I was surprised to see that both countries were actually doing better now than in the last decades of the 20th century, well before the global financial crisis and the euro crisis. Spain had 52.7% of people in employment in the 1980's, 51.8% in the 1990's, and 58.5% in 2011. Greece was more stable, with 54.8% in the 1990's and 55.6% in 2011. Either way, there are more people in work today than before the 2000's. Yet both Greece and Spain have over 27% of unemployment today, compared with roughly 10% before the crisis. How could that be ?

    One possible explanation is that more women are working now that there were 20 or 30 years ago. I know for a fact that the percentage of working women rose dramatically in Spain after the death of general Franco in 1975, reaching a near parity with men in the early 2000's. I am not sure about Greece, but a similar phenomenon may have happened. In other words, the number of jobs has remained stable, and even slightly increased. It is the number of job seekers that has skyrocketed. It is undeniable that the crisis had an negative effect on employment, but judging from the real number of people in employment, Greece has lost only 6% of its working force and Spain 8% compared to their peak in 2007-8, just before the global credit crunch.

    This would mean that about half of the increase in unemployment rates since 2008 were not directly caused by the crisis itself, but rather by more people wanting to work. Fear about the future could be one reason. Helping relatives could be another. Another possibility is that the lowering of salaries and tax increases have forced housewives in many families to start looking for a job to complement their husband's income to make ends meet or maintain the same lifestyle as before the crisis.

    One way of seeing this whole situation is that the soar in unemployment rates has been caused at least as much by a change in mentalities as by job losses. Jobs have been destroyed by the financial crisis in all developed economies. Real estate prices and stock exchanges have declined almost everywhere in Europe from an all-time high in early 2008. People have lost money everywhere, but especially in countries that had an artificially inflated real estate market, like Ireland, Britain, Spain and Italy.

    Employment rates reached an all time high in 2007-08 in all countries that experienced a real estate bubble. Those that managed to put a lid on their property market, like Germany, did not suffer from any decrease in employment rate. The correlation is actually pretty startling. The country that suffered the sharpest decline in property prices is Ireland. It is also the one that lost the most percentage points in real employment figures : nearly 10% from 2008 to 2011 (against 6% for Greece). Spain has the second largest real estate bubble burst, and it lost 8% points in employment rates from 2007 to 2011. In contrast, Germany gained 3.6% over the same period.

    It doesn't seem to matter how well a country's economy is faring, nor how large or small its public debt is. Sweden has a healthy economy and a public debt at only 33% of GDP, but it lost 3.5% of employment rate immediately in the year from 2008 to 2009. Its real estate market did not experience a real bubble, but was over-inflated nonetheless. The case of Denmark is even more telling. With an economy as sound as that of Sweden, the only thing that really distinguished the two neighbours is the real estate market. Prices fell more sharply in Denmark and at the same time employment figures tumbled too. The Danish employment rate, once the highest in the world, fell from 77.9% in 2008 to 73.1% in 2011 - a drop of 5%, almost as much as in Greece. Even super-rich Norway lost nearly 3%.

    Even though the US stock market recovered quicker than anywhere else, the USA also lost 4% of employment rate, mirroring the drop in real estate prices over the same period. Only countries like Germany, Switzerland and to a lower extent Austria, where property prices have barely increased over the last 20 years, have sustained a steady increased in employment rates throughout the crisis.

    In conclusion, it seems that the financial crisis and euro crisis were both caused by a real estate bubble burst after all. In other words most countries had been living beyond their means with artificial money from speculation. What most of Europe is experiencing now is a market correction.
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    It could be that in those years there was a generous government welfare system so they didn't need to work. Just guessing. Don't know for sure.

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    I agree with your explanations for the development in Spain and Greece.

    The correlation of real estate and employment is not so surprising I think. The real estate market was the easiest target for the banks and the money flood. But like every bubble this is destructive because it is the result of exceeding investment attraction causing malallocations and dangerous single-risk exposure. Once the bubble bursts, too many architects, builders, bankers, insurance companies lose their job too quickly. Then the mortgages crumbled etc. ... we all know the story.
    But there might be also a more pessimistic explanation, which is that there are no good investment alternatives left anymore, which leaves mostly bubbles as investment opportunities. The local markets are saturated. It is possible that the real estate bubbles naturally emerged due to market pressure to escape from the reality of economic decay as long as possible (much industrial power already went to China, for instance).
    BTW, current private debt is highest in Denmark, Norway, Netherlands, Iceland and Ireland (http://en.wikipedia.org/wiki/Househo...conomic_impact). I wonder whether Denmark wants to join the EURO.

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    1 out of 1 members found this post helpful.
    Quote Originally Posted by Maciamo View Post
    Over the last few years the news have been assailing us on a nearly daily basis about the woes of the Greek and Spanish economies. The way unemployment has been skyrocketing in these two countries has grabbed people's imagination and filled many Europeans with fear and apprehension about the future.

    Looking at the employment rate figures, I was surprised to see that both countries were actually doing better now than in the last decades of the 20th century, well before the global financial crisis and the euro crisis. Spain had 52.7% of people in employment in the 1980's, 51.8% in the 1990's, and 58.5% in 2011. Greece was more stable, with 54.8% in the 1990's and 55.6% in 2011. Either way, there are more people in work today than before the 2000's. Yet both Greece and Spain have over 27% of unemployment today, compared with roughly 10% before the crisis. How could that be ?

    One possible explanation is that more women are working now that there were 20 or 30 years ago. I know for a fact that the percentage of working women rose dramatically in Spain after the death of general Franco in 1975, reaching a near parity with men in the early 2000's. I am not sure about Greece, but a similar phenomenon may have happened. In other words, the number of jobs has remained stable, and even slightly increased. It is the number of job seekers that has skyrocketed. It is undeniable that the crisis had an negative effect on employment, but judging from the real number of people in employment, Greece has lost only 6% of its working force and Spain 8% compared to their peak in 2007-8, just before the global credit crunch.

    This would mean that about half of the increase in unemployment rates since 2008 were not directly caused by the crisis itself, but rather by more people wanting to work. Fear about the future could be one reason. Helping relatives could be another. Another possibility is that the lowering of salaries and tax increases have forced housewives in many families to start looking for a job to complement their husband's income to make ends meet or maintain the same lifestyle as before the crisis.

    One way of seeing this whole situation is that the soar in unemployment rates has been caused at least as much by a change in mentalities as by job losses. Jobs have been destroyed by the financial crisis in all developed economies. Real estate prices and stock exchanges have declined almost everywhere in Europe from an all-time high in early 2008. People have lost money everywhere, but especially in countries that had an artificially inflated real estate market, like Ireland, Britain, Spain and Italy.

    Employment rates reached an all time high in 2007-08 in all countries that experienced a real estate bubble. Those that managed to put a lid on their property market, like Germany, did not suffer from any decrease in employment rate. The correlation is actually pretty startling. The country that suffered the sharpest decline in property prices is Ireland. It is also the one that lost the most percentage points in real employment figures : nearly 10% from 2008 to 2011 (against 6% for Greece). Spain has the second largest real estate bubble burst, and it lost 8% points in employment rates from 2007 to 2011. In contrast, Germany gained 3.6% over the same period.

    It doesn't seem to matter how well a country's economy is faring, nor how large or small its public debt is. Sweden has a healthy economy and a public debt at only 33% of GDP, but it lost 3.5% of employment rate immediately in the year from 2008 to 2009. Its real estate market did not experience a real bubble, but was over-inflated nonetheless. The case of Denmark is even more telling. With an economy as sound as that of Sweden, the only thing that really distinguished the two neighbours is the real estate market. Prices fell more sharply in Denmark and at the same time employment figures tumbled too. The Danish employment rate, once the highest in the world, fell from 77.9% in 2008 to 73.1% in 2011 - a drop of 5%, almost as much as in Greece. Even super-rich Norway lost nearly 3%.

    Even though the US stock market recovered quicker than anywhere else, the USA also lost 4% of employment rate, mirroring the drop in real estate prices over the same period. Only countries like Germany, Switzerland and to a lower extent Austria, where property prices have barely increased over the last 20 years, have sustained a steady increased in employment rates throughout the crisis.

    In conclusion, it seems that the financial crisis and euro crisis were both caused by a real estate bubble burst after all. In other words most countries had been living beyond their means with artificial money from speculation. What most of Europe is experiencing now is a market correction.
    your employment percentages are flawed in the sense that they are figures gathered as ethnic/citizen tax payers. many tax payers where a non greek or spanish ethnicity and they are not included.
    The spanish housing boom in the 80s and 90s was worked on by a majority of non-ethnic spaniards, which is why your figures have not increased or decreased once they left spain when it busted
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    Quote Originally Posted by oriental View Post
    It could be that in those years there was a generous government welfare system so they didn't need to work. Just guessing. Don't know for sure.
    Not possible. Only people who are officially unemployed can benefit from the welfare system (like the dole). But the unemployment figures are the highest ever now. So in all logic, if welfare has anything to do with this, I would expect the system to be more generous now. People who were not working and not looking for work before and now claiming to be looking for a job to obtain welfare benefits. If a sizeable portion of the population did indeed get this idea into their mind it would explain the surge in unemployment against a background of relatively stable number of jobs.

    In Spain, what changed most in society since the late 1990's is the number of immigrants. In 1998, there were 637,085 immigrants in Spain, or 1.6% of the population. In 2011, there were 5,730,667 immigrants (12.2% of the population), mostly from poor countries. This alone is enough to explain the dramatic increase in unemployment from about 10% to 27%. Considering that an 8% increase can be attributed to jobs lost because of the crisis, the remaining +9% could have been caused by immigration.

    If we cut out the 500,000 Northwestern Europeans (mostly retired people) who moved to Spain during this period, who account for 1% of the population increase, the remaining +9.6% of immigrants matches almost perfectly the +9% of unemployment. It doesn't mean that all those immigrants are jobless, but for each one that got a job a Spaniard had to lose his job. I don't have the unemployment figures for the immigrants only though, so it's hard to assess the percentage of Spaniards who actually lost their job to immigrants. It could be a tiny percentage or a very considerable one.

    I couldn't find data showing the evolution of the immigrant population in Greece from 2001 to 2011, but from 1991 to 2001 the number jumped from 167,276 to 797,091 - almost a fivefold increase. According to Wikipedia, if estimates for undocumented immigrants are included, this number already exceeded 1.2 million people in 2006. The International Organization for Migration gives an official figure of 10.1% of immigrants in Greece in 2010, so over a million individuals. It's not as much as in Spain, but still is a very considerable increase.
    Last edited by Maciamo; 19-05-13 at 10:31.

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    Quote Originally Posted by zanipolo View Post
    your employment percentages are flawed in the sense that they are figures gathered as ethnic/citizen tax payers. many tax payers where a non greek or spanish ethnicity and they are not included.
    The spanish housing boom in the 80s and 90s was worked on by a majority of non-ethnic spaniards, which is why your figures have not increased or decreased once they left spain when it busted
    You are right, the title is a bit misleading. I didn't mean ethnic Greeks and Spaniards but rather residents in Greece and Spain, including foreigners.

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    The statistic also (of course) doesnt include the hundreds of thousands of young unemployed youths that have already left the countries.

    March 17, 2013
    http://www.thestar.com/news/world/20...h_of_work.html

    And that (well educated youths leaving en-masse) is far more hurting and damaging (in total) than the recession itself;

    The situation in Greece and Spain truly seems as desolate as their statistics in the news;
    April 26, 2013 - Spain
    http://www.theatlantic.com/business/...s-ever/275324/
    May 9, 1013 - Greece
    http://www.dailymail.co.uk/news/arti...t-country.html

    Italy seems like the next country to bust,
    January, 2013
    http://www.businessinsider.com/itali...loyment-2013-3

    France doesnt look that stable either and than .......
    April 25, 2013
    http://www.guardian.co.uk/world/2013...rance-eurozone

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    Quote Originally Posted by Nobody1 View Post

    And that (well educated youths leaving en-masse) is far more hurting and damaging (in total) than the recession itself;
    These are the times when Canada receives good quality emigrants. :)
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    Unfortunately the unemployment is increasing yet in Spain.
    It is a problem for many families that today all members are unemployed.

    First came the housing bubble, much of the population was employed in the construction sector and then the "cascade effect" appears , job lost in the manufacturing, services, industries .... All these things affected, the debt began to grow
    And then began the cuts, which also reached the administration and civil servant employment, health, education and pensions. if we add the dizzying industrial relocation .... "The drama is served".

    People are very scared, the number of unemployed currently reaches 30% ....
    Not counting the youth unemployment ... with incredible figures ... a large proportion of young highly qualified are leaving ,there is an immigration to other countries.

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