The Rebirth of the Greek Labor Market

Transcription

1 The Rebirth of the Greek Labor Market

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3 The Rebirth of the Greek Labor Market Building Toward 2020 After the Global Financial Meltdown Edited by Panagiotis E. Petrakis

4 THE REBIRTH OF THE GREEK LABOR MARKET Copyright Panagiotis E. Petrakis, Softcover reprint of the hardcover 1st edition All rights reserved. First published in 2014 by PALGRAVE MACMILLAN in the United States a division of St. Martin s Press LLC, 175 Fifth Avenue, New York, NY Where this book is distributed in the UK, Europe and the rest of the world, this is by Palgrave Macmillan, a division of Macmillan Publishers Limited, registered in England, company number , of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN ISBN (ebook) DOI / Library of Congress Cataloging-in-Publication Data is available from the Library of Congress. A catalogue record of the book is available from the British Library. Design by Newgen Knowledge Works (P) Ltd., Chennai, India. First edition: December

5 Contents List of Tables List of Figures Introduction Panagiotis E. Petrakis vii xi xv Part A The Rebalancing of the Greek Economy and Employment 1 The Crisis and the Setting of the Recovery 3 Panagiotis E. Petrakis, Pantelis C. Kostis, and Dionysis G. Valsamis 2 Rebalancing and Jobs 19 Panagiotis E. Petrakis and Dionysis G. Valsamis 3 Structural and Cyclical Unemployment 39 Panagiotis E. Petrakis, Pantelis C. Kostis, and Kyriaki I. Kafka 4 Human Capital Supply 49 Panagiotis E. Petrakis and Kyriaki I. Kafka Part B Macro Projections through to Macromodels for the Greek Economy 67 Panagiotis E. Petrakis and Pantelis C. Kostis 6 A Medium-Term Macro Forecast Model for the Greek Economy 85 Efthymios G. Tsionas 7 Medium-Term Projections: Efthymios G. Tsionas, Panagiotis E. Petrakis, and Pantelis C. Kostis

6 vi CONTENTS Part C The Labor Dynamism of the Greek Economy through to The Labor Dynamism of the Sectors of Economic Activity 127 Olympia Kaminioti 9 Input-Output Analysis of Sectoral Labor Dynamism 153 Svetoslav Danchev, Grigoris Pavlou, and Ilias Kostarakos 10 Input-Output Analysis of the Medium-Term Demand of Occupations in the Greek Economy 181 Svetoslav Danchev, Grigoris Pavlou, and Ilias Kostarakos List of Contributors 241 Index 243

7 Tables 2.1 Consolidated public and private obligations in 2009 (% of the GDP) Unemployment rate and job vacancies in the Greek economy: 2009Q1 2013Q Long-term unemployment in the euro area: 2008 and Proprietary rights over the results of the research activity of European and Greek universities and other research institutions General government expenditure on education, 2011 (% of GDP) Percentage of change in the population share of different age groups ( ) Exogenous variables Estimating the consumption equation Estimating the investment equation Estimating the employment equation Estimating the price level equation Estimating the exports equation Estimating the imports equation Forecasting performance: actual outcome versus model estimations on GDP growth Greek real GDP growth rate (year-on-year change %) 107 A7.1 Predicted key variable growth rates (year-on-year change [%] unless otherwise specified) 116 A7.2 GDP and its components under the basic scenario (bn euros unless otherwise specified) 118 A7.3 GDP and its components under the optimistic scenario (bn euros unless otherwise specified) 120 A7.4 GDP and its components under the pessimistic scenario (bn euros unless otherwise specified) General classification of economic activity sectors: NACE Rev2 130

8 viii TABLES 8.2 Sectoral employment forecasts for Summary of the studies on the dynamism of Greece s economic sectors Employment changes in the economic activity sectors: (per thousand people) Employment changes in the economic activity sectors: 2012Q1 2013Q1 (per thousand people) Comparative contribution in employment index for the sectors of economic activity, 2013Q1 (per thousand people) Number of employees per economic activity sector: (per thousand people) Number of employees per economic activity sector: 2012Q1 2013Q1 (per thousand people) Employment share in the economic activity sectors: (%) Employment share in economic activity sectors: 2012Q1 2013Q1 (%) Percentage employment change in the economic production sectors, Comparative contribution in employment index for the economic activity sectors, 2013Q Hierarchical order of the economic activity sectors dynamism according to the comparative contribution in employment index Extent of analysis Categories of occupations: ISCO Number of Greek employees per 1-digit sector of economic activity, 2012: NACE Rev Greek number of employees per 2-digit sector of economic activity, 2012: NACE Rev Input-output table 166 A9.1 Assumptions on the composition of value added per sector of economic activity (Α11) 175 A9.2 Composition of the value added per sector of economic activity (Α64) 176 A9.3 Greek employment per occupation and sector of economic activity in Evolution of employees per 1-digit sector of economic activity (NACE Rev2) Basic scenario Evolution of employees per 2-digit sector of economic activity (NACE Rev 2) Basic scenario 187

9 TABLES ix 10.3 Evolution of employees per 1-digit ISCO Basic scenario The ten occupations per 2-digit ISCO with the biggest increase/decrease The ten occupations per 3-digit ISCO with the biggest increase/decrease Evolution of employees per 1-digit sector of economic activity (NACE Rev2) Optimistic scenario Evolution of employees per 2-digit sector of economic activity (NACE Rev 2) Optimistic scenario Evolution of employees per 1-digit ISCO Optimistic scenario Occupations per 2-digit ISCO with the biggest increase/ decrease Optimistic scenario Occupations per 3-digit ISCO with the biggest increase/ decrease Optimistic scenario Evolution of employment per 1-digit sector of economic activity (NACE Rev2) Pessimistic scenario Evolution of employees per 2-digit sector of economic activity (NACE Rev2) Pessimistic scenario Evolution of employees per 1-digit ISCO Pessimistic scenario The top ten occupations per 2-digit ISCO with the biggest increase/decrease Pessimistic scenario The top ten occupations per 3-digit ISCO with the biggest increase/decrease Pessimistic scenario Scenario evolution of employees per 1-digit NACE Rev Evolution of employees per 1-digit ISCO and per scenario Occupations per 2-digit ISCO with positive prospects in all three scenarios (CAGR ) Occupations per 3-digit ISCO with positive prospects in all three scenarios (CAGR ) 218 A10.1 Occupations per 2-digit ISCO Basic scenario 220 A10.2 Occupations per 3-digit ISCO Basic scenario 222 A10.3 Occupations per 2-digit ISCO Optimistic scenario 227 A10.4 Occupations per 3-digit ISCO Optimistic scenario 229 Α10.5 Occupations per 2-digit ISCO Pessimistic scenario 234 Α10.6 Occupations per 3-digit ISCO Pessimistic scenario 236

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11 Figures 0.1 Estimates of GDP growth and unemployment rates in the Greek economy to 2020 xxi 0.2 Change in employment per sector of economic activity under three scenarios ( ) xxiii 1.1 Change in GDP, employment, and total credit in the Greek economy (%) The Phillips curve for the Greek economy and the euro area Aggregate inflation reduction in Greece, Spain, France, and Germany: January 2011 to October 2013 (%) Primary and current account balances for the Greek economy (% of GDP) Net international investment position of the Greek economy (bn Euros) Uncertainty Index and unemployment for Greece Gross value added for the Greek economy at current prices (million euros) Prices of tradable products versus those of nontradable products in the Greek economy (2005 is the base year) Employment in the tradable and nontradable sectors Change in degree of leveraging (financial obligations to financial assets) for nonfinancial enterprises Change in degree of leveraging (financial obligations to financial assets) for households Labor reform intensity and direction in Greece during Evolution of nominal unit labor costs of Greece and the euro area (2005 is the base year) Job losses from the peak of employment during eight big financial crises The evolution of total factor productivity (2005 is the base year) 34

12 xii FIGURES 2.10 The trend of Greek debt Beveridge curve for the Greek economy showing quarterly data Change in total and long-term unemployment: 2008 and 2012 (%) People in long-term unemployment as a percentage of the workforce The duration of unemployment in Greece (thousands of people) Ratio of unemployed people who remain unemployed to those who found a job The educational level of people aged years (2011) Employment percentages of tertiary education graduates (2012) Percentage reduction of expenditure on tertiary and adult education in 2011 and 2012 relative to the previous year (measured using 2010 constant prices) The evolution of U25 unemployment (%) Employment of young people aged under 25 years (thousands) Employment versus level of education (%) Population share per age group in Greek society ( ) Estimates of unemployment trends in the Greek economy Estimates using the Okun s Law coefficient for the Greek economy Actual versus predicted values for consumption, investment, and employment Actual versus predicted values for exports and imports Actual versus predicted values for the price level Greek GDP growth rates ( ) Greek GDP in constant prices (in bn euros) ( ) Greek GDP growth rates under the three scenarios (year-on-year change %) Greek employment levels under the three scenarios (number of people) Greek unemployment rates (%) Greek unemployment rates under the three scenarios (%) Greek harmonized consumer price index under the three scenarios (year-on-year change %) 111

13 FIGURES xiii 7.8 Greek exports and imports of goods and services and trade balance under the three scenarios (bn euros) Greek private consumption under the three scenarios (year-on-year change %) Greek gross fixed investment under the three scenarios (year-on-year change %) Contribution of investment to Greek GDP under the three scenarios Greek debt to GDP ratio under the three scenarios (%) 115 A7.1 Contribution of GDP components to GDP growth under the basic scenario 119 A7.2 Contribution of GDP components to GDP growth under the optimistic scenario 119 A7.3 Contribution of GDP components to GDP growth under the pessimistic scenario Economic activity sector share of total employment: Economic activity sector share of total employment: 2012Q1 2013Q Employment share of the economic production sectors: Employment share of the economic production sectors: 2012Q4 2013Q Sectoral employment changes in absolute figures, Sectoral employment changes in absolute figures, Greek occupation shares 2012: ISCO Greek employment per 1-digit sector NACE Rev Greek employment change per 1-digit sector NACE Rev2 ( ) and change in the relative shares Greek economic sector shares: value added and employment (2012) Elements for estimating employment per occupation for the period Structure of occupations per scenario (1-digit ISCO) (2020) 216

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15 Introduction Panagiotis E. Petrakis A fter six years of recession, the last three of which have been characterized as a Great Depression, the Greek economy is marching toward recovery. In the last three years, Greece has shed 26 percent of its gross domestic product (GDP). In January 2014 (the most recent data available at the time of writing in May 2014), among people in the year-old age group, 3,613,826 Greeks were employed (612,000 in the public sector), 1,317,848 were unemployed, and 3,386,498 were economically inactive. The remainder of Greece s population, which totals approximately 11,063,000, was not in the year-old age group. This is the fourth time since the establishment of the modern Greek state in 1828 that Greek society has experienced a default crisis, where the nation has become unable to meet its external obligations. Greece has undergone such crises at intervals of 50 to 60 years, which creates a situation where the conditions for economic survival compete with the conditions for economic growth. Greece s growth over the last 20 years, while impressive, was characterized by public sector involvement in the operation of the private sector. More than 50 percent of the economy s production directly or indirectly involved the public sector, either through direct public sector employment of resources and personnel or public sector operations (procurements, public works, among others) that depended on such employment. Thus when the Greek state and then banking system were excluded from international credit markets because of heavy exposure to Greek sovereign bonds and bad loans, a major economic crisis involving the public and private sector occurred, with consequent unprecedented high unemployment. Greek society has undergone a huge test in the form of fiscal adjustment ( ) and internal devaluation. As a result, economic figures have stabilized and started to improve, whereas social burdens (unemployment, inequality, and poverty) have worsened. The period of stabilization and relative recovery will be relatively long (at least 5 years) but, barring the unexpected (i.e., provided conditions remain stable), is expected to lead to economic reorganization and labor market recovery.

16 xvi INTRODUCTION This book comprises three parts: The first part (Part A) describes the rebalancing of the Greek economy and employment market. This part comprises four chapters, covering the following topics: the crisis and recovery, rebalancing and jobs, structural versus cyclical unemployment, and analysis of human capital supply. The second part (Part B) presents macro projections up to 2020 and comprises three chapters focused on: a review of the macro models for the Greek economy, a medium-term macro forecasting model, and a medium-term projection for The third part (Part C) presents the labor dynamism of the Greek economy up to This part comprises three chapters that discuss: the labor dynamism of the sectors of economic activity, input-output analysis of sectoral labor dynamism, and input-output analysis of medium-term demand for labor in different occupations. A global financial crisis has been ongoing since 2008 and has also affected the Greek economy (chapter 1). In Greece, as elsewhere, the crisis is accompanied by persistent high unemployment that has failed to decrease as quickly as in previous similar crises. The increase of risk in the economy and the deleveraging to meet stricter liquidity requirements increase the distinction between businesses able to borrow (unconstrained borrowers) on the basis of collateral or good business practices and those unable to borrow (constrained borrowers). Small-medium enterprises are especially affected. Given that the Greek economy is dominated by numerous smallmedium enterprises, its crisis is larger and deeper than elsewhere. Disinflation and the low inflation effect negatively impact the functionality of the economy, mainly because they increase the pain of deleveraging. The rightward shift of the Phillips curve (the curve that indicates the relationship between inflation and unemployment) after 2011 reveals economic de-structuring accompanied by high unemployment. For the curve to return to the left, unemployment must decrease under activation of the new productive model, but no such move has yet been observed. However, the fiscal adjustment and recession conditions that emerged significantly decreased the twin deficits (fiscal and external) that gave rise to increased trust and consequent recovery and capital inflow. The rebalancing of the external balance position was based more on decreased imports than increased exports. Therefore, despite shrinkage of the trade sector dealing in imports, there was not (or has not yet been) any growth in the export sector and hence related employment. The exponential decrease in the unit labor cost in the Greek economy has favored the increase of exports sensitive to labor cost. This development is associated with the change of the productive model, which itself is a goal of the 10-year investment plan of the Greek economy that was prepared in May 2014 and aims to convert the Greek economy from consumption oriented to export and investment oriented.

17 INTRODUCTION xvii Nevertheless, the successful recovery of the Greek economy will significantly depend on decreasing risk and uncertainty, both of which are necessary to reactivate the labor market. As long as uncertainty remains high, businesses are reluctant to commit to serious investment, making it difficult to employ people. Employment recovery thus requires a decrease in uncertainty. In fact, given that increased uncertainty in the Greek economy had both economic and political (remuneration) origins, as well as the significant decrease in economic risk, the political field remains the sole influence on future risk. However, the rebalancing process has certain characteristics that decisively impact the reactivation of the labor market (chapter 2). Unemployment was mainly caused by the shutdown of the construction sector and the shrinkage of very small and small-medium entrepreneurship, trends that were both linked to the trade and use of imported goods. The recovery of the labor market therefore will be challenging unless the exercise of economic policy is altered to once again favor housing or very small entrepreneurship. In more general terms, the replacement of non-tradable sectors with tradable sectors requires extended realization. Tradable sectors do not also require a high labor content. In addition, the deleveraging process is connected with a balance sheet recession, which international experience suggests is linked to extended timeframes for enterprise reactivation. From one perspective, the organization of the small-scale private productive sector complicates the process of enterprise reactivation. The expectation of growth in the internal market is necessary for full labor rebalancing after the Great Recession. The alteration of productive standards requires extensive structural changes, particularly to the institutional framework governing the operation of the product and labor markets. Such structural alterations are known to be linked to the short-term deterioration of working conditions, mainly because they simultaneously increase uncertainty and decrease productivity. Decreased mark-up policies and changes to the institutional framework governing the operation of the labor market are relevant examples. The positive effects of these changes take time to appear, which delays the positive reaction of the labor market. Nevertheless, extensive changes in the labor market, namely: (a) changes in the framework of working conditions and (b) wage cuts in the public and private sectors, have dramatically reduced the unit labor cost in the Greek economy. These changes represent one of the most positive effects of the wider rebalancing of the Greek economy within the broader European context. The strong hysteresis of unemployment since the crisis, which has created a particularly large footprint in the case of Greece, is associated with a lack of productivity. An increase in total factor productivity (TFP) is associated

18 xviii INTRODUCTION with an increase in investment, GDP, consumption, and thus employment. A TFP shock may have a lasting effect on the unemployment rate produced by an endogenous propagation mechanism. Positive supply and demand shocks may lead to regaining lost jobs; however, high unemployment may persist for a long time despite positive economic growth rates. Finally, the adjustment speed of general debt under low growth conditions is directly associated with the reactivation speed of the labor market. A swift fiscal adjustment causes de-structuring of the productive fabric, thus increasing the ratio of debt to GDP and decreasing confidence in the economy. Flawless amortization of debt is thus critical to the condition of the labor market. The rapid emergence of high unemployment, as occurred in Greece during , led to a very large employment gap. In contrast, the gradual reduction of the debt to GDP ratio, which has been the chosen policy since 2014 (in contrast to the policy of the Troika during ), allows for the gradual reactivation of the labor market. Chapter 3 analyzes the nature of unemployment to determine whether it is structural or cyclical. This distinction is important. If the current unemployment in the Greek economy is mainly cyclical, as in the United States after the 2008 crisis, then the problem could be tackled using conventional fiscal and monetary policy measures to stimulate demand. However, this chapter shows that unemployment in Greece is mainly structural, with 79 percent of Greek unemployment being of this type. The rightward and horizontal trends and shifts of the Beveridge Curve (vacancies versus unemployment) clearly indicate this fact. Besides, the recession in the Greek economy started at least two years earlier than the implementation of the April 2010 consolidation plan, and was ultimately caused by the replacement of Greece in the global division of labor. The substitution of Greece as a supplier of products dependent on low labor cost (through either import or export substitution, such as in the textile and garment industries) predated the consolidation plan. Furthermore, the trend of Greek enterprises to move offshore to countries to the north was in progress before the 2008 global crisis. This is the explanation for the high rate of structural unemployment. The hysteresis in unemployment intensified this effect after Chapter 4 analyzes the role of the educational system in the formation of workforce characteristics, and particularly the relationship between unemployment and educational level. The findings show that employers favor highly qualified persons, with such individuals being much less likely to become unemployed. Simultaneously, the findings reveal the weakness of the educational system, which produces an inflexible workforce. This finding is consistent with the findings shown in chapter 3 regarding long-term unemployment (defined as lasting more than 9 months) being structural in nature. These conditions result in increased mobility of young people,

19 INTRODUCTION xix particularly those who are educated, to destinations outside Greece, such as Germany, Australia, and other countries. This occurs despite the limited, albeit increasing, international mobility of the workforce in Europe and Greece. Furthermore, the aging of Greek society should also be noted, with Greece being an aging society with a declining number of employees that exhibit special consumption and saving behavior. Clearly, the Greek economy is undergoing a significant structural alteration focused on the labor market. The question is whether this change caused mismatches during the recovery stage, specifically meaning specialization gaps in educational qualifications, skills, and needs occurring during the labor market recovery. This depends on the sectors to be activated under the new conditions versus those deactivated during the crisis. A central aim of this book is to forecast the development of the labor market up to This forecast uses input-output data for the Greek economy, which include changes in basic macroeconomic data as exogenous variables. Achieving the above goal requires a reliable forecast of the Greek economy to However, the available models for the Greek economy (chapter 5) lack the properties necessary for such long-term forecasting. Moreover, forecasts derived from macroeconomic figures for have been very inaccurate, a failure that demands serious future consideration from economic scholars. While poor performance of economic forecasting models was a general phenomenon rather than specific to Greece, forecasts for the Greek economy were less accurate than for other developed countries ( chapter 7). For these reasons, a specialized macroeconomic model was developed (chapter 6). The model was primarily Neo-Keynesian. Moreover, it incorporated expectations via (a) the exogenous introduction of productive expectations and (b) general estimates (general consensus) of external demand, primarily European demand, based on expected European growth rates. The results of the model are described in chapter 7. The model displays an impressive ability to reproduce the actual conditions of both the difficult period during and those of 2013 and Figure 0.1 shows the most important conclusions of the model, which concern real GDP growth rate and unemployment in the Greek economy in the form of three scenarios: basic, optimistic, and pessimistic. We estimate change in the employed workforce for the period , and obtain forecasts of 4.1 percent in the pessimistic scenario (146,400 people), 5.3 percent in the basic scenario (188,900 people), and 19.7 percent in the optimistic scenario (703,670 people). However, comparison of our forecasts with the official forecasts by the IMF, European Commission, and Greek government reveals that our optimistic scenario matches the basic scenario of the IMF, at least with regard to real GDP growth rate.

20 xx INTRODUCTION Hence, while our optimistic scenario resembles that of the IMF, European Commission, and others, in terms of forecasted GDP, it differs for unemployment and employment. In fact, in the IMF scenario, the relationship between the changes in the real GDP growth rate and the unemployment rate is broken. In other words, Okun s Law does not apply. This relationship is preserved even for Southern European countries, including Greece (European Commission 2013). The suggested interpretation is that the coefficient of Okun s Law will continue to apply after This coefficient increased during the crisis phase because every change in GDP was linked to much bigger (compared with pre-2008) negative changes in employment. Given the increase in GDP, this would mean a significant rise in employment. However, this interpretation is very difficult to accept because the crisis affected other sectors (with high labor content) and the recovery is expected to originate from other sectors. For example, the crisis clearly had a serious impact on the construction sector, but this sector is not expected to recover unless housing again becomes a source of employment growth. Therefore, we conclude that the differences in unemployment rates relative to the official forecasts mainly arise from two factors: (a) The forecast on the use of European-financed programs to train the unemployed (provided to 450,000 people) (New Mid-Term Fiscal Strategy Framework , May 2014). If this is a way to drive a significant part of the workforce away from statistical unemployment then it is reasonable to expect a significant decrease in the statistical unemployment rate. (b) The second reason relates to an expectation regarding the employment outperformance of the 10-year National Investment Model (May 2014) that is estimated to positively impact employment for 550,000 people. However, in this book we have ignored the consequences of vocational training programs and the excessive optimism of those who shape economic policy. Hence, we have maintained the forecasts of the macroeconomic model developed herein and have added them to the input-output analysis as an exogenous variable. Chapter 8 reviews the recent literature on the crisis in the Greek economy, with a particular focus on attempts to identify the dynamic sectors that will dominate the Greek economy during the next five years in terms of employment rates and workforce. The gathering of such conclusions showed that the sectors with the highest employment dynamism are agriculture, education, health, professional-scientific activities, financial services, transportation-storage, and information communications. These sectors are considered dynamic because they proved more durable than others during the crisis, and are increasing their share of overall employment. Furthermore, some manufacturing sectors (food products,

21 22 Unemployment rate in Greek economy GDP growth in Greek economy GDP growth - Basic Scenario (left axis) GDP growth - Optimistic Scenario (left axis) GDP growth - Pessimistic Scenario (left axis) Unemployment rate - Basic Scenario (right axis) Unemployment rate - Optimistic Scenario (right axis) Unemployment rate - Pessimistic Scenario (right axis) Figure 0.1 Estimates of GDP growth and unemployment rates in the Greek economy to

22 xxii INTRODUCTION pharmaceutical products) are expected to shortly become the most important investment centers for increasing employment. The 10-year National Investment Model of economic growth, recently (in May 2014) announced by the Greek government, includes organized sectoral preferences for the growth of the Greek economy. However, this does not mean that the sectors suggested are those that will offer the most jobs. For example, although fish farming is considered a top sector (mainly because of its export performance), it possesses no significant advantage in terms of increasing employment. Hence, the sectors suggested by various sources are: tourism, primary production and manufacture of agricultural products, energy, transit trade and transportation, technological research and innovation, pharmaceuticals, metals and construction materials, shipping and similar activities, and tradable services. Chapters 9 and 10 present the methodology for the use of the input-output tables to assess total employment demand in all sectors and industries. The analysis includes 64 industries (NACE Rev2) 1 and 123 different occupational categories (ISCO-08) 2. Analysis of macroeconomic conditions for 2020 is exogenously introduced, as mentioned in chapters 6 and 7. The use of the input-output tables includes a fundamental and known drawback of the methodology, namely the assumption of the stability of the structural coefficients of cross-industry interconnections for Given that the analysis uses the structure of input-output tables for 2012, we assume a similar structure will persist until 2020, at least as far as cross-industry interconnections are concerned. Of course, as found in chapter 2, the productive model that emerges based on the data from the incorporation of new enterprises displays a notable repetitive persistence after the crisis. This indicates the lack of a tendency to yield very different productive structures. The post-crisis economy was already reflected in 2012, including readjustment by the main industries. The basic findings of the analysis are presented in Figure 0.2. For 2012, this figure presents three scenarios for developing the labor market through to 2020, including pessimistic, basic, and optimistic variants, which correspond to the three macroeconomic scenarios (chapter 7). Under the basic scenario, employment recovery is expected to derive in order of degree of positive impact from the following sectors: manufacture of transport equipment (e.g., railway construction, ship building, military vehicle manufacture, and others); employment activities (e.g., employment placement agencies, human resources management enterprises, and others); manufacture of computers; manufacture of machinery and social work activities; and manufacture of base metals and pharmaceuticals. Respectively, under the optimistic scenario, employment recovery is expected to derive in order of degree of positive impact from the

23 Pessimistic scenario Basic Scenario Optimistic Scenario Wholesale And Retail Trade Real Estate Activities Public Administration And Defence Administrative And Support Service Professional, Scientific And Techn Other Service Activities Education Financial And Insurance Activities Activities of Extraterritorial Activities of Households As Empl Arts, Entertainment and Recreation Manufacturing Agriculture, Forestry and Fishing Information and Communication Minning and Quarrying Electricity, Gas, Steam and Air Accommodation and Food Service Water Supply, Sewerage, Waste Transportation and Storage Human Health and Social Work Act Construction 30% 10% 10% 30% 50% 30% 10% 10% 30% 30% 10% 10% 30% 50% 70% Figure 0.2 Change in employment per sector of economic activity under three scenarios ( ) Note: Construction includes the following subsectors, as presented in NACE classification: Manufacture of other transport equipment; manufacture of computer, electronic and optical products; manufacture of machinery and equipment not elsewhere classified; manufacture of base metals; manufacture of basic pharmaceutical products and pharmaceutical preparations; manufacture of motor vehicles, trailers and semi-trailers; manufacture of chemicals and chemical products; manufacture of other nonmetallic mineral products; manufacture of electrical equipment; manufacture of fabricated metal products other than machinery and equipment; repair and installation of machinery and equipment; manufacture of wood and products of wood and cork other than furniture; manufacture of straw and plaited articles; manufacture of straw and plaiting materials; manufacture of coke and refined petroleum products; manufacture of foods, beverages, and tobacco; manufacture of furniture and other manufacturing; manufacture of rubber and plastic products; printing and reproduction of recorded media; manufacture of paper and paper products; and manufacture of textiles, apparel, leather, and related products.

24 xxiv INTRODUCTION manufacture of computers and other transport equipment. A significant increase is also expected for the manufacture of machinery, as well as for scientific research and development. Increases are also expected for the sectors of residential care activities and social care activities that do not involve accommodation; manufacture of base metals; manufacture of other nonmetallic mineral products; water transportation; water collection, treatment and supply; manufacture of basic pharmaceutical products and preparations; warehousing and transportation support activities; and finally, manufacture of chemicals and chemical products. By inference, we ascertain that the rebuilding of the Greek labor market is based on the activation of a relatively new productive model of an intermediate technological level that creates new data for the system of labor offers and particularly for the educational system. I wish to thank the following people who contributed to the completion of this book. In particular, a special thank-you goes to Prof. E. G. Tsionas for the development of chapters 6 and 7, and to Mrs. O. Kaminioti, for the development of chapter 8. Furthermore, I would like to thank Mr. P. C. Kostis for his cooperation on chapters 1, 3, 5, and 7; Mr. D.G. Valsamis for his cooperation on chapters 1 and 2; and Mrs. K. I. Kafka for her cooperation on chapters 3 and 4. Finally, I would like to thank Mr. S. Danchev, Mr. G. Pavlou, and Mr. I. Kostarakos for their assistance in the development of chapters 9 and 10. I would also like to thank Mrs. K. Anomitri who provided administrative assistance throughout the project. Of course, final responsibility for the presentation of this book lies with the editor. My scientific work could not have been complete without the help of my colleagues at University of Athens, particularly Mrs. E. Gkiouli, who contributed significantly to the development of this scientific project. Notes 1. Statistical Classification of Economic Activities in the European Community (Statistical Nomenclature of Economic Activities in the European Community NACE). 2. Statistical Classification of Occupations in the European Community (International Standard Classification of Occupations ISCO). Reference European Commission. (2013) The Second Economic Adjustment Programme for Greece Second Review, European Economy. Occasional Papers, 148. May Brussels.