Greece and the ‘paradox of flexibility’. Two graphs.
Is the Greek economy inflexible and unable to create jobs? Not really. The rebound (and more) of tourism led, in 2014, to one of the highest job growth rates of Europe, demand led of course. Despite this, unemployment did not really come down… talk about flexibility of labour supply! A case can even be made that the Greek labour market, with its unusual high percentage of self-employed (look here, El is Greece), is one of the most ‘flexible’ of Europe. Unemployment benefits are for instance also quite low, not available for the self-employed and for a short time only, a libertarian dream. One of the reasons for the sheer depth of the Greek crisis may exactly be this flexibility and the lack of automatic stabilizers: the paradox of flexibility. Income of employees declined with about 32% during the crisis (graph 1), much more than in other program countries (and mind that disposable income declined even more!). But, even more unusual and contrary to the situation in other program countries, ‘operating surplus (gross profits of companies) and mixed income (of the self-employed)’ declined about as much (28%) as total income of employees, while aside from a temporary dip in Ireland it stayed about level in other program countries (graph 2).