Greece: Facts and figures of the economic collapse

Greece: Facts and figures of the economic collapse

The Bank of Greece’s forecasts for the Greek economy and society appear once again doomy. Estimates show a drop of almost 7% in the total compensation of employees. It is worth noting that compensation of employees will fall by 3% per employee, while labor costs per unit of output will decrease by 1.6%.

In 2020, total compensation of employees is expected to drop sharply, as the amalgamation of restrictive measures and the overall economic consequences of the coronavirus epidemic had a negative impact on employment and average wages. In 2019, it had increased by 5.2% (based on ELSTAT quarterly data), reflecting an increase of 7.6% in the business sector and 0.9% in the general government sector. As productivity is also expected to decline in 2020, while being lower than the average wage decline, labor costs per unit of output will also fall. In 2020, the progression of earnings in the business sector has been partly affected by the complete or partial suspension of operations in many sectors, the disbursement of compensation allowances (800 and 534 euros) to the affected employees, and the implementation of the “SYN-ERGASIA” project afterwards.

How key sectors of the economy were affected

The blow suffered by various sectors of the economy is grave, vividly reflected in the data recorded by the Bank of Greece. The added value in the services sector decreased by 2%. The deterioration observed in the fields of the tertiary sector is mainly due to the negative performance of the trade sectors, hotels-restaurants and transport-storage activities (-5.4%). From the data available so far, it appears that the turnover in the services at current prices for 2020 was recording an upward trajectory until the pandemic erupted. However, there has been a significant deterioration in the expectations of businesses in the service sector, reflecting the unfavorable economic and social conditions resulting from the pandemic and the measures to address it. The services sector has been hit hard, as the pandemic, in addition to its public health implications, appears to have had a negative impact on changes in the behavior of citizens who, at the risk of transmission, have reduced the consumption of particular services (mainly tourism, transport, trade, arts and entertainment). This development in turn leads to additional shrinkage in production and consequently in the labor market.

The industry sector in decline

During 2019, the gross value added in the Economy increased by 0.9% at constant prices, mainly due to the performance of the tertiary sector and in particular of trade services, restaurants-hotels and transport-storage services, as well as the construction sector. In the first quarter of 2020, the upward trend of the economy was reversed due to the effects of the COVID-19 pandemic. The gross value added in the Economy recorded a decrease of 1.5%, to a large extent due to the negative performance of services (-2.0% compared to the corresponding period of 2019).

The progression of the gross value added in the Industry sector, including energy, in the first quarter of the year (-1.4%) was also negative, in line with the decrease in the industrial production index in the same period. Particularly negative was the development of the industrial production index in April 2020 (-9.9%), reflecting the consequences of the pandemic in all sectors of activity, with manufacturing taking the hardest hit (-11.3%). Most processing industries have suffered significant losses. /ibna