Article

 

EMPLOYMENT AND SOCIO-ECONOMIC CHANGES IN GREECE: 1970-1993 AN EMPIRICAL INVESTIGATION

by

C. Kollias , Technological Education Institute of Larissa

G. Manolas, Ministry of National Economy

M. Chletsos, National Labour Institute

JEL classification : C29, E24

Abstract

A number of papers have analyzed the labour demand determinants and provided theoretical and empirical explanations between the employment or unemployment level and its determinants in various countries (Disney and Kiang 1990; Arestis and Biefang-Frisancho Mariscal 1994). Cross-national research shows that employment growth in European countries has been much lower than in United States. This has been explained by the obvious institutional differences between North America and Europe, with the suggestion that the “overegulated” European economies were unable to respond to shocks in the world economy (Appealbaum and Schettkat 1995). In the case of Greek economy we can remark that the change in the political regime affected most aspects of the economy. The change in the regime after 1974 also altered the labour market by the emergence of new labour unions, by the involvement of the state in the wage structure and in the level of employment. In this article empirical evidence is provided in order to assist in the investigation of the relation between employment level on the one part and growth rate, productivity and real wage on the other part in two time periods : 1974 – 1980 and 1981 – 1993. On the basis of the obtained results it appears that this relationship has not remained unchanged throughout the whole period. The structural changes of the Greek economy appear to have directly affected this relationship. In the first period, a period of economic expansion and absence of an economic crisis, the empirical findings indicate that employment levels are positively related to growth rate and to wage rates and negatively to labour productivity. In the second period, a period of economic crisis and restructuring of the Greek economy in which employment appears to be positively affected conclude only by growth. It would appear therefore that government employment policies must be targeted towards achieving structural changes in the labor market which along with active employment policies could in the medium term have beneficial effects on employment levels.