El-Erian: Really Depressing Numbers Out of Greece
We should feel a mix of great sadness and heightened concern upon seeing the latest unemployment numbers out of Greece.
According to the data released today, the official unemployment rate rose to a stunning 25.4% in August, setting a new record. More alarming, the jobless rate for 15- to 24-year-olds is 58% – 58%! And there is reason to believe future employment reports will be even worse.
This is a distressingly sad situation.
While the informal sector can alleviate some of the pressure, it provides only limited relief given the scale and scope of the country's enormous unemployment crisis – one that speaks to widespread misery while suggesting a high probability of a "lost decade" for Greece (we are already three years into the country's crisis) AND a "lost generation."
The fabric of any society risks enormous tearing if such joblessness persists. Already, Greece is subject to waves of social unrest, some of which have been quite violent. Only yesterday, TV screens were full of images of rioting citizens in the streets of Athens.
No wonder Greek popular rejection is at extremes not seen before in recent European history; and it is encompassing economic, financial, political and social dimensions.
Some observers even believe that we are close to the point where the Greek government could lose control of the country's management. And as the experiences of Egypt and Tunisia have shown, do not underestimate what a grass root youth movement can achieve – especially with social media greatly facilitating large-scale mobilization and coordination.
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In view of the harmful consequences for so many people persisting for so long, I would absolutely love to be find some hopeful aspects to the Greek numbers. And I have tried really hard.
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Yet looking closely at the detailed data and what Greece and its European neighbors are doing about them, it is hard to be positive. And my deep mix of sadness and concern is not helped by the fact that Greece, while certainly an extreme case, is not the only European country with a severe joblessness problem. Upwardly trending youth unemployment rates have already gone above 50% in Spain, and 35% in both Italy and Portugal.
This Greek tragedy looks certain to be with us for a long time to come.
Mohamed El-Erian is the CEO and Co-CIO of PIMCO, which oversees nearly $1.8 trillion in assets and runs the Pimco Total Return Fund, the largest bond fund in the world. His book, "When Markets Collide," was a New York Times and Wall Street Journal bestseller, won the Financial Times/Goldman Sachs 2008 Business Book of the Year and was named a book of the year by The Economist and one of the best business books of all time by the Independent (UK).