Greece Faces Increasing Labor Shortages Amid Economic Growth

Labor shortages in Greece has surged since 2019, outpacing other OECD countries, posing a severe challenge to its economic growth.

As a result, the country’s labor market tightness (number job vacancies vs. unemployed people) has steadily increased. In the fourth quarter of 2023 alone, the ratio of job vacancies to unemployed individuals quadrupled compared to the same period in 2019.

This trend is constraining the available workforce, further complicating economic recovery efforts. Governor of the Bank of Greece Yannis Stournaras highlighted the urgency of the situation, warning that “if immediate efforts are not made to fill approximately 200,000 job vacancies, the problem will only worsen.”

According to Stournaras, the labor shortages are particularly pronounced in sectors critical to the Greek economy, such as tourism, agriculture, and construction.

A recent report by Alpha Bank reveals alarming vacancy rates in several sectors for the first quarter of 2024, including accommodation and food services (18.4%), arts (9.6%), real estate management (7.3%), water supply (6.8%), and construction (6.5%). The accommodation and food services sector has the highest vacancy rate among the EU-27, significantly surpassing that of other Mediterranean countries like Spain (0.5%) and Italy (5.3%).

A significant factor contributing to labor shortages is the mismatch between the skills possessed by the workforce and those demanded by employers. This skills gap is notably higher in Greece compared to other European economies such as Italy, Spain, and Portugal.

A study by EY Greece, the Athens University of Economics and Business, and Endeavor Greece found that only one in five university graduates possess the skills required by businesses. AUEB Professor George Doukidis pointed out that “To achieve a GDP of 300 billion euros, we need 50,000 STEM graduates annually.”

Also, despite a steady decline in unemployment, which fell to 10.6% in May 2024, the employment rate remains lower than pre-crisis levels. Employment figures rose by 1.3% annually in May 2024, reaching approximately 4.25 million workers. However, this is still 371,000 fewer than the peak employment levels of October 2008.

Source: tovima.com