Greece Risks Unemployment Surge as Tourism Is Slow to Restart

(Bloomberg) --

Vangelis Giakoumis is worried.

With summer coming, the 28-year-old would normally be gearing up for a busy season of mixing drinks and earning tips as head bartender at a hotel in Glyfada, just down the coast from Athens.

This year, of course, is different. After completing an anti-virus lockdown last month, Greece is only now beginning to welcome back international visitors, with flights set to restart June 15 under varying rules based on airport of origin.

“Reservations have been slow, hotels are waiting to see what happens with international flights,” Giakoumis said. “How many flights will there be, will tourists arrive in any real numbers?”

A lot is riding on the answer, for Giakoumis, his co-workers, and for Greece as a whole.

While the government gave year-round hotels the go-ahead to restart business June 1 -- with seasonal ones set to join them June 15 -- most are still waiting to see whether reopening is worthwhile.

In Glyfada, all the employees at the family-run hotel where Giakoumis works, some 30 people, remain on standby, paid only through a state-funded furlough program. If forecasts are correct, many hotel workers will never go back.

Almost half of the 600,000 employees in Greece's tourism and food business will lose their jobs this year, according to George Chotzoglou, chairman of the employees' organization for the sector.

“There are no reservations until July 20,” Chotzoglou said. Even if some hotels open for a couple of months after that, many seasonal workers “will have to live over the next 12 months on 2,800 euros ($3,136) in the best-case scenario and 1,200 euros in the worst case.”

Prime Minister Kyriakos Mitsotakis faces a bout of rising unemployment after the economy suffered through six weeks of total lockdown this spring. Joblessness had fallen to 16.1% in February from 27% at the peak of Greece's decade-long debt crisis.

Given the struggles to restart tourism -- which accounts for around a fifth of Greece's gross domestic product and nearly 22% of jobs -- unemployment is seen rising to 20% this year.

In a bid to spark job growth, the government is planning to lower the 40% social security contributions employers and workers currently have to pay, with an initial reduction kicking in on June 1. Mitsotakis, who announced a 5 percentage point cut by the end of 2023 even before the pandemic began, has set this as a key priority for boosting employment.

Greece is also considering cutting the threshold at which social contributions have to be paid in order to move closer to the European average, and make it easier to hire the high-level managers needed to manage investment projects that could help rekindle growth.

None of those measures is likely to salvage the 2020 tourism season, and Mitsotakis has acknowledged that his administration will spend the summer analyzing how to best use the 32 billion euros in loans and grants the European Commission has proposed to support employment in the country.

With only a fraction of the per capita toll from the virus that Italy, Spain and France suffered, Greeks like Giakoumis are proud of their country's response to the outbreak.

“Greece fared well in its handling of the coronavirus compared to other tourist destinations,” he said. “Hopefully the country can capitalize on this image to attract tourists this year, but especially in 2021.”