For the first time in a while, we can begin to be optimistic about the stability of Greece – at least in the very short term. While the country edges ever-closer to a deal with creditors, preventing bankruptcy and a potentially abrupt fallout from the eurozone, official figures have also revealed the economy grew 1.5% in the second quarter of the year, a rise of 0.8% from the first quarter.

There are of course caveats to this optimism. The long-awaited deal still has to be agreed upon by Germany and the Greek parliament. Alexis Tsipras, the Greek prime minister, is still yet to convince opposition members and from within his own party, with the loudest voice coming from ex-finance minister Yanis Varoufakis, repeating his claim that the deal will not work and that Syriza, the governing party, should return to its election promise and reverse spending cuts and tax rises.

Greece Flag
Greece has a 'lack of any significant job creation in diverse sectors'Cathal McNaughton/Reuters

What's more, capital controls were imposed two days after the second quarter of the year – which means they don't show up on latest growth figures. In any case, Greece has an even greater problem to come, which will make any agreed deal redundant and an economic recovery – if we can even really call it that – wholly unsustainable: the lack of any significant job creation in diverse sectors.

Since the financial crisis, unemployment in the country has hit workers hard. The rate of people out of work rose from 7.7% in 2008 to 27.8 as of 2013. Some 75% of job losses occurred during 2010 to 2013, after the European institutions began directly imposing policies on the country as terms for bailout packages.

All the while the largest number of jobs lost came from wholesale and retail, manufacturing, agriculture and construction. With the latter, which had added 1,500 jobs between 2008 and 2010, 157,600 workers lost their jobs between 2010 and 2013. Wholesale and retail trade, and manufacturing eliminated around 145,000 positions each, while agriculture lost 57,700 jobs.

As one representative of a Greek trades union body recently put it: "Greece has weak exports, does not invest in research and development, the culture of innovation is absent and in fact entrepreneurship is not familiar with innovation. Even if the private sector recovers in the country there are still many challenges we face."

Greece awaits third bailout
Greek Prime Minister Alexis Tsipras faces myriad challenges

The result has been a nationwide mismatch of skills to jobs and a mass exodus of workers – both of which negatively impacts upon a country that needs to grow its economy or face financial insolvency.

When I spoke to Passas Costas and Nasos Koratzanis, representatives of the General Confederation of Greek Workers, they told me that without the ability to devalue its currency, a rise in productivity was seen as the only way to bring Greek wage levels up to the cost of living in the country. But due to a rapid shift in types of employment, from high to low-skilled labour and low wages, the productivity rise didn't materialise.

According to ERE Media, the recruitment specialists, data from Greek job search engines found that in the first half of July 2015, an average of 32% of their searches were for employment outside of Greece, almost twice the share in the same time period in 2014.

In 21 occupation categories, over 50% of Greek job searches are outside Greece, compared with just three occupations in 2014, and a significant number of high-skilled workers – including mathematicians, computer scientists and educators – are leaving to take up employment elsewhere in countries such as Germany.

As it's widely recognised, workers emigrating to other countries, particularly within the eurozone, is not a bad thing at all. They can leave, work in environments unfamiliar to their home country, bring back those skills and pass them on to others. But in reality, highly skilled workers in Greece are not returning, fully aware that the jobs they want are not there.

IMF report Greece debt crisis
International Monetary Fund Managing Director Christine Lagarde is kissed by Eurogroup President Jeroen DijsselbloemPhilippe Wojazer/Reuters

Active labour market policies in the country have previously been enacted on the assumption that Greek workers don't have the correct skills. Initiatives have been set up to improve a person's employability and to give training for the acquisition of skills. But the problem is not that skills are absent, but that the right jobs are not being created.

According to the European Labour Force Survey, unemployment is higher for the 15 to 29-year-olds who have already acquired technical skills compared with the average unemployed. Graduates of Greek technical educational institutions are among the hardest hit by youth unemployment.

A jobs plan is absolutely vital. Apart from small talk about investment in start-ups, as part of the so-called "Juncker-package", there is limited mention of good job creation in the deal currently being debated. But this is vital.

Where jobs are matched to skills, productivity is sure to rise. With growing output, it becomes easier for Greece to meet primary surplus targets and grow its way to sustainability. This is why a blueprint on employment is so necessary today in Greece. The European institutions ignore this at their peril.


Carl Packman is an independent debt and finance researcher and the author of Payday Lending: Global Growth Of The High-Cost Credit Market (2014).