Pockets of eurocrisis: Regional differences in Greece

 •  Filed under fiscal policy and taxation, EU, inequality, International economics

Several European regions are still economically depressed. The absence of a proper economic recovery is probably most striking in Greece.

Consider the long-term unemployment rate, which is about 5% in the EU. In 2009, not a single Greek region had more than 7% of its labor force classified as long-term unemployed.

The labor market got tougher in many countries around Europe after 2009, but Greece absolutely stands out. The long-term unemployment stands at about 8.5% in the “best-performing” region (Ionia Nisia), and it approached 21% in Kentriki Makedonia and in Dytiki Makedonia.

Four of Greeces’ thirteen regions have long-term unemployed exceeding 20%. In the best-performing area, in terms of youth unemployment (Notio Aigaio), about 37% of young people had no job in 2013. Even this relatively superior region offered fewer opportunities for young people than a majority of EU countries (all except Croatia, Cyprus, Spain, and Italy). In the worst-performing region (Dytiki Makedonia) the youth unemployment rate reached a catastrophic 70%: 12 percentage points above the national average and 46 percentage points above the euro area average.

The overall condition of the Greek economy reflects many failed policies from the past, but any metric capturing the national average inevitably disguises regional differences. In Greece’s case, their enormity is an additional reason to assess the handling of the eurocrisis as a failure.