# **1. Introduction**

The COVID-19 pandemic has had dramatic consequences for economies and labor markets around the world. The pandemic has been unique in triggering both supply and demand shocks. To contain the spread of the virus, governments introduced various confinement and lockdown measures that shut down businesses and removed workers from their jobs. At the same time, there have been substantial declines in demand despite large government transfers to firms, workers, and households in many countries. According to the World Bank’s June forecast, global GDP is expected to fall by 5% in 2020, with the decrease projected at 7% in the advanced economies (World Bank, 2020). The ILO estimates that the decrease in labor demand in the second quarter of 2020 compared to the last quarter of 2019 will be equivalent to the loss of about 400 million jobs worldwide (ILO, 2020c). The OECD expects that overall unemployment in member countries will be in double digits for the remainder of 2020, more than twice the 5.3% unemployment rate in the first quarter of the year (OECD, 2020).

While a dramatic reduction in labor demand has been a consequence of the pandemic everywhere, there has been considerable variation in how different labor markets have adjusted to the shock. Take the examples of two G-7 countries that have been hard-hit by the virus. In the United States, the unemployment rate more than tripled between February and May, with 14 million workers added to the unemployment rolls in this period. Italy, on the other hand, experienced a decline in unemployment, with almost 400,000 fewer unemployed workers in May compared to February. There, the adjustment to declining labor demand has occurred through labor force withdrawal. There are also important differences emerging between countries in terms of the types of jobs and workers most affected by the crisis.

In this paper, we analyze how the labor market in Greece has been affected during the early months of the pandemic and lockdown. Greece is a particularly interesting case, both because of its situation prior to the arrival of COVID-19 and because of how the pandemic has been handled. Greece entered the current crisis just as it seemed to be finally emerging from the protracted and deep recession the country had endured since the financial crisis began more than a decade earlier. After declining every year from 2008 to 2013, Greece’s real GDP has experienced modest growth since 2014, with an annual increase of about 2% in 2018 and 2019. At the same time, labor market conditions, while still difficult, were improving. After peaking at over 27% in 2013, the unemployment rate had slowly but consistently declined to 14.3% in March of this year, the lowest monthly rate in a decade.

To this point, Greece has been quite successful in holding the pandemic in check. While many neighboring countries suffered rapid escalations in cases and deaths, and severe burdens on health care systems, for the most part Greece has been able to avoid difficulties of such magnitude. As of mid-July, Greece had fewer than 4,000 confirmed cases which, on a per capita basis, is roughly one-twentieth of the rate in Spain and one-tenth of Italy’s rate. Fewer than 200 deaths have been attributed to the virus, about one-thirtieth of the rate in Italy and Spain. These numbers reflect the swift response of the government after the first case was confirmed on February 26. After that, and within a relatively narrow time window, closures shut down public events, schools, workplaces, travel, and public gatherings, and finally a general stay-at-home 2