order was implemented on March 23 (eventually lifted on May 4). The government was also very active in introducing a series of measures to help employers and workers weather the economic consequences of the lockdown. These included various forms of tax and rent relief for businesses, unemployment benefit extensions, financial support and social insurance coverage for employees whose contracts have been suspended, financial support for the self-employed, and prohibitions on dismissals for businesses shut down by state order.

Nonetheless, as elsewhere, the pandemic and lockdown are having major economic impacts in Greece. The Hellenic Statistical Authority (ELSTAT) reports that on a seasonally adjusted basis, GDP declined by 1.6% in the first quarter compared to the fourth quarter of 2019.<sup>2</sup> In its Summer Forecast, the European Commission predicts that economic activity will decrease by 9% in 2020.<sup>3</sup> In this situation, a significant deterioration in labor market conditions would be expected.

The main empirical contribution we make in this paper is to describe in some detail how the Greek labor market has evolved in the first few months of the pandemic. Relying on a range of sources including administrative data, survey data, and data from online job posting sites, we document the drop in employment following the imposition of the lockdown and the subsequent flat employment trend through the first months that followed. Two things are particularly noteworthy about the patterns we have observed. First, while Greece did not experience the major declines in employment that some other OECD countries did in March, April, and May, these are normally months when employment growth is substantial in the heavily seasonal Greek economy. Second, employment in these months in 2020 differed from the story in previous years not because the lockdown fueled large numbers of separations but rather it choked off new hiring in what should have been expansionary months. In fact, compared to recent years, separations were comparable or even lower. We attribute this largely to the regulations and wage subsidies introduced by the government that were designed to minimize job loss.

Indeed, one of the messages from our analysis is that policy choices help to explain how the labor market has responded differently to the pandemic shock in different OECD countries. A particularly relevant distinction is between countries, like Greece, that have primarily linked their support to the maintenance of the employment relationship through dismissal restrictions, wage subsidies, and short-term compensation and those countries that have largely let layoffs occur and supported workers through unemployment benefits and cash transfers. Highlighting this link between policy choices and labor market outcomes is a second contribution of this paper.

The remainder of the paper is organized into the following sections. In section 2, we review the early evidence on how the COVID-19 pandemic has affected labor markets in OECD countries. We note how a roughly similar shock has translated into different outcomes across countries and highlight the role of government mitigation policies in shaping those outcomes. Section 3 turns to the pandemic in Greece. It describes the measures introduced by the government to control the spread and to compensate

> 2 The relevant ELSTAT press release can be found here.

> 3 The Summer 2020 Interim forecast is <u>here.</u>

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