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Our View: The problem facing businesses is not liquidity, but labour shortage

Labour shortages exist in many sectors of the economy

The government’s support schemes that saw businesses through the last 18 months of lockdowns and restrictions of trade will be terminated at the end of October, it was announced last week. For the last two months, assistance was targeted at businesses that had a real problem, said Labour Minister Zeta Emilianidou last week.

Emilianidou was almost apologetic about the termination of the schemes. “As the economy is recovering, unemployment is at 5.2 per cent, we have a big increase in the search for staff we believe that another two months it is satisfactory for the schemes to continue.” After October, she said, there will be other schemes of employment and training that allowed the termination of the direct cash assistance.

If anything, the schemes have carried on a bit longer than they should have and the government has no obligation to apologise for ending them. They served their purpose, protecting people’s jobs when the government locked down the country and we lived under a regime of widespread restrictions on movement and trade. We have now returned to normality, all sectors of the economy are open, and there is no justification for continuing the schemes.

The law for loans guaranteed by the state, aimed at providing businesses with liquidity are still awaiting legislature approval. This is another form of assistance for businesses, which might not be needed by the time it is approved by the parties, which had blocked the first version of the scheme because they feared the government would convert it into votes in last May’s parliamentary elections. The second version before the House might also be abandoned, given the economy is bouncing back.

In fact, the problem facing businesses is not liquidity, but labour shortage. Businesses of all sectors of the economy are having great difficulties finding workers to hire. With unemployment at 5.2 per cent, which Emilianidou views as conditions of near full employment, it will not be easy for businesses to hire the staff they need. This was a direct result of the departure of EU workers, estimated to have been close to 100,000, during last year’s lockdown. They have not returned because of the continuing uncertainty caused by the pandemic.

The termination of the support schemes and return to business normality could open the way for these workers coming back gradually. It will not happen overnight, and they will probably wait to see how the situation with the pandemic develops before making the decision. It is the labour shortage that threaten to slow down growth. Dealing with this should be the primary concern of the labour minister, rather than the support schemes and employment policies for graduates.

There is no need for any policies and schemes by the state when, as the minister said, we are close to full employment conditions. It is workers the economy needs.


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