Employers propose minimum wage exemptions
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In early 2006, as part of the discussions over a new National General Collective Agreement (EGSSE), the Federation of Greek Industries (SEV) has proposed that areas and/or industries with high unemployment rates be excluded from the minimum pay standards set in the EGSSE. Both the Greek General Confederation of Labor (GSEE) and the local Labour Centres in some of the areas concerned have expressed their opposition to the employers’ position
In the context of the discussions being held over a new National General Collective Agreement (EGSSE) (to succeed the 2004-5 agreement - GR0409102F), the Federation of Greek Industries (SEV) employers' organisation has suggested excluding from the minimum pay standards set in the EGSSE areas and/or industries affected by high unemployment rates. Both the Greek General Confederation of Labor (GSEE) and the Labour Centres in some of the areas involved have come out in opposition to the employers’ proposals.
SEV proposals
SEV has suggested that employees in certain of the country’s prefectures and/or industries where unemployment rates are high should be excluded from the pay regulations of the new EGSSE. The basic arguments in favour of this point of view are that it will combat unemployment and prevent company relocations. In statements to the media, the SEV chair, Ulysses Kyriacopoulos, has argued: 'we are one of the few countries in the world that has National General Collective Agreements. In almost all countries of the world there are industry-level agreements, there are company-level agreements and there are individual contracts. Therefore it is high time that in our country we re-examine this practice and see whether we can find the lowest common denominator.' Although Mr Kyriacopoulos is not opposed to the minimum wage, he states that it is not by any means adequate to meet people’s basic life needs; therefore its usefulness or reason for existence is de facto thrown into question.
Although Mr Kyriacopoulos is in favour of pay increases in companies or industries which show a profit, he believes that the minimum wage is too high and is opposed to increasing it in specific areas with high unemployment rates (eg Naoussa) - arguing 'in an area where unemployment stands at 20%, is there any sense or reason in our raising the bar any higher'- or in troubled industries and companies (such as the textiles industry), or even in the case of new labour market entrants. In the SEV chair's view: 'I am speaking having in mind mainly the troubled companies and industries with very serious competition problems. We have many, many industries whose future is a real concern and there are many, many thousands of jobs involved. On the other hand, we have 500,000 people who are more or less unemployed; what they want is to find a job and get some insurance stamps. Could we be placing the bar too high?'
GSEE’s reactions
The positions expressed by the chair of SEV sparked opposition from GSEE. At a press conference held on 9 January 2006 on 'the EGSSE for 2006 and policies to combat unemployment', GSEE responded: 'This coordinated strategy by the government [referring to legislative changes being taken forward regarding the employment status of employees in public utilities and services] and SEV is in keeping with the neoliberal outlook, which argues that for the Greek economy and companies to be competitive on the international level and create new jobs, Greece should become a country of cheap labour and an unregulated labour market, so that it will be possible, apart from the abovementioned, to reduce the high unemployment rate which has resulted from labour market rigidities, high wages and the existence of collective agreements.'
For GSEE, SEV’s basic argument, according to which Greece’s high unemployment and low competitiveness are mainly due to high labour costs, is not valid for various reasons. It claims that, although the statistics indicate that wage costs in Greece have been reduced by 25% over the last 20 years, this decrease has not been transformed into a commensurate increase in employment or competitiveness. Therefore Greece’s unfavourable economic position is not connected to high wages but to the absence of a development model based on investments in innovation and technology, GSEE argues.
Most policies/practices providing direct or indirect support and financial assistance to companies aimed at boosting their competitiveness and increasing employment have failed or proved to be insufficient, GSEE maintains, blaming employers for this failure. The policies/practices referred to include: lower pay for overtime exceeding maximum working hours (a move whose ultimate purpose is to boost employment); lower employers’ social insurance contributions for certain categories of employees; job subsidies from the state (eg work experience programmes for unemployed people); lower statutory tax obligations for companies; indirect financial assistance for companies through state intervention; transfer of substantial resources from the stock exchange to companies in order to increase the volume of available capital; and provision for subsidies aimed at job creation in the framework of a recent new development law.
For its part, GSEE proposes the following measures to combat unemployment and boost employment:
- achieving 'complementarities' between active and passive employment policies, and a simultaneous increase in the level and duration of unemployment benefits;
- linking investment subsidies under the recent development law with new job creation and higher rates of investment subsidies, depending on the number of new jobs created. There should also be discussions over targeted interventions in industries such as textiles. Finally, companies that have received subsidies and relocate to another country should be obliged to return the amounts of such subsidies with interest;
- immediate implementation of a 35-hour working week without loss of pay for workers who have reached 59 years of age;
- an obligation for companies to cover at least half the social insurance contributions of employees who are dismissed and who have reached the age of 55, for a period of at least five years, provided that they remain unemployed in areas where unemployment rates are high;
- priority subsidies for the investment plans of companies operating in industries with high (direct or indirect) 'multiplier effects' as concerns employment (eg agriculture, lumber/furniture, metal products, transport and communications, or food/beverages);
- creation of a special item in the state budget, using funds from the redistribution of income at the expense of the well-to-do, for the purpose of subsidizing the recruitment of people who have been unemployed for over two years;
- a maximum untaxed income set at EUR 20,000 for the first two years of employment for newly hired workers under 30 years of age who were previously unemployed for more than two years;
- a tax exemption for all personal expenses for vocational training of unemployed and employed people;
- a change in the statutory operating framework for the Account for Employment and Vocational Training (LAEK) and implementation of the LAEK operational programme as already agreed between GSEE and the employers' organisations; and
- design and implementation of specialized medium- and long-term development schemes via the programme for public investments in areas facing acute unemployment problems.
Reactions from Labour Centres
The statements by the SEV chair Mr Kyriacopoulos sparked reactions from the Labour Centres in those prefectures where unemployment rates are high. Representatives of the Labour Centres in Drama, Kastoria, Florina and Veria (prefectures with extremely high rates of unemployment) expressed strong criticism of the proposals, which they viewed as unacceptable and provocative. In their opinion, the institution of collective agreements has come under fire from SEV and they have no intention of consenting to such a development, because if an exception is made for these four prefectures any new EGSSE will be neither national nor general. Finally, they called on the government to take effective measures regarding the prefectures concerned.
Commentary
The proposals made by SEV through its chair may be seen as another step towards the erosion and deregulation of industrial relations, following a number that have been observed recently, on the basis of arguments that are not always valid. On the one hand, there are many countries where minimum terms and conditions of employment are regulated by collective agreements at the national level. On the other hand, even though the relocation of Greek companies to low labour-cost countries has recently begun to be put forward as the main argument in favour of reducing labour costs, in practice it has been demonstrated that many companies, despite the direct or indirect assistance they have received, and even companies that are economically robust, have relocated abroad. In addition, the wage gap between pay in Greece and pay in neighbouring low-cost countries is not actually very wide. (Christina Karakioulafis, INE-GSEE/ADEDY)