1998 Annual Review for Greece

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This record reviews 1998's main developments in industrial relations in Greece

Introduction

The process of nominal convergence of the Greek economy with the EU continued during 1998, as inflation fell to 4.5%, compared with 5.2% in 1997. This was the lowest level in 25 years, despite a devaluation of the drachma by about 15% in early 1998. Significant progress was also made in relation to the public deficit, which stood at 2.7% of GDP, compared with 4% in 1997 and 16% in 1990. Following these developments, and given the continued improvement of nominal convergence criteria, Greece will have a significantly better chance of entering EMU on 1 January 2001. In addition, considerable progress was made with regard to production, as GDP rose by 3% in 1998, and a comparable increase is expected for 1999.

However, unemployment is showing a long-term upward trend, with the rate standing at 10.1% in 1998. Although this represents a slight fall from the 1997 figure of 10.3%, this improvement cannot be attributed to a rise in employment, but to a reduction in the size of the labour force, and specifically to a rise in the number of unemployed people who have despaired of ever finding work. Another problem which has taken on worrying dimensions is that of long-term unemployment, which accounts for about 50% of total unemployment. It should be noted that unemployment has remained high despite the spectacular fall in real unit labour costs in the past 12 years. The average wage in Greece today has the same purchasing power it had at the beginning of the 1980s.

Maintenance of workers' real incomes at levels which do not correspond to patterns of consumption in Greece today, along with continuing high levels of unemployment and efforts on the part of the government to promote labour market flexibility, led to a further increase in tensions in industrial relations in 1998.

The Pan-Hellenic Socialist Movement (Panelino Socialistiko Kinima, PASOK) formed the government in 1998. The next general election is due in 2000.

Industrial relations in 1998 were dominated by three key issues: privatisation; the imposition of flexibility in the labour market and transformation of the institutional framework of labour relations, either through dialogue or unilateral government decision; and trade union calls for an economic policy to maintain the purchasing power of workers' incomes at stable levels.

Key trends in collective bargaining and industrial action

As a rule, collective bargaining in Greece has remained centralised. Despite predictions to the contrary, the new private sector National General Collective Agreement signed on 18 May 1998, had a two-year duration (GR9805171N). The deal provided for a 2.7% pay increase for the first six months of 1998, followed by a 2% increase for the second six months. In 1999, there is a 1.4% increase in the first half of the year and another 1.4% in the second half (based on a projected inflation rate of 2%). If inflation exceeds 3.5% in 1998, a corrective sum of up to 1% is paid on 1 January 1999, but if it exceeds 4.5%, the corrective sum will be paid on 31 December 1999. If inflation in 1999 exceeds 2%, the total extra amount will be paid from 1 January 2000. The agreement also: increases paid annual leave entitlement; provides medical insurance to unemployed people under 29 years of age; and promotes equal treatment of workers who, although not bound by a dependent employment relationship, provide labour under conditions of dependence and demonstrate a need for protection similar to that of wage-earners in dependent employment.

The three key issues listed above - privatisation, flexibility/transformation of industrial relations and attempts to maintain purchasing power - were the source of considerable controversy and industrial action. April saw the the biggest one-day general strike of recent years, in which the trade unions' basic framework of demands included all these issues, with regard to both the private and to public sectors (GR9804169N). A further 24-hour general strike was held in December (GR9812113N).

The privatisation process began with the government announcement in May of the sale of Ionian Bank (GR9805170F). The unions regarded this decision, which provoked strong strike action, as being the first stage in the implementation of a programme of structural adaptation in the framework of the EU (GR9805172N). Over the year, unions in many transport sectors, such as the railways (GR9812115N) and coastal shipping (GR9804168N), held strikes in protest against the stepping-up of the liberalisation and privatisation process.

The government views promotion of flexibility in the labour market and changes to the institutional framework of labour relations as necessary measures to boost market confidence in the Greek economy and to achieve Greek membership on an equal footing in EMU. In this framework, 1998 began in a climate of sharp confrontation caused principally by the government's efforts to reform industrial relations in public utilities and organisations, without any prior collective bargaining. Most of the trade unions came out against this attempted change, their basic argument being that the government was trying to alter the provisions safeguarding democracy in the workplace and free collective bargaining as a means of resolving collective disputes (GR9801150N). Passage of the relevant law in February 1998, the decision during the same month to implement the relevant measures immediately (GR9802155F) and parliamentary approval in April 1998 of a law to regulate labour relations in Olympic Airways (GR9804166F), sparked even greater opposition from the unions.

Tension reached a climax in August 1998, when, despite the opposition of employers, unions and political parties, the much-discussed bill on "regulation of labour relations and other provisions" was passed. This legislation attempts to reform industrial relations both in the public and in the private sector (GR9808187N) and covers key issues such as working time, "atypical" forms of employment and the distinction between dependent and independent labour (GR9807181F). Apart from the different positions taken by the social partners with regard to the detailed provisions of the bill, both separately (GR9808185F) and in the framework of discussion of the bill in the Economic and Social Committee, the main point on which they differed is how much flexibility the law promotes. The unions believe that it increases labour flexibility with negative ramifications for the content of employment and industrial relations. Employers' organisations believe that the law contains no effective measures to achieve increased flexibility which will help increase employment and the competitiveness of the Greek economy, and in many areas they have insistently demanded measures for greater flexibility (GR9803162N).

A final example of this broad climate of social unrest in 1998 was a five-day strike called by Albanian and Romanian agricultural workers in the Volos area in May 1998 (GR9806176N). Their basic demands were for better pay and conditions of employment.

Despite the climate of tension predominant during 1998, collective bargaining continued to grow in importance. During the 1990s, free collective bargaining has been strengthened by Law 1876/1990, which removed state interventionism from bargaining and promoted dialogue and consensus between employers' and employees' organisations. The law supports and encourages the parties (employers' organisations, individual employers and trade unions) to develop dialogue and procedural consensus or agreements to settle their collective disputes. The Mediation and Arbitration Service (OMED) plays a key role in this process and its 1998 results revealed a continuing decrease in the number of arbitration decisions reached though its services and an increase in the number of collective agreements (GR9812102F). This indicates that collective bargaining in Greece is growing in maturity.

Industrial relations, employment creation and work organisation

The fact that unemployment remained at high levels remained a concern for both the government and the social partners and frequently sparked dialogue about the need to find solutions. The National Action Plan (NAP) for employment presented by the government in March set out goals for employment creation and lower unemployment in the years to come. However, this Plan was criticised by the social partners for focusing too much on employment policies which had already been implemented. Moreover, it also related to certain crucial items under dispute, such as reduction of non-wage labour costs, "local employment agreements" (GR9901107F) and management of working time, on which there is disagreement between the social partners.

The employment policy currently being implemented has led to a further increase in social tensions beyond the main social partner organisations, creating pockets of reaction outside the trade union movement. One characteristic example was the establishment, organisation and mobilisation of Greece's first union of unemployed people (GR9802154F). This organisation, based in Euboea, is a pioneering initiative which may give a greater impetus to the creation of an unemployed movement in Greece and in the formation of demands and specific actions to combat unemployment. This development will certainly have implications in 1999.

The introduction of a 35-hour working week without loss of pay is still one of the unions' basic demands, though, in comparison with 1997, the social partners did not devote as much attention to the issue in 1998. However, it is worth noting that Greece's first company-level agreement on implementing the 35-hour week was signed in September 1998 at Hochtief (GR9810197N).

Developments in representation and role of the social partners

Unusually by Greek standards, 1998 saw a series of trade union initiatives in relation to a number of issues in which unions had arguably not shown a significant interest in the past. These included a range of measures proposed by the Greek General Confederation of Labour (GSEE) to tackle the problem of workplace accidents (GR9801149F). Also in this area, a seminar was organised by the Confederation of Public Servants (ADEDY) on the subject of workers' health and safety in the public sector (GR9810194F), and a study conducted by the Athens Labour Centre on the working and living conditions of workers in Athens (GR9810196F).

Other matters newly considered by unions included: women's representation and participation on union bodies (GR9802157N); union independence from state intervention (GR9803160F); exploitation of the property of social insurance funds (GR9803163N); and the operation of Attica's Metro railways (GR9812114N).

With respect to worker representation at the national and international levels, despite Greece's ratification in 1997 of the relevant Community legislation on the creation and operation of European Works Councils (EWC s), in practice both workers and employers have arguably underestimated the value of the EWCs. As a result of inflexibility in practice, the impact of the EWC's on Greece's system of industrial relations has been extremely limited or even non-existent (TN9807201S).

The lack of impact of EWCs in practice is arguably largely due to a more general perceived failure of participative bodies in Greece. For example, worker participation on companies' boards of directors is non-existent in the private sector and is restricted exclusively to public corporations and utilities (TN9809201S).

Industrial relations and the impact of EMU

Economic policy is a constant point of friction between the social partners. This was made clear in the framework of devaluation of the drachma in January 1998 and also in the framework of Greece's impending membership of EMU.

On the issue of devaluation, both the government and the employers feel that flexibilisation of labour relations and social security are measures that will support the development of the drachma in the right direction. The unions, by contrast, believe that devaluation should be accompanied by a mix of economic and social policy that will shield the national currency by developing the economy (GR9803161F). In the opinion of GSEE, the new two-year National General Collective Agreement demonstrated the unions' support for the policy of stabilisation of the economy, despite its negative effects for wage earners. However, GSEE believes that economic policy should in future make efforts to redistribute income to the benefit of labour, and that there should be a reduction in working time without loss of pay (GR9810195F). This view was reinforced by a study conducted by GSEE's Institute of Labour (INE) into the impact on wages and unemployment of Greek EMU membership. This study was the first attempt in Greece to describe the evolution of wages and unemployment within EMU's macroeconomic stability framework. One of the causes of the one-day general strike in December 1998 was opposition to the government's economic policy.

Conclusions and outlook

As a whole, 1998 was characterised by an increase in social tensions and a sharpening of the differences between the social partners on a number of key industrial relations issues. In the framework of prospective Greek membership in EMU, the government began to implement a series of measures aimed at greater flexibility in the labour market. An important change which was evident from the start of 1998 - and which observers saw as a negative development for industrial relations in Greece - was that most of the changes were imposed by legislation, often without prior dialogue, a practice described by trade unionists and other parties as "authoritarian". Worries have also been expressed that this policy may come to be the rule in future regulation of labour relations. There are also fears that developments in 1998 mark the beginning of a sweeping move by the government aimed at mass privatisations and a radical change in industrial relations in the direction of flexibility. However, it is becoming clear that a new round of talks is to begin in 1999 on reduction of working time without loss of pay, and that the government especially, followed by the employers' organisations, will come to them in a more positive spirit. Much will depend, too, on the manner in which the measures announced by the government are implemented, as well as on the position taken by the unions. (Eva Soumeli, INE/GSEE)