Government issues draft employment policy law

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In December 2003, the Greek Ministry of Labour and Social Security presented a draft law on 'measures to address unemployment and other provisions'. The proposed legislation provides incentives for the recruitment of unemployed people and to boost employment among women, young people and older workers, as well as regulating a number of paid leave matters.

On 4 December 2003, the Minister of Labour and Social Security presented to the competent bodies and the social partners a new draft law on 'measures to address unemployment and other provisions'.

Content of the draft law

According to the text of the draft law and the accompanying explanatory report, it seek to introduces a series of incentives to enable enterprises to hire unemployed people. The main points relating to employment are set out below.

Recruitment incentives

Article 1 of the draft law, on 'active employment policies and measures for the subsidised unemployed' offers employers an incentive to hire unemployed people registered with the Labour Force Employment Organisation (OAED). The higher the unemployment benefit received by the person concerned, the fewer costs the employer has to bear. Unemployed people may thus be hired with subsidies in full-time or part-time jobs (respecting the terms and provisions of Law 1545/1985 on a 'national protection system for unemployment and other provisions') for as long as their unemployment benefits last. While working, they are paid in accordance with the provisions applicable to the employer’s other staff, depending on their skills and working hours. In no case may the workers’ pay be lower than the unemployment benefits to which they are entitled.

According to the draft law, the OAED will pays a portion of the workers' wages up to the amount of the unemployment benefit to which they are entitled. The difference is borne by the employer, which is also responsible for their social insurance coverage. A precondition for implementing the scheme is that, while the employment relationship with the recruited unemployed person and the subsidy are in effect, the employer may not carry out dismissals, unless there is good reason to do so, and must bear its proportion of the cost of the worker's social insurance contributions. As mentioned, the higher the unemployment benefit, the lower the costs to the employer of hiring an unemployed person. Thus the previously unemployed workers’ jobs will be subsidised, enabling them to obtain an income higher than the amount of their employment benefits and to retain coverage under the social security scheme.

Training measures

Article 1 of the proposed legislation offers unemployed people two additional training provisions:

• they will be given priority in participation in training programmes run by the Vocational Training Association of OAED and in the programmes of the Vocational Training Centres (KEKs); and

• they will not lose their entitlement to unemployment benefits if they take part in training programmes during the period they are entitled to receive such benefits. Instead, payment of the benefit is suspended during the time they participate in such programmes, and continues after training has ended for as long as they are entitled to it.

Paragraph 8 of Article 1 lays down special provisions for workers made redundant by ailing companies that have undergone restructuring or closed plants in an attempt to restore them to health. Recent cases include Softex SA (GR0306101N and GR0304101N), TVX Hellas (GR0312104F) and Agno SA, Specifically, workers in such companies whose contract of employment is terminated or who voluntarily retire may participate in special programmes offering skills upgrades, training and work experience. While taking part in the programmes they retain their social insurance with the competent primary and secondary insurance carriers in the sectors in which they were insured when they were employed.

Furthermore, Article 3 of the draft law stipulates that KEKs, provided that they have been set up and are operating legally, may also operate as 'private employment advisory bodies'.

Measures for specific groups

Article 2 of the draft introduces incentives to boost employment among women, young people and older workers. In particular, a scheme will promote the employment of women with at least two children, with the state bearing the cost of the employers’ social insurance contributions. Moreover, employers who hire men or women workers under fixed-term contracts to replace workers absent from their jobs due to maternity or childcare leave will receive subsidies for the term of the leave equal to the employers' social insurance contributions for the recruits.

An employer's subsidy is to be introduced for the recruitment of young unemployed people under the age of 25 or long-term unemployed people over the age of 55, equal to 50% of the employer’s social insurance contribution. Both these groups experience particular difficulties in entering or re-entering the labour market. The incentives will reduce indirect, non-wage costs, with the aim of making employers more likely to hire members of these groups. These provisions apply only if the employer has not, in the six months preceding the recruitment, dismissed staff from the company without good reason. Employers will also be able to offset their tax obligations with the amount of employer's social insurance contributions paid for such workers.

Article 8 introduces an award for companies that employ and promote the employment of people with disabilities, ensuring them of productive performance and advancement.

Leave

Finally, outside the field of labour market policy and unemployment measures, the draft law includes a number of provisions on leave for workers.

Article 12 seeks to enact a provision of the social partners' National General Collective Agreement for 2002-3 (GR0204109F) (submitted to the Ministry of Labour and Social Security in April 2002). It thus provides two days’ paid leave for employees in the event of the death of a spouse, child, parent or sibling.

Article 13 regulates matters related to annual paid leave. Specifically, it replaces Article 2 of Law 539/1945 on 'grant of annual paid leave to employed earners' and adapts existing legislation to Article 6 of Law 3144/2003 on 'social dialogue for the promotion of employment - social protection and other provisions' (GR0304102F). It stipulates that employed wage earners are entitled, in each working year they are employed in an enterprise, to 24 working days of paid leave or, if the enterprise implements a five-day working week system, to 20 days of leave. This leave increases by one working day for every working year after the first, up to 26 working days, or to 22 working days for those employed under a five-day working week system. In the legislative provisions regulating the granting of ordinary annual paid leave, the term 'calendar year' will be replaced by the more correct term 'working year'- ie a year beginning from the date the employee was engaged and ending 12 months from that date.

Commentary

In this draft law, the Greek government is taking forward changes aimed at boosting employment and combating unemployment. According to evaluations by government officials, the draft law seeks to achieve an important breakthrough in this area as it:

• provides the possibility of subsidising jobs for unemployed people and of offsetting their unemployment benefit against part of their total pay in the job;

• introduces incentives to boost employment among women;

• introduces incentives to recruit unemployed people up to 25 years of age and long-term unemployed people, who experience difficulties in entering the labour market;

• stipulates in all the above cases that employers that wish to hire personnel via these incentives must not cut back the staff they already employ; and

• introduces principles and rules on a responsible vocational training consultation process.

In evaluating the draft law, both the trade unions and the employers' organisations have been cautious, in the initial stage, about taking a stand. (Anda Stamati, INE/GSEE-ADEDY)