The economic crisis in Greece has hit the country’s workforce hard, with unemployment rising to 21% and wages falling sharply. Data from the most recent report by the Labour Inspectorate show that changes to labour legislation have also led to a dramatic increase in flexible employment contracts. Companies have been allowed to introduce individual contracts that bypass sector-level agreements, resulting in salary reductions and an increase in uninsured labour.
A report issued by the Labour Inspectorate (SEPE) on developments in employment contracts during the first four months of 2012 showed that 46% of new contracts in the private sector were for flexible forms of work such as part-time work and work rotation.
The figures also showed dramatic growth in business-level agreements and the regulation of working conditions through individual employment contracts. These were introduced at the expense of sector-level agreements which had been in force for decades. These changes were accompanied by a reduction in workers’ wages and an increase in uninsured labour.
The Labour Inspectorate, a department of the Ministry of Labour and Social Security (GGKA), has been operating throughout Greece since 1999. Its aim is to monitor trends in employment and enforce labour legislation, to impose sanctions where rules aren’t followed, and to provide information and advice in relation to employment law.
The inspectorate also prepares annual reports and publishes details about private-law employment agreements. It provides information about developments in employment and forms of work, on business-level or sector-level employment agreements, and on issues such as uninsured labour.
According to data provided by the Labour Inspectorate for the first four months of 2012, the recruitment of new employees in the private sector, taking into account all categories of workers, decreased by 8% (14,802 fewer jobs) compared with the same period in 2011. Compared with the corresponding period in 2010, the recruitment of full-time workers decreased by 67,303, a drop of more than 44%.
Of the 156,805 newly recruited employees, 72,217 were hired under flexible employment contracts (54,964 for part-time work and 17,253 on a work rotation basis), and the remaining 84,588 were hired for full-time employment.
There was also a significant increase in the number of full-time employees switching to part-time and work rotation contracts. Some of these changes were made with the agreement of the employee, and sometimes the employer imposed the change without agreement.
More specifically, compared with the first four months of 2011, the conversion of full-time employment contracts to flexible forms of employment increased by:
The total number of conversions in the period was 28,795, up from 20,045 in 2011. In the same period in 2010 the total number of conversions was just 4,588.
Compared with the same period in 2010, the 2012 increase in conversions of full-time contracts to flexible employment forms were:
It should be noted that, under the relevant legislation, it is possible for an employer to introduce work rotation that reduces employment to fewer days per week or month (or a combination the two) for a period of up to nine months in a calendar year without being obliged to provide official statistical data for the change.
In Greece, the enactment of Law 4024/2011 made it possible for Collective Employment Agreements (CEAs) to be drawn up at business level, even in very small enterprises. These agreements take precedence over the sector-level CEAs, even if imposing less favourable terms for employees.
In accordance with the new law, 53 business-level agreements were drawn up in January 2012, of which 44 were made with collective industrial organisations and primarily concerned small enterprises. These collective industrial organisations, also introduced under Law 4024/2011, are temporary workers’ unions composed of three-fifths of employees. The representatives are entitled to enter into a CEA at any company where there is no trade union.
This regulation created a new trend in the field of collective bargaining. Many business-level agreements are now being drawn up by informal associations of workers established under the provisions of the new rules.
Further legislation, Law 4046/2012 implementing Memorandum 2 agreed with the Troika – the International Monetary Fund (IMF), European Union (EU) and European Central Bank (ECB) (GR1203019I) – allowed companies to reduce lower national wages by 22%, effective from 14 February 2012.
Between 14 February 2012 and 14 May 2012, 263 business-level agreements, affecting 13,829 employees, were brought in across Greece. The Labour Inspectorate data show that these new business-level agreements introduced an average wage reduction of 21.35%. In the same period, data for the personnel lists of 16,338 enterprises registered with the Labour Inspectorate revealed a similar reduction of wages, an average drop of 22.9% affecting 64,201 employees.
There was a corresponding rise in the number of uninsured workers. Random inspections conducted by the Labour Inspectorate of 7,474 companies employing a total of 20,772 workers discovered 7,549 uninsured workers (36.3%), compared to the uninsured labour rate of 28.9% in 2011.
According to workers’ representatives and the General Confederation of Greek Workers (GSEE), these developments have been the direct result of the anti-labour legislation passed to implement the Memorandum 2 commitments.
In their view this legislation clearly favoured the significant expansion of personal work contracts, the overturn of the collective agreements’ hierarchy at the expense of sectoral-based agreements, and the rapid increase in contracts offering fewer working hours (work rotation) and other flexible forms of work. The result, says the GSEE, is a serious general deterioration of the position of workers within the labour market and weakening of the trade unions.
Unions may lose a significant sphere of influence as a result of the abolition of obligatory collective agreements, now that such agreements can be made at company level by businesses that are not members of the employers’ associations.
Since negotiations to stabilise the Greek economy began in 2010, the country’s trade unions have strongly resisted the deregulation of the labour market and organised a series of general strikes and demonstrations. The GSEE appealed to the International Labour Organization (ILO), protesting that these policy measures were not only unfair and contrary to the ILO’s principles, but also used wage reduction – almost exclusively – as the tool for improving competitiveness, without at the same time creating a minimum social safety net to prevent people falling into poverty.
The employers’ associations representing small and medium enterprises, the General Confederation of Greek Small Businesses and Trades (GSEVEE) and the National Confederation of Greek Traders (ΕSΕΕ), are not happy either. They say the reorganisation of the labour market, while reducing labour costs, does not really constitute an effective answer to the crisis. Their view is that these measures deepen the recession and reduce consumption and product demand.
Meanwhile, the Hellenic Federation of Enterprises (SEV), although in principle supporting the general decrease of the labour costs and the increase of work flexibility, agrees that this is not enough by itself to improve competitiveness.
Greece’s new economic landscape, shaped by the financial crisis and deep recession, has brought not only high unemployment rates of around 21%, but also triggered extremely negative changes in labour relations and a significant reduction in workers’ wages.
These changes have been brought about by the drawing up of business-level collective employment agreements which are less favourable than the existing sector-level CEAs. Other contributing factors include individual employment contracts and the conversion of contracts from full-time to part-time or work rotation contracts.
The aim of the new measures under the provisions of Memorandum 2 was the recovery of Greece’s economic competitiveness, a target that is underlined in all the recent legislation and memoranda. In practice, however, they have achieved the opposite and the recession has deepened.
Penny Georgiadou, Labour Institute of Greek General Confederation of Labour (INE/GSEE)