Greece: latest working life developments Q2 2018
An increase in the minimum wage, the return of fundamental collective bargaining regulations and a roadmap to combat undeclared and precarious employment are the main topics of interest in this article. This country update reports on the latest developments in working life in Greece in the second quarter of 2018.
New laws set out labour market priorities
In June, the Greek Parliament passed Ministry of Finance Law 4549/2018, also known as the Medium-Term Financial Strategy Framework 2019–2022. It includes government plans and predictions for the course of the economy, with three main priorities for the labour market: to increase the minimum wage, to restore collective bargaining and to combat undeclared and precarious employment. A Ministry of Labour law implementing some of these objectives was voted in at the end of July: Law 4554/2018 includes regulations to tackle undeclared work.
Minimum wage increase announced
In 2012, in a move intended to make Greece more globally competitive, the minimum wage was reduced by 22%. However, the reduction had a dramatic impact on income distribution, as the proportion of low-wage earners rose and the issue of ‘working poverty’ increased. According to the Ministry of Labour announcements in July, the minimum wage will be increased under the existing legal framework. It will follow the model of Portugal, where four increases of 5% have been made in the last four years. A study will be carried out to examine the impact of this increase on productivity, unemployment, competitiveness and income distribution, and this will determine the rate of increase. The study will be the subject of consultation with the social partners and the State will take the final decision.
Plan to reinstate collective bargaining regulations
Another political priority for 2018 is to reinstate two fundamental principles of collective bargaining: the scalability principle and the favourability principle. According to the scalability principle, the power of a sectoral Collective Employment Agreement may, by ministerial decision, be extended to the whole sector, whether the employer is a member of the signatory employer’s organisation or not. The favourability principle is based on the general legal principle of protecting the weaker party; where an individual contract of employment exists alongside more collective labour agreements, the most favourable arrangement for the worker applies.
These principles have traditionally been in force since 1990, under Law 1876, but were postponed in 2012 as part of measures to tackle the economic crisis. The government argues that reinstating them will help promote social dialogue by giving workers and employers incentives to participate in collective bargaining. At the same time, healthy competition will be supported for the economy as a whole, contributing to the reduction of income inequalities and achieving a fairer income distribution.
Tackling undeclared and precarious work
In line with the Explanatory Memorandum of Law 4549/2018, the government has placed the fight against the phenomenon of undeclared and precarious work at the centre of its policies, with the ‘Roadmap for the fight against undeclared work’ being an essential tool.1 The Roadmap was drawn up in the context of a European Commission-funded project on undeclared work in Greece, which was set up and implemented by the International Labour Organisation in close collaboration with the Greek government and the main national-level social partners. 2
In summer 2018, the Ministry of Labour aims to restart a plan implemented the previous summer, with labour market inspections being carried out collectively by four inspection bodies: the Labour Inspectorate (SEPE), the Economic Crimes Enforcement Agency (SDOE), the Financial Guard, and the Single Social Security Entity (EFKA). Another key objective is the transition from the use of punitive policies to a new framework combining enforcement measures with voluntary cooperation measures. A draft law is under preparation which will reduce fines imposed on an employer who employs an undeclared worker if they proceed to hire that worker lawfully.
- ILO: Supporting the transition from informal to formal economy and reducing undeclared work in Greece: identifying drivers and ensuring effective compliance
1 SEV-Hellenic Federation of Enterprises (2017), Four requirements to rejoin the world economy .
2 Eurofound (2017), Greece: Tripartite strategy for combatting undeclared work , 24 January.