Minimum wage not keeping pace with earnings

The Institute of Labour of the Greek General Confederation of Labour and the Confederation of Public Servants (INE-GSEE/ADEDY) has carried out a survey on wage levels in Greece and in the European Union. The survey will form the basis for GSEE’s demands with a view to signing the new National General Collective Labour Agreement (EGSSE). Among its conclusions, the study calls for a 5.4% annual increase in wages.

In September 2007, the Institute of Labour (Ινστιτούτο Εργασίας, ΙΝΕ) of the Greek General Confederation of Labour (Γενική Συνομοσπονδία Εργατών Ελλάδας, GSEE) and the Confederation of Public Servants (Ανώτατη Διοίκηση Ενώσεων Δημοσίων Υπαλλήλων, ADEDY) published a report entitled Wages in Greece and in the European Union (in Greek, 1.97Mb PDF). The report is based on a survey of data from the European Commission, Eurostat, the Organisation for Economic Cooperation and Development (OECD) and the National Statistical Service of Greece (Εθνική Στατιστική Υπηρεσία της Ελλάδος, ESYE). It also incorporates data from the National General Collective Agreement (Εθνική Γενική Συλλογική Σύμβαση Εργασίας, EGSSE) from various years.

Share of labour

In the period 1995–2004, labour productivity increased overall by about 35%. As real wage increases lagged behind labour productivity during this period, from 1995 to 2004 the proportion of wages in respect of gross domestic product (GDP) decreased by seven percentage points – from 51% to 44% (Figure 1). Between 2005 and 2007, labour productivity has slowed down from the average levels recorded during the period 1996–2003 to the current level of 2.3%; it is expected to remain at this level in 2007–2008. Thus, there is less scope for real wages to increase without affecting profit margins.

Share of labour in the private sector, as a proportion of GDP, 1978–2005 (%)

Share of labour in the private sector, as a proportion of GDP, 1978–2005 (%)

Source: OECD Economic Outlook Database

Income levels

Overall, 55% of employees have a net monthly income of €501–€1,000; 22.3% earn a net monthly amount of €1,001–€1,250; 11.6% are paid €1,251–€1,500 a month; and 5.2% of employees have a net monthly income of €1,501 or higher. A similar proportion of employees (5.1%) receive a net monthly income of €251–€500. In all, 0.8% of workers earn a net amount of less than €250 each month (see table).

Full-time and part-time employment

In general, part-time employment is not highly paid. As a result, this type of employment generates a low net monthly income, with 64.7% of part-time workers receiving a net monthly income of less than €500, most of whom – eight out of every 10 – are women. Part-time workers constitute 53.7% of employees in this pay category. Mainly full-time employees earn net monthly incomes of over €501, whereas part-time employees only represent 1.8% of this wage category.

Permanent and temporary employment

Of all workers employed on a temporary basis, 21.2% receive a net monthly income of €251–€500, and 36.4% are paid €501–€750 a month. Only 11.2% of temporary employees have a net monthly income of over €1,000. On the other hand, 53.9% of people employed on a permanent basis earn a net monthly amount of €501–€1,000, and 42.6% earn €1,001 or more each month.

Public versus private sector

In the private sector, 69.4% of employees receive a net monthly income of €501–€1,000. Overall, the majority of people earning such incomes – eight out of 10 workers – work in the private sector. In the broader public sector, only 29.5% of workers earn a net amount of €501–€1,000, while the majority of workers (67.4%) earn €1,001 or more. One in three women in the broader public sector earn more than €1,250 a month, whereas the corresponding ratio in the private sector is one in five women.

Employment in the broader public sector is defined as employment in the following areas: public services, state-law entities, public organisations, municipalities and communities or municipal enterprises, public utilities, state banks and state-controlled enterprises.

Gender differences

Three out of every four employees whose net monthly income is less than €500 are women. This proportion falls to one in every three employees in relation to the €751–€1,500 pay category, whereas in the over €1,500 category the relative proportion is one woman in five employees. The income level of men and women is about equal only in the category of workers earning a net wage of €501–€750 a month.

Net monthly pay from main job, 2006 (€)
This table shows the net monthly pay received by men and women on various types of employment contracts in 2006; it also distinguishes between income received in both the private and broader public sectors.
Total employment Employment Employees working in:
Full-time Part-time Permanent Temporary Broader public sector Private sector
To 250 20,165 (0.8%) 6,227 (0.3%) 13,938 (11.9%) 9,310 (0.4%) 10,855 (4.2%) 5,712 (0.7%) 14,453 (0.9%)
251–500 121,245 (5.1%) 59,283 (2.6%) 61,962 (52.8%) 66,427 (3.1%) 54,819 (21.2%) 20,727 (2.4%) 100,518 (6.6%)
501–750 573,293 (24.0%) 546,274 (24.0%) 27,019 (23.0%) 479,192 (22.5%) 94,100 (36.4%) 63,162 (7.3%) 510,130 (33.5%)
751–1,000 738,230 (31.0%) 728,208 (32.1%) 10,022 (8.5%) 668,372 (31.4%) 69,858 (27.0%) 191,625 (22.2%) 546,604 (35.9%)
1,001–1,250 533,501 (22.3%) 531,902 (23.4%) 1,599 (1.4%) 513,886 (24.1%) 19,616 (7.6%) 317,812 (36.8%) 215,689 (14.1%)
1,251–1,500 278,201 (11.6%) 276,657 (12.1%) 1,544 (1.3%) 273,667 (12.8%) 4,534 (1.7%) 187,328 (21.6%) 90,873 (6.0%)
1,501–1,750 63,181 (2.6%) 62,970 (2.8%) 211 (0.2%) 60,801 (2.9%) 2,379 (0.9%) 42,529 (4.9%) 20,652 (1.3%)
1,751–2,000 30,346 (1.3%) 29,395 (1.3%) 951 (0.8%) 28,953 (1.4%) 1,393 (0.5%) 18,722 (2.1%) 11,624 (0.8%)
2,001 or more 30,826 (1.3%) 30,678 (1.4%) 148 (0.1%) 29,556 (1.4%) 1,271 (0.5%) 16,974 (2.0%) 13,853 (0.9%)
Answers 2,388,988 2,271,594 117,394 2,130,164 258,825 864,591 1,524,396
No answer 445,157 (15.7%) 418,813 26,344 396,384 48,772 140,282 304,875
Number of employees 2,834,145 2,690,407 143,738 2,526,548 307,597 1,004,873 1,829,271
 
Income of men (€) Total employment Full-time Part-time Permanent Temporary Broader public sector Private sector
To 250 5,950 (0.4%) 3,488 2,462 2,122 3,827 1,857 4,093
251–500 30,529 (2.2%) 17,183 13,346 15,265 15,264 4,492 26,037
501–750 260,339 (18.7%) 252,213 8,126 219,357 40,982 25,307 235,031
751–1,000 466,953 (33.5%) 463,285 3,668 422,414 44,539 103,756 363,197
1,001–1,250 346,466 (24.8%) 345,715 751 333,218 13,248 183,526 162,940
1,251–1,500 188,234 (13.5%) 187,237 997 185,171 3,062 117,508 70,725
1,501–1,750 49,403 (3.6%) 49,192 211 47,237 2,167 32,084 17,320
1,751–2,000 22,445 (1.6%) 22,101 344 21,864 581 13,497 8,948
2,001 or more 24,170 (1.7%) 24,170 - 22,900 1,271 12,563 11,608
Answers 1,394,489 1,364,584 29,905 1,269,548 124,941 494,590 899,899
No answer 266,515 254,701 11,814 239,881 26,634 80,460 186,055
Number of employees 1,661,004 1,619,285 41,719 1,509,429 151,575 575,050 1,085,954
 
Income of women Total employment Full-time Part-time Permanent Temporary Broader public sector Private sector
To 250 14,215 (1.4%) 2,739 11,476 7,187 7,027 3,855 10,360
251–500 90,717 (9.1%) 42,101 48,616 51,162 39,555 16,235 74,482
501–750 312,954 (31.5%) 294,061 18,893 259,836 53,118 37,855 275,099
751–1,000 271,277 (27.3%) 264,923 6,354 245,958 25,319 87,869 183,408
1,001–1,250 187,035 (18.8%) 186,187 848 180,668 6,368 134,287 52,749
1,251–1,500 89,967 (9.0%) 89,420 547 88,496 1,471 69,820 20,148
1,501–1,750 13,778 (1.4%) 13,778 - 13,565 213 10,445 3,332
1,751–2,000 7,901 (0.8%) 7,294 607 7,089 812 5,225 2,676
2,001 or more 6,656 (0.7%) 6,508 148 6,656 - 4,411 2,245
Answers 994,500 907,011 87,489 860,617 133,883 370,002 624,499
No answer 178,642 164,112 14,530 156,503 22,139 59,822 118,820
Number of employees 1,173,142 1,071,123 102,019 1,017,120 156,022 429,824 743,319

Source: Data from the National Statistical Service of Greece (ESYE), Labour Force Survey, second quarter, 2006

Comparison of minimum and average wages

From 1990 to 2007, the average net wage increased more rapidly than the minimum net wage (Figure 2). However, the ratio between the two rates declined from around 55% in 1994 to around 45% in the six years between 2002 and 2007. Thus, the minimum wage was €270 in 1994, representing 55% of the average wage (€488). By 2002, the average wage had reached €944, while the minimum wage was only 45% of that amount (€430).

Average and minimum wage levels, 1990–2007 (€)

Average and minimum wage levels, 1990–2007 (€)

Source: INE-GSEE/ADEDY, 2007

Trends in real minimum wages

Whereas a gradual increase in the real value of minimum wages has been recorded from about the mid 1990s, there has not been a return to 1984 levels (Figure 3). For this to occur, in 2008 real wages should increase by about 4%, which in nominal terms translates to 7.1% – assuming inflation forecasts are taken into account.

Figure 3 shows the evolution of real minimum wages – adjusted for inflation – during the period 1984–2007, taking into account annual nominal wages for each year (on a 12-month basis) and deflating to average levels with the consumer price index, according to provisions of the 2007 Stability Pact for inflation.

Longitudinal trends in real minimum wages, 1994–2007

Longitudinal trends in real minimum wages, 1994–2007

Note: Reference year 1994=100.

Source: Calculations based on National General Collective Labour Agreements (EGSSEs) and average consumer price index

Conclusions

The INE study concludes by noting the following points.

  • In social cohesion terms, wages carry much more importance than any other benefit. Therefore, in 2007–2008, in order to maintain the purchasing value of wage earners’ average nominal pay (not adjusted for inflation), their pay should increase by 3.1% in 2007 and 3.1% in 2008. Moreover, in order to avoid the redistribution of income at the expense of labour, nominal wages should also increase by a further 2.3%, representing a total increment of 5.4% annually.
  • Defining the minimum wage is a necessary tool, which acts as a minimum safety net to prevent an increase in the number of poor workers. Therefore, in 2007–2008, real minimum wages must be increased substantially if there is to be a gradual convergence with the respective wages of other former EU15 Member States.

Source

INE-GSEE/ADEDY, The Greek economy and employment 2007, Annual Report, Athens 2007, available (in Greek) at: http://www.inegsee.gr/ekthesi2007/ekthesi2007.htm

Sofia Lampousaki, INE-GSEE/ADEDY

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