Government announces employment protection measures

With the unemployment rate in Greece rising to over 9% during the first quarter of 2009, up from 7.2% in 2008, and based on estimates anticipating a further increase in 2009, the government has announced measures to protect employment. The funds for the programme, which has a two-year time horizon, amount to €3.2 billion and derive from both national and European Union resources. However, opposition parties and trade unions have criticised the measures.

Measures to strengthen employment

The Greek Minister of Employment and Social Protection (Υπουργείο Απασχόλησης και Κοινωνικής Προστασίας, YPAKP), Fani Petralia, has announced a series of employment protection measures. The initiative was made in light of the escalating national unemployment rate, which stood at 9% in the first quarter of 2009, compared with 7.8% in 2008, and is expected to increase further during 2009.

The new provisions will target 1,333,000 workers and unemployed persons, offering them training or retraining courses, or participation in programmes subsidising employment and supporting socially vulnerable groups. The funds for the programme, which is to run over two years, will amount to €3.2 billion and derive from both national and EU resources.

More specifically, the programme will include initiatives such as the following.

  • Top-up payments for workers on reduced working time will be available. This provision concerns small and medium-sized enterprises (SMEs) that have already introduced shorter working hours for their employees. It will have a budget of €50 million and cover 8,000 workers, who will receive the earnings they lose due to reduced working time schedules.
  • Aid will be channelled to vulnerable sectors of economic activity. This mainly refers to the financial support granted to persons working in the construction and tourism sectors, where the most significant consequences of the global economic crisis are anticipated. Regarding construction, the Workers’ Housing Organisation (Οργανισμός Εργατικής Κατοικίας, OEK) will auction 2,692 residences intended for employees. In relation to tourism, training programmes will be held for 3,500 employees and recruitment will be encouraged by converting the seasonal unemployment benefit into an ‘employment benefit’ to be provided to hotels keeping the same number of personnel as last year during April and May. It is estimated that this initiative concerns 50,000 jobs and will cost €50 million.
  • €250 million will be earmarked to SMEs for intra-corporate training; it is expected that this will benefit 75,000 workers.
  • The creation of new jobs in both the private and public sectors will be subsidised and help 60,000 unemployed people by converting unemployment benefit into employment benefit. Companies will receive a subsidy equal to the unemployment benefit for each person whom they hire, while the worker will receive a salary and will maintain their insurance cover. This initiative will amount to €309 million.
  • Programmes for hiring young people who have left school early will total €160 million. In addition, companies will be subsidised for hiring young unemployed persons and provisions will be made to support young scientists aged up to 34 years; the latter will be given financial support of €15,000 per person to set up their own enterprise.

Reactions of social partners

The Greek General Confederation of Labour (Γενική Συνομοσπονδία Εργατών Ελλάδας, GSEE) has opposed the measures. In a statement, it declared:

The announcements made by the government in order to deal with unemployment repeat in essence intentions declared in the past and act as ‘aspirin’ against soaring unemployment and employers’ anti-labour attack. Putting forward the international crisis as a pretext, employers infringe blatantly on labour law and workers’ rights. In an arbitrary manner, they establish a four-day working pattern (flexible forms of employment), make redundancies and dismiss personnel without being controlled by the Labour Inspection or the Ministry of Employment.

GSEE warns that conflict between government and trade unions is inevitable.

On the employers’ side, certain bodies mainly from the wholesale and retail trade sector consider that the measures are moving in the right direction. They have asked that the support to micro and small enterprises be continued so that they can meet their financial obligations.

Political opposition parties have criticised the employment protection measures.

Commentary

It seems that the provisions announced aim exclusively to protect employment rather than reduce rapidly rising unemployment. Companies are being subsidised to keep their personnel but few initiatives support enterprises in actually hiring staff. Although recruitment programmes exist, these mainly concern temporary jobs and almost exclusively the public sector. Moreover, the risk arises that the various training programmes targeting persons working a four-day week due to the economic crisis will encourage employers to put pressure on workers to accept flexible forms of employment on a permanent basis by arguing that their income will be supplemented by state subsidies. Criticisms have been made that, using the economic crisis as a pretext, the government is favouring companies more than citizens since enterprises are already taxed at a low rate (15%), thus passing on the cost of the financial crisis to society as a whole.

Stathis Tikos, Labour Institute of Greek General Confederation of Labour (INE/GSEE)

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