New law facilitates dismissals and cuts labour costs

In a further response to the crisis which left Greece on the brink of bankruptcy in early 2010, the government has passed a new labour law that introduces a series of changes of great institutional importance. It halves the severance pay of white-collar workers by 50%, lowers the threshold for collective dismissals, reduces overtime costs and reduces the minimum wage for young workers. Workers’ access to mediation and arbitration services is also likely to be restricted.

Measures introduced by government

Extraordinary measures taken by the Greek government to bring its finances under control and activate the European financial support system were reflected in two recent pieces of legislation, Law 3833/2010 (GR1003029I) and Law 3845/2010 (GR1005019I). Now a further law, 3863/2010, has been passed by the Greek parliament introducing fundamental changes in labour relations.

  • It shortens significantly the notice period for terminating white-collar workers’ open-ended employment agreements. This amounts to an indirect reduction of white-collar workers’ severance pay by 50%.
  • It lowers the thresholds for collective dismissals. Dismissals are now considered to be collective where more than six employees lose their jobs with companies which have between 20 and 150 employees, compared with the previous threshold of four employees for companies with 20–200 employees. The threshold is set at 5% of staff or more than 30 employees for companies with more than 150 employees, compared with the previous level of 2%–3% of staff and 30 employees for companies with more than 200 employees.
  • It reduces overtime costs by between 5% and 10%.
  • It decreases the minimum wage for workers under 25 years of age to 84% of the minimum national wage set by the National General Collective Agreement (EGSSE). It decreases the minimum wage for underage workers aged 15–18 years to 70% of the minimum wage set by the EGSSE through the conclusion of apprenticeship agreements.
  • Lastly, the new law anticipates the reform of the mediation and arbitration procedure by presidential decree. The current legislation, Law 1876/1990 (in Greek), makes unilateral recourse to the Mediation and Arbitration Service (OMED) possible. Abolition of this possibility is currently being discussed.

Reactions of the social partners

According to an article (in Greek, 386Kb PDF) by the Greek General Confederation of Labour (GSEE):

these provisions, which are in obvious violation of constitutional rules … undermine the operation and the activity of our trade union organisation, and they are also bringing about a dramatic reduction in the level of workers’ protection and depriving them of their employment rights.

In an interview (in Greek) with of Dimitrios Asimakopoulos, President of the General Confederation of Greek Small Businesses and Trades (GSEVEE), he stated:

there must be an effective safety net for the unemployed, for youth who are struggling to find jobs and for people over 55 years of age who are at risk of losing their jobs and their pension rights … A society in protracted insecurity cannot produce any economic outcome, no matter what legislative changes are made.

In a statement (in Greek) by Vassilis Korkidis, President of the National Confederation of Greek Traders (ESEE), he said:

The representatives of Greek trade do not agree with the new system of recruitment and dismissals which, rather than help small and medium-sized commercial enterprises, assists mergers of very large companies. The new system that will be created will reduce workers’ capacity to consume and their feeling of security. Ease of hiring and firing will not only deepen the crisis, but will create great stagnation in the market. The motor of the Greek economy is gradually beginning to stall, and restarting the real economy will be difficult to impossible.

On the other hand, the Hellenic Federation of Enterprises (SEV) is taking a positive view of the measures. Dimitris Daskalopoulos, President of SEV, commented:

The measures at issue seek to slow down the rise in unemployment and limit the number of enterprises going out of business – that is, to address two of the most painful impacts of the crisis. They are aimed at alleviating the crucial problem of youth unemployment … They include measures that provide additional protection to older workers. And finally, they entail the adaptation of conditions governing the Greek labour market to European standards and acquis … A way out of the crisis can be secured only through growth. That is why the necessary structural changes must be made immediately, changes that will liberate entrepreneurial activity, competition and investments.

Survey of citizens’ reactions

In May 2010, the company V-Project Research Consulting (VPRC) conducted and presented a survey (in Greek, 500Kb PDF) on the views of paid employees and unemployed workers about the new measures which had then just been announced.

The survey showed that 86% of respondents considered the measures socially unjust and only 9% considered them socially just.

Of great interest were the views of respondents about the most appropriate way of addressing the crisis. Of various measures suggested to alleviate Greece’s financial difficulties, the most popular were: criminalisation of major tax evasion (88% in favour), criminalisation of corruption in the public sector (88%), taxation of the church (87%), a bipartite agreement with Turkey on joint military spending cuts (72%) and a drastic reduction in armaments programmes (64%).

Sofia Lampousaki, Labour Institute of Greek General Confederation of Labour (INE/GSEE)

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