Greece: Latest working life developments – Q2 2016

The conclusion of the first evaluation of the economic adjustment programme, new legislation on social security, taxation and privatisations, and a review of the labour market framework 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 2016.

Conclusion of first evaluation of the economic reform programme

At the end of May 2016, after eight months of negotiations between the Greek government and the institutions coordinating the current financial assistance programme – the European Commission, the European Central Bank (ECB), the European Stability Mechanism (ESM) and the International Monetary Fund (IMF) – the first evaluation of the Third Economic Adjustment Programme to Greece was concluded. It was agreed that the Greek government had implemented all the prerequisite measures and actions. Following the Eurogroup statement of 25 May 2016 and a positive assessment in the compliance report (PDF) of the programme implementation by the European Commission and the ECB, Greece received a second loan instalment of €7.5 billion.

New law on social security, tax system and privatisation

In May 2016, Parliament passed Law No 4387/2016 introducing extensive reform of the social security, pension and tax systems, including:

  • establishing a single Social Security Fund for all;
  • establishing a national pension of €384 per month at the age of 67;
  • increasing social contributions for employers, employees and the self-employed;
  • introducing a new method of pension calculation;
  • reducing basic and supplementary pensions.

The tax reform establishes a new tax scale, increases VAT from 23% to 24%, and increases tax rates significantly, especially for independent professionals and farmers. The new law also sets out proposals for the privatisation of 19 public companies.

A new privatisation and investment fund, the Hellenic Corporation of Assets and Participations S.A. (HCAP), will manage state-owned assets and publicly owned real estate, and prepare some for privatisation: these include ports, railways, transport services, energy, water, and postal services. These privatisation provisions triggered widespread protests and strikes by unions representing workers in public companies.

The social security and tax reforms generated a series of reactions from workers and the self-employed, particularly by lawyers who have now ‘abstained’ from their duties for more than six months.

Labour market developments 

A comprehensive review of the frameworks for collective bargaining, industrial action and collective dismissals was launched in April 2016. The review is led by a group of eight independent experts who are renowned international professors of labour law, labour economics and industrial relations. The group has conducted a consultation process to gather the views of social partners and key stakeholders (including the ILO) and is drawing up recommendations for further reforms in these areas (a commitment of the Memorandum of Understanding 2015 signed with the European institutions). A preliminary report with recommendations is expected by July 2016. A final report will form the basis for government proposals to align Greece’s labour market frameworks with best practice in the European Union. Any change to labour market frameworks will be made only after the completion of the review process, and in consultation and agreement with the institutions.

During the second quarter of 2016, three big companies closed or declared bankruptcy and more than 1,500 employees lost their jobs. Working conditions are steadily worsening in the private sector; average wages are falling and work flexibility is increasing significantly. 

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