INE annual report highlights low wages

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The Institute of Labour (INE) of Greece's GSEE and ADEDY trade union confederations issued its third annual economic and employment outlook in September 2001. The report highlights wage differentials between EU Member States and income inequality in Greece, contrasted with the good performance of the Greek economy in terms of GDP growth, investment and profits. The main conclusions of the outlook are that: wages in Greece are very low compared with the EU average expressed either as a cost (in euros) or in purchasing power; and after a decade of low growth in real wages, unit labour costs in manufacturing are among the lowest in the EU.

On 1 September 2001, the Institute of Labour (INE) of the Greek General Confederation of Labour (GSEE) and the Confederation of Public Servants (ADEDY) released its third Annual economic and employment outlook at the HELEXPO international trade fair in Thessalonica (GR0009185F and GR9908145F).

Unlike other reports on the Greek economy - such as the annual reports by the Bank of Greece, the Ministry of National Economy, the Organisation for Economic Cooperation and Development (OECD) and the European Commission- the INE Outlook highlights wages, costs and employment. The 2001 report describes the macroeconomic situation in Greece and its relation to changes in employment and unemployment, compares wages, unit labour costs and income distribution between EU Member States and identifies possible threats of overheating and inflation.

The report finds that during 2001 and 2002 real convergence of the Greek economy with the rest of the EU will continue for the sixth and seventh consecutive years. Alongside the sustained rise in production and investment, labour productivity is rising rapidly. GDP growth, the fixed-capital accumulation rate and productivity increases are the highest in EU except for Ireland. As GDP is growing at a faster pace than productivity, employment is rising at a relatively stable annual rate of around 1%.

Wages and productivity

The report finds that unit labour costs continue to fall in real terms. Between 1981 and 2000, they decreased by approximately 25%. Thus it is obvious that the business sector of the Greek economy enjoys cheap labour costs, which should have brought about a substantial improvement in the competitiveness of the Greek economy, states INE. However, the reduction of labour costs appears to have been transformed more into increased profits and less into improved competitiveness.

The INE Outlook also finds that Greece is in second-to-last place in the EU with regard to industrial wages, after Portugal. With the exception of Denmark, West Germany and the Netherlands, where wages are very high, in seven countries hourly wages vary between EUR 10 and EUR 12 for men and EUR 9 and EUR 10 for women, compared with only EUR 6 and EUR 4.15 respectively in Greece. Spain is in an intermediate position, with hourly wages at around EUR 8 for men and EUR 6 for women. This means that blue-collar workers' wages in Greek industry are 55% lower than in Belgium, 77% lower than in Denmark, 68% lower than in the Netherlands, 36% lower than in Spain and 50% lower than in Ireland (calculated in EUR). Gross monthly earnings of white-collar workers in manufacturing industry present about the same picture as blue-collar workers' hourly wages.

INE's comparison of the gross earnings of white- and blue-collar industrial workers across the EU, expressed as purchasing power (calculated in Purchasing Power Parities), shows that the purchasing power of wages in Greece is the second-lowest in Europe, after Portugal. To be sure, differences in purchasing power are plainly lower than the differences in earnings in EUR (calculated as costs); however, they are still large. Thus, in 1998 the purchasing power of blue-collar workers' wages in Greece was 43% lower than in Belgium, 49% lower than in West Germany, 41% lower than in the UK and 34% lower than in France and Spain. Of a similar magnitude are the differences in white-collar industrial workers' earnings calculated as purchasing power.

The INE report also addresses the argument often put forward, that wage differences among the countries of the EU reflect national differences in labour productivity in industry. If in one country productivity is, for example, 30% lower than in other countries, wages calculated in EUR should logically be correspondingly lower, because in this way unit labour costs (and therefore price competitiveness) are balanced out in the various countries. However, in industry the gap between earnings in Greece and those in other countries is so wide that this difference offsets differences in productivity, the report states. According to INE' s calculations (based on data from Eurostat and the OECD STAN Database), unit labour costs in Greece are among Europe's lowest. In particular, taking West Germany as a base at 100, unit labour costs in Greece are 66 for blue-collar workers and 47 for white-collar workers. Portugal has similar unit labour costs.

Employment and unemployment

Employment prospects in the years to come are ambiguous, according to the INE report. Greece is entering a period of high increases in labour productivity since high rates of investment in computers and other machinery are bringing new technologies into labour processes, followed by high rates of labour-capital substitution. Moreover, further restructuring and privatisation will probably have negative contributions on employment, INE finds. Unemployment has fallen during 2001 but, according to the INE report, the fall is attributed to a 'discouragement effect' and a subsequent decrease in the labour force. Greece's unemployment rate, which in the 1980s was one of the lowest among the EU Member States, is currently well above the average.

Commentary

INE's Annual economic and employment outlook, now issued for the third consecutive year, has had an important impact on public debate in Greece. It has been cited at length in the daily press and now constitutes a reference point for alternative views on the macroeconomic situation, employment and unemployment, as opposed to prevailing mainstream neo-liberal views. It has arguably contributed significantly to the confidence of workers in trade unions; a confidence which is still growing as a result of GSEE and ADEDY's strong opposition to the government's pensions reform (GR0106111N). (Elias Ioakimoglou, INE/GSEE-ADEDY)

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