Greece: Hopes dashed on plans for collective bargaining

Negotiations to restore the national minimum wage to its pre-2012 level were welcomed by the Greek social partners in May 2015. However, the process was stopped after Greece signed a new loan agreement with its creditors (IMF, EU, ECB, and ESM). Under this, any changes must be agreed by the institutions and there can be no return to earlier legislation.

Background

After the financial crisis in 2010, several laws radically changing the Greek system of collective bargaining (enshrined in law No. 1876/90) were enacted (laws No. 3899/2010, No. 4024/2011, No. 4046/2012, No. 4093/2012 and No. 4172/2013).

The main changes were:

  • establishment of a new mechanism for the government to set minimum wages, instead of the social partners through the National General Collective Empoyment Agreement (EGSSE);
  • derogation of bargaining levels;
  • downgrading of intersectoral and sectoral bargaining;
  • encouraging a predominance of company-based collective agreements;
  • abolishing the extension mechanism, with collective agreements binding only for members;
  • establishing only a voluntary arbitration procedure.

Social partners asked to re-establish collective bargaining 

However, after the election of the SYRIZA–ANEL government, the Minister of Labour, Panagiotis Skourletis, wrote to the national social partners to ask for talks on his new initiative for re-establishing collective bargaining (in Greek, 81.8 KB PDF).

His initiative contained 20 points, including:

  • abolishing the mechanism which the government uses to determine the minimum wage (in Greek, 384 KB PDF) and reinstating a universal minimum wage set by the National General Collective Employment Agreement (EGSSE);
  • reinstating, in two stages, the minimum wage to the levels of the 2010–2012 EGSSE (€751, instead of the present €586);
  • abolishing wage differences based on age (€586 for over-25s and €511 for under-25s); 
  • reinstating long-service (three-years) and maturity allowances;
  • establishing a new type of collective bargaining at company group level;
  • enabling negotiations at sectoral level where there is no sectoral employers’ association, by allowing a sectoral level agreement to be signed by individual employers or enterprises (up to 10) if they employ most of the employees in the sector;
  • reinstating the binding character of all collective agreements and the extension mechanism for collective agreements;
  • re-establishing the continuing effect of collective agreements for six months after they expire (currently three months) and, if the agreement is not renewed, allowing the after-effect framework to cover all the employee’s wage conditions;
  • strengthening the institution of mediation as a key stage in resolving collective disputes and the reinstatement of unilateral recourse to arbitration when one party refuses mediation or rejects the mediation proposal (‘compulsory arbitration’).

Α tripartite social dialogue meeting in April 2015 was attended by representatives of the national social partners (GSEE, SEV, ESEE, GSEVEE, and SETE) who discussed the minister’s proposals. In general, all the national social partners welcomed the suggestions, although the employers had some concerns over the methods of increasing the minimum wage, and on compulsory arbitration.

After this, the Ministry of Labour prepared a draft law entitled Amendment of the provisions of Law 1876/1990 – Restoration and reform of the framework for collective bargaining, mediation and arbitration and other provisions, which was sent for tripartite and public consultation. The proposal was indeed a return to the previous situation, but with some additional features such as the opportunity to conclude collective agreements in a group of companies, enhancing mediation and arbitration as a process to resolve collective disputes, and the creation of a body of experts to assist mediators and arbitrators. The draft bill was also submitted to the Economic and Social Committee (ESC) for an opinion, which it issued in May 2015 (in Greek, 831 KB PDF).

On 15 May, the Minister of Labour also met with Guy Ryder, Director General of the International Labour Organization (ILO) in Geneva. A statement by the ILO welcomed the reactivation of social dialogue in Greece, including continuing legislative efforts to conform with international labour standards.

Social partner views

Employers

All employers were in favour of reinstating the setting of minimum wages via the EGSSE, and of its universal effect and binding character in respect of all its terms and conditions (wage and non-wage), as proposed in the draft law. However, some disagreed with the reinstatement of the minimum wage by legislative intervention, the reinstatement of long-service allowances, and the reinstatement of compulsory arbitration (unilateral recourse).

The National Confederation of Hellenic Commerce (ESEE) was in favour of gradual reinstatement of the minimum wage to €751 in two stages, implemented one year apart; the extension of sectoral agreements; the extension of their effect to six months; and the full after-effect framework. However, the confederation proposed individual amendments to other arrangements contained in the draft law.

The Hellenic Confederation of Professionals, Craftsmen and Merchants (GSEVΕΕ) disagreed with the immediate reinstatement of minimum wages by law, asking instead for a phased introduction through the EGSSE over three years. It also expressed reservations about the reinstatement of long-service allowances and the institution of compulsory arbitration, but was in favour of the extension of collective agreements and the requirement for them to be implemented by all employers.

The Greek Tourism Confederation (SETE) published an opinion statement on 2 April. Within the statement, SETE made three proposals: the minimum wage should gradually be restored through collective bargaining; the reduced wage for young people under the age of 25 should be offset by a reduction in non-wage costs; and compulsory arbitration should not be re-established. It agreed with the reinstatement of compulsory implementation of collective agreements by all employers. 

The employers jointly proposed that there should be additional measures to support entrepreneurial activity and reduce operating costs, such as tax concessions, employment grants, and a reduction of social security costs.

Trade unions

The General Confederation of Greek Workers (GSEE), wrote to the Minister of Labour in May 2015, welcoming the legislative initiative (in Greek) and submitting detailed proposals, although it also expressed doubts about whether the provisions would be passed and implemented.

GSEE said the draft law proposed many improvements to the existing legal framework, such as the abolition of agreements concluded with ‘associations of persons’ and the opportunity for concluding collective agreements in company groups. However, among the most important points, it said, were restoring the minimum wage without age discrimination, as well as long-service allowances. The confederation also suggested that the draft law should apply to public services and utilities.

Outcome

The draft law did not go before parliament.

On 12 July 2015, after seven months of negotiations, Greece finally signed a third bailout agreement (Law 4331/2015) with its creditors (IMF, EU, ECB, ESM) worth €86 billion. Points in the agreement, specified in the Government Gazette, state that no changes to the current collective bargaining framework will be made before an independent review has been completed (in Greek, 3.3 MB PDF).

The agreement provides for several steps in the process.

  • By October 2015, the government will launch a consultation process led by a group of independent experts to review a number of existing labour market frameworks, including collective dismissal, industrial action and collective bargaining, taking into account best practice internationally and in Europe.
  • Further input to the consultation process will be provided by international organisations, including the ILO. The organisation, terms of reference and timelines shall be agreed with the four creditors. Following the conclusion of the review process, the government must bring the frameworks for collective dismissals, collective action and collective bargaining in line with best practice in the EU.
  • No changes to the current collective bargaining framework will be made before the review has been completed. Changes to labour market policies should not involve a return to past policy frameworks which are not compatible with the aims of promoting sustainable and inclusive growth.

Conclusions

In the second quarter of 2015, through the revival of the national social dialogue, the government developed a particularly important initiative that would have restored the institutional framework of collective bargaining and reinstated the minimum wage at pre-2012 levels. 

The draft law, drawn up in consultation with the social partners, received a largely positive response from employers and employees. The employer associations mainly disagreed with the points concerning the reinstatement of the minimum wage by legislative regulation and the reinstatement of compulsory arbitration.

However, the new loan agreement between Greece and its creditors has halted the legislative initiative and stipulated that any changes must take place in agreement with the four institutions and that there cannot be a return to earlier legislation.

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