Greece: Report on economy and employment criticises current economic policy

A report by the Labour Institute of the GSEE trade union confederation argues that the economic policy implemented to tackle the economic crisis is incompatible with the Greek economic development model and has, as a result, brought high unemployment, disinvestment, social disintegration and increased poverty among wide sections of the population. 


The annual report on the Greek economy and employment by the Labour Institute of the Greek General Confederation of Labour (INE/GSEE) was presented at the Thessaloniki International Trade Fair in September 2015. The report's main focus was an evaluation of the impact of the economic adjustment programmes on Greece and their compatibility with the Greek model of economic development. According to the report, the economic policy of fiscal adjustment and internal devaluation, which was implemented as part of the programme to tackle the economic crisis, is incompatible with the structure of the Greek development model that has taken shape in recent decades. The report's main argument is that:

... linking the crisis of public debt and the country’s lack of competitiveness with shrinking wages, pensions and social funding, with the undermining of labour law and fundamental employment and social rights, and with the dismantling of the social security system traps the economy in the debt crisis and the economic crisis.

The report draws several conclusions about Greece's labour market and both individual and collective labour relations.

Rise in unemployment

At the end of 2014, unit labour costs were 13.7% lower than in the last quarter of 2009. The INE/GSEE report notes that, according to the conventional theory of internal devaluation, this should prompt businesses to respond by reducing prices and increasing employment and competitiveness. However, this has not occurred. Unemployment has risen, and the cuts in wages and unit labour costs have not led to reductions in the prices of exports.

The number of unemployed people increased by 364,000 in the third quarter of 2008 to 1.342 million in the first quarter of 2014. In the fourth quarter of 2014, unemployment was 1.246 million. The highest rate of unemployment, over 30%, is recorded among employees with low levels of education (those who have attended primary school only). In the third quarter of 2014, the unemployment rate was 24.2% among junior high school graduates, 28.6% among senior high school graduates and 28.0% among graduates of technical vocational school. University graduates had a lower unemployment rate of 20.6%, while the rate among holders of postgraduate degrees or doctorates was 12.7%.

The employment rate fell from 60% in 2009 to 50% in 2014. As a consequence, the Greek economy has diverged dramatically from the Europe 2020 target employment rate of 75% for those aged 20–64. The sectors with the biggest decline in employment are manufacturing, trade, and construction. More specifically, of the 1 million jobs lost in the economy as a whole, 222,000 were lost in manufacturing, 219,000 in trade and 236,000 in construction (together a total of 68% of jobs lost).

The rate of part-time employment increased from about 6% of all employment in 2009 to nearly 10% in 2014. The rate of involuntary part-time employment is extremely high at nearly 70% of all part-time employment.

According to Ministry of Labour data, 65 new sectoral or occupational collective employment agreements were signed in 2010, but just 14 in 2014. However, the number of company-level agreements rose: 227 new company-level collective employment agreements were signed in 2010 and 976 in 2012. This is due to a new law allowing such agreements in businesses with fewer than 50 employees (through the use of the newly established ‘associations of persons’).

Fall in wages

Significant wage cuts have been brought about by decentralising collective bargaining from the sector level to individual companies and suspending the extension of sectoral and occupational collective employment agreements to the whole sector or occupation by ministerial decision. Most of the new company-level collective employment agreements included wage cuts of between 10% and 40%.

Between 2010 and 2014, the purchasing power of the actual minimum wage fell by 24.9%, and by 34.5% for people under the age of 25. In 2010, Greece ranked seventh in terms of minimum wage purchasing power and had fallen to tenth place by 2014. It fell to eleventh place following the introduction of a minimum wage in Germany in 2015.

The rate of absolute poverty among full-time employees was 7.6% in 2009 and 19.7% in 2012. For the full-time self-employed, the absolute poverty rate was calculated to be 23.5% in 2009; by 2012, it had increased to 37.4%. The poverty rate for the unemployed increased from 34.8% in 2009 to 65.5% in 2012, a change that underlines the inability of the system of social protection to support the income needs of the unemployed. In 2012, the poverty rate also increased from 18.6% to 31.3% among pensioners, and from 27.5% in 2009 to 54% among other economically inactive individuals.

Proposals for change

The INE/GSEE report concludes that Greece urgently needs to change its economic policy in the framework of a new strategy to exit the debt crisis, deflationary recession and leveraging, based on three pillars of economic planning:

  • an alternative strategy for managing the sustainability of the debt, on the basis of the ‘sustainable primary surplus – sustainable debt’ axis;
  • the activation of domestic demand to kick-start the economy;
  • re-regulation of the labour market and the reintroduction of the minimum wage.

The report stresses that these three pillars take into consideration the structural and institutional aspects of the Greek development model. They tackle the economic and social crisis while creating resources that can service the country’s debt obligations in a sustainable way.


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