Minimum wage / Government and employers put the brakes on the increase – What they propose

The process of increasing the minimum wage seems to be evolving into a dialogue with an exchange of notes mainly between scientific committees and employers’ organizations, which converge on the assessment that the increases that should be granted from April 1 should not go beyond the limits of inflation.

Of course, no one would expect both the government and employers to veer off the beaten track for «prudent» increases set at between 3.5% and 4%, despite the fact that private sector worker losses are up to four times higher.

However, it is noteworthy that in no report other than the INE/GSEE, which includes a serious part of the losses, there is no serious reference to the huge wave of precision and profiteering that has been plaguing Greek society for the last three years and has left its indelible stamp to the dramatic decline in the purchasing power of wages, ranking our country in the last places (see Table).

Raises fuel inflation!

On the contrary, both the KEPE and the Bank of Greece, and of course the institutes of employers’ organizations, emphasize low increases as a priority in order to avoid further inflationary pressures. “Any inflation-based increases should not be excessive, as they may lead to a feedback loop of inflation and an upward spiral between wages and inflation,” notes the KEPE characteristically, giving the signal for low increases. And this despite the admission that “high inflation seems to have absorbed a very large part of the wage increases given, since average wages in real terms have increased by just 1.6% against nominal increases of 5.2%”.

In a completely opposite direction, the GSEE, through the INE, points out that in the last almost three years the accuracy crisis and the feedback inflation have significantly reduced the purchasing power of workers, mainly those paid the minimum wage, despite the successive increases given in the last years .

The decline in purchasing power

“We still have the eighth lowest salary in the EU. even after its marginal improvement in the first half of 2023. As a result, the minimum wage in Greece falls short in terms of purchasing power of Romania, Croatia, Lithuania, Slovenia and Poland, while our country had the fifth highest percentage of workers (2022) at risk of poverty among EU member states, with its ranking even worsening compared to 2019!».

As the INE also reports, “the rate of inflation in recent months in our country shows, on average, increasing trends. In December 2023 it increased, on an annual basis, at a rate of 3.7% (against 3.4% in the EU-27 as a whole), before it was limited to 3.2% in January 2024, a rate higher by 0, 4 percentage points above the Eurozone average. Despite an average slowdown in the rate of growth of the general price level in 2023, the cost of living has continued to rise, eroding workers’ real disposable income and living standards.”

The poverty line

According to the submitted proposals, the GSEE requests an increase in the minimum wage in 2024 by 128 euros and a salary adjustment to 908 euros in order for the wages of workers in the private sector to exceed the poverty threshold (up to 850 euros today the net wages for 1 in 2 workers) and correspond to a basic level of decent living.

Through the proposal elaborated by the INE/GSEE, the Confederation proposes a significant increase in entry wages that reaches 16% in percentage terms. At a time when the government, either through Labor Minister Domnas Michailidou or through Finance Ministry circles, limits the increase in minimum wages for 2024 to between 3.5% and 4% which correspond to a new minimum wage between 800 and 810 euros.

Today the gross wages for the minimum wage are at 780 euros and the net wages received by the employees do not exceed 667 euros. With the government’s proposal, the minimum net salary will be slightly above 700 euros (706), while with the GSEE proposal, it will exceed the limits of 2009 (751 euros) and will be 775 euros.

The proposal of GSEE

* Immediate increase of the minimum wage to 908 euros per month and reinstatement of its determination in the institution of the National General Collective Labor Agreement.

* Restoration of the protective regulations of individual and collective labor law (universality of validity of the terms of Collective Labor Agreements, their full retroactivity, principle of favoring their “confluence” and extension of their validity).

* Removal of institutional and legislative obstacles to increase the coverage of employees by Collective Labor Agreements (over 80% of employees).

* Strengthening of the Labor Inspectorate to effectively deal with workplace delinquency.

* Regulation and control of flexible and informal forms of work to protect minimum wages and working conditions’.