Greece in labour law standoff with troika
POLICEMEN HOLDING BLACK FLAGS AND SHOUTING SLOGANS MARCH IN CENTRAL ATHENS DURING AN ANTI-AUSTERITY DEMONSTRATION IN ATHENS ON NOVEMBER 1. THE INTERNATIONAL MONETARY FUND SAID THAT TALKS BETWEEN GREECE AND THE TROIKA OF INTERNATIONAL LENDERS REMAINED STUCK ON THE CONDITIONS FOR FINANCING THE COUNTRY AS IT SEEKS A TWO-YEAR EXTENSION FOR MEETING FISCAL GOALS. |AFP PHOTO / ARIS MESSINIS
An impasse between Greece and the Troika of the European Union, IMF and the ECB is continuing over changes to Greek labour laws, that have been rejected by junior coalition party the Democratic Left.
The objection is over the insistence from the foreign lenders that the national wage agreement be targeted to unionised workers only rather than all employees, and the party also reject the plan to withdraw the 10% hike in wages to employees when they marry.
Further details of the Troika’s austerity package have been released by the Greek government, and they include the raising of the retirement age to 67, cutting salaries and pensions and increasing taxes. In response Greek unions have called for a two day strike next week.
In return for EUR 31.5 billion of rescue funding, the lenders have said they want EUR 13.5 billion of cuts, also including reduced social benefits.
The Troika demanding a continuation of reforms in Greece if it is to release the latest instalment of the EUR 164 billion worth of financial assistance, as part Second Economic Adjustment Programme that was agreed in March, planned to be spent between 2012-14.
In total EUR 144.7 billion is to be provided through the European Financial Stability Fund, and the IMF will also contribute EUR 19.8 billion, plus an extra EUR 130 billion will be made available over the two year period.
The Democratic Left are the most junior part of the governing coalition with socialists PASOK and the New Democracy, currently holding 17 seats, any agreement to new labour laws could bypass them, but this could leave a fragile coalition at a crucial time.
An EU official said: “Talks are continuing with the Greek authorities with a view to reaching a staff-level agreement on a range of fiscal measures and structural reforms designed to ensure the sustainability of Greece's public finances and boost the capacity of the economy to generate sustainable growth and job creation.”
Eurostat figures have confirmed that economic growth has contracted by 6.2% for the second quarter of 2012 when compared to the same quarter of last year. As unemployment levels are at 24.4%, the second worst behind Spain in the European Union, the Troika partners are convinced the further reforms need to take place to engineer growth in the Greek economy.
Labour laws were targeted as part of the second adjustment programme, focusing on a greater level of company involvement over wage bargaining, ensuring the company agreements supersede sector collective agreements.
Reductions in minimum wages were also included, wage floors by the National. General Collective Agreement (NGCA) have been reduced by 22 percent, or even by 32 percent for those younger than 25. This was an important aspect from the European Commission paper as average wages had been decreasing.
Legislations on collective bargaining were also trimmed, as it was decided that collective agreements can only last for a maximum of three years to curb inflexible longer term agreements. The argument also is that when the economy is in a state of deflation to increase competitiveness, privileged labour conditions with former state owned industries will be placed in line with the private sector.
Dr. Dimitris Kremalis of Kremalis Law Firm, who are based in Athens and are experts in employment and labour law, said: “The changes are mostly initiated by financial motivations, the changes that are advocated will reduce the insurances that are in place with already established measures, and a balance must be struck. The fear is that the proposals will reduce the conditions of the labour market to a level such as Bulgaria, that is the view of some parts of the confederation.”
“The situation is that the Troika partners should realise that a horizontal way to approach the labour market is not the right way, but it is a time to a bring Greece in line with current European standards. Notoriously we have current extremes in our labour laws and regulation, and we have to be realistic in that it is not easy to make lasting structural reforms over a time period of weeks and months. What is clear is that the governing coalition is not what it seems after the elections, and they are not willing to question some extreme labour laws.”
Since the second adjustment programme was drafted there has been progress on the recommendations that it put forward.
“The progress is that wages have been reduced to adapt to the current times.” Kremalis continued: “Employers have been granted with an increasing flexible regulatory framework making it easier to dismiss workers, but there is some evidence that they have tried to employ people who may not be legal to work so again there has to be a balance. This affects contributions to social security that has not been adequately collected. For the future we need to have a greater focus on labour law that include corporate taxes, and have agreements in place to create a more favourable conditions for foreign investors.”
Talks are ongoing between all parties, and so far it in unclear when a decision or deal will be made on the labour regulations. NEW EUROPE
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