Brussels, 09/03/2011 (Agence Europe) - How are the various austerity programmes affecting labour relations and what has been decided for collective bargaining in order to change the labour market to get Greece out of crisis? These are two of the main questions running through the latest report from the International Labour Organisation (ILO) entitled “Social dialogue and collective bargaining in times of crisis: The case of Greece”, published on Thursday 8 March. One of the most important conclusions is that the resources used to improve Greece's competitiveness, which is described as the main objective if economic growth is to be restored, are at best ineffective, if not plain counter-productive.
Greece may have avoided defaulting on its debts by writing off a share of it (see separate article), but the soon-to-be-paid-out first instalment of aid under the second bailout is subject to a string of terms and conditions set out in the latest memorandum of understanding (MoU) which, like the first MoU signed in May 2010 between the Greek government and the troika of lenders (the European Commission, European Central Bank and International Monetary Fund) for the initial €110 billion bailout, includes measures to reduce pay (making it more flexible), cutting the cost of manpower and stimulating competitiveness. This is supposed to be in addition to the changes already made to shake up the Greek labour relations system.
The ILO report examines the implications of these measures in terms of pay, working time, unemployment and staff/employer relations. It looks at a series of laws introduced by the Greek government, ranging from a law dated 15 March 2010 (Protection of the national economy - Emergency measures to deal with the financial crisis) to a law introduced on 14 February 2012 on the Financial Assistance Facility Agreement. Without challenging the conditions imposed by the troika, the ILO demonstrates the economic and social limits of the policies introduced and highlights the potential risks of a deteriorating labour-employer relationship.
It is the institutional set-up underlying collective bargaining that has borne the thrust of the labour market reforms in the country because it underlies all the planned changes to pay in the public and private sector that will influence overall labour costs. The idea behind the reforms is simple - making Greece more competitive.
Pay. Minimum pay in Greece is decided by a general agreement (EGSSE) that covers all minimum pay agreements. The main measures introduced recently are a cut in minimum pay of up to 20%, a ban on any increase in the minimum pay rate, a cut in redundancy pay, increasing the number of layoffs allowed and introducing a new minimum pay rate for young workers and apprentices. These measures are currently described as insufficient, and the EGSEE minimum wage has been reduced again by Law 4045/2012 dated 14 February 2012 from €751 a month gross to €586 (€527 for under 25-year-olds), in order to further slash pay.
Collective bargaining. The application of the new EGSEE pay rate is accompanied by changes to the legal system governing collective bargaining. The introduction of a new legal system for “special company agreements” aims to introduce more flexibility into negotiations at company level, introducing the option of getting round existing industry-wide agreements on pay, redundancy, part-time work and trial periods. For the same reasons, a law dated 27 October 2011 establishes a new legal body for small businesses that has the same powers as a trade union and can negotiate work contracts. This increases pressure on negotiations and reduces the eligibility for external mediation. The ILO report states: “There are complaints by workers and unionists that workers receive pressure by their employers to sign individual agreements with sub-minimum wages. There is information that in larger organisations employees were obliged to accept reduced work week schedules accompanied by reduced salaries. On the other hand, workload has been intensified for those remaining employed on a full-time basis.”
Competitiveness. According to Eurostat, Greece at the moment is experiencing the sharpest drop in hourly labour costs (down 6.5%, compared with the 1.6% increase in the eurozone as a whole). The ILO comments: “The reduction of wages in the private sector and the weakening of collective agreements have not contributed to the resolution of the issue of competitiveness of the Greek economy. In a recent article by the former Minister of Labour, she states that there are no indications in the international bibliography that reductions of the unit labour cost may reinstate competitiveness. Low competitiveness in Greece is attributed to lack of investment and to the high non-wage cost of labour. The latter, which reaches 41.5 per cent of the total labour cost, is attributed to increased taxation, high insurance contributions by both employers and employees and enormous bureaucracy which constrains entrepreneurship.”
Social and economic lessons. The ILO report states: “It is still difficult to draw conclusions at this early stage about the impact the reforms will have on collective bargaining practices, as the new legislation has created a new environment that affects the distribution of power and the role of the actors involved in the Greek industrial relations system. In terms of the operation of the industrial relations system there is a possibility that more effective tripartite social dialogue could have prevented social instability. Collective agreements remain an effective means for regulating wages, working conditions and employment relations. There is a need to strengthen social dialogue at the bargaining table and to promote a forward looking negotiating culture at all levels.” If the collective bargaining agreements are challenged and accompanied by measures to reduce the Greek budget, then there is a serious danger of creating a vicious circle, with the increase in indirect taxation (VAT and the like) leading to lower consumer spending, leading in turn to lower state income and therefore the introduction of new austerity measures.
Changing direction. “The answer to the crisis may be found in taking developmental measures. It is through entrepreneurship and innovation that an economy may revive. There is need to increase investments, market mobility, and provide measures to assist enterprise start-ups”, comments the ILO. Similar comments are made by the European Trade Union Confederation, which on Thursday 8 March called for the introduction of a new Marshall Plan for Greece - comments echoed by the president of the European Parliament, Martin Schulz, who called on Friday 9 March 2012 for new measures to stimulate growth. The ILO says that alongside structural reforms and strong social dialogue, investment must be increased, along with market mobility and measures to encourage business start-ups, adding: “Areas that can be strengthened in Greece are tourism, the agricultural sector by producing and offering quality products and services, energy and new skill training, to name a few.” (JK/transl.fl)