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Labour market reforms in Greece - background summary

Labour relations and employment law were at the centre of the economic adjustment programmes brought into operation after the debt crisis arose (2010). The scale and intensity of the measures are producing radical changes which are seriously undermining working conditions and wages in both private and public sectors.

The changes, which are characterised by strong State interventionism, centre around three main axes in the private sector:

1. Measures to promote the extension of flexible working and working time management by employers. These consist mainly of:

  • extension of the maximum duration of temporary work (from 12 to 36 months) and fixed term contracts (from 24 to 36 months);
  • 20 % reduction in the cost of overtime;
  • probation period increased from 2 to 12 months, option for employer to terminate contract without compensation;
  • extension of maximum duration of reduced working week from 6 to 9 months. This is a form of part-time work (known as ‘ek peritropis ergasia’) which allows employers unilaterally to reduce the number of days worked per week in the event of financial difficulties, with a proportional reduction in wages, for a period of nine months in any one calendar year.

According to the Ministry of Employment database (ERGANI), over 50 % of new recruitment in the private sector in the past three years has been for part-time or reduced working week contracts (‘ek peritropis ergasia’). In 2016 only 45 % of all new recruitment was under full-time contracts.

2. Measures to facilitate redundancies and parallel measures to reduce access to compensation and the amount of unemployment benefit.The main measures are:

  • collective redundancies threshold raised (from 2 % to 5 % per month for undertakings with more than 150 employees and 6 persons per month for undertakings with between 20 and 150 employees);
  • significant reduction in the cost of redundancies for employers through reduction of the notice period (the maximum notice is reduced from 24 to 6 months and then to 4 months)and a ceiling on redundancy payments for employees (especially those with high seniority);
  • 22 % reduction in unemployment benefit, falling in 2012 from EUR 461.5 to EUR 360 per month (fixed amount, same for all beneficiaries, not linked to previous wages), payable for a maximum of one year;
  • ceiling on unemployment benefit period (not more than a total of 400 days benefit in the past four years).

In 2016, only one unemployed person out of every ten received unemployment benefit. 73 % of the unemployed are long-term unemployed.

3. Deregulation of the collective bargaining system and removal of link between the different collective bargaining agreement (CBA) levels

The main changes that have deregulated the collective bargaining system were introduced in October 2011 (Law 4024) and February 2012 (Law 4046 and Ministerial Council Act No 6) through measures aimed at restricting the role of sectoral collective bargaining and further decentralising the system to company level (see individual employment contracts). Briefly, these consist of the following:

  • suspension of the process for extension of sectoral and occupational CBAs during the adjustment programme;
  • suspension of the favour principle and primacy of the company agreement over sectoral and occupational CBAs, even when the provisions of that agreement are less favourable (including lower wages);
  • possibility for non-trade union representatives (‘associations of persons’) to sign company CBAs;
  • 22 % nominal reduction in the minimum wage set by the national agreement (32 % for the under-25s) by Act of the Ministerial Council; restriction of the role of the national agreement (EGSSE), in that it no longer sets the minimum wage (set by the State since 2012) and now only applies to employers belonging to the signatory employers’ organisations;
  • restriction of the maximum duration of CBAs (to 3 years), restriction of the period for which the validity of CBAs may be extended (from 6 to 3 months) and parallel reduction in the ‘after effect’of expiring CBAs. In the absence of a new agreement, only the provisions on basic wage and four allowances (seniority, child, education and heavy work) apply;
  • abolition (in 2012) of unilateral recourse to arbitration and restriction of the subject matter of arbitration (determination of basic wage only); [1]
  • suspension (from 14 February 2012) of all automatic increases provided for by law or a CBA, until the employment rate falls below 10 %.

Impact of reforms: erosion of collective bargaining and wages

The new labour relations landscape is characterised by the destructuring of CBAs, erosion of collective bargaining and a decline in the rate of cover

  • fall in the number of sectoral and occupational CBAs, from 65 in 2010 to only 10 in 2016 ;
  • after 2014 the number of company CBAs returned to 2010 levels following a steep rise, particularly in 2012;
  • the rate of cover by CBAs has gone from over 80 % to less than 40 %, with a marked downward trend which is continuing.

The severe contraction of economic activity following the crisis and the austerity measures and the radical reforms to the labour market have led to a drastic reduction in nominal wages in the private sector:

  • in 2012 the national minimum wage was reduced from EUR 751 gross per month to EUR 586 (EUR 510 for the under-25s) and it remains fixed at those levels;
  • 2012 saw an explosion in the number of company CBAs (from the usual 200 per year to 976 in 2012 and 409 in 2013). Most new company CBAs are signed by ‘associations of persons’ and most provide for nominal wage reductions of between 10 % and 40 %. A large number of them align company wages with the national minimum wage; [2]
  • according to Elstat (Hellenic Statistical Authority), the wage index (2012=100) dropped from 116.2 in 2009 to 88.5 in 2015 (-24 %);
  • according to the ERGANI database, in 2015 almost two-thirds of private sector employees earned less than EUR 1 000 per month.

Finally, since the start of the adjustment programme (2010) civil service and public company employees have been affected by the austerity measures to reduce the public deficit, including in particular nominal wage cuts and deteriorating working conditions. The measures have mainly consisted of:

  • various measures to reduce wages and reduce or abolish allowances;
  • weekly working hours increased to 40 (from 37.5), with no increase in wages;
  • 2 months’ wages per year cut for all public sector employees (abolition of 13th and 14th months);
  • unified wage policy characterised by general reductions in civil service pay; the new pay scale results in nominal salary reductions(between 7 % and 55 %);
  • drop in nominal pay for specific categories: academics, doctors (public health), armed forces, police, diplomats;
  • 35 % nominal reduction in pay (compared with 2009) in 11 public undertakings. Suspension of collective bargaining in public undertakings, abolition of internal labour regulations and (downward) alignment of pay with the civil service pay scale;
  • drastic reduction of personnel (over 200 000 have left the civil service) and strict limits on recruitment (the rule is one new recruit for every five leavers).

[1] In 2014, a complaint by the GSEE was allowed by decision of the Council of State. Law 4303/2014 formally restores unilateral recourse to arbitration, but further procedural obstacles remain in regard to the extension of its subject matter to all provisions.

[2] Kapsalis A. and Triantafillou Christos (2014), INE GSEE No 42, study on changes to collective bargaining and wages in 2013, http://inegsee.gr/wp-content/uploads/2015/05/Meleti-42_-Eidiki-ekdosi-Tetradia-INE2.pdf.

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