The government’s social welfare spending spree and rampant talk of raising the minimum wage within the year has triggered the consternation of the powerful Hellenic Federation of Enterprises (SEV), whose members include the country’s industries and big businesses.

After Prime Minister Alexis Tsipras’ announcement to his cabinet that he intends to pursue a left-wing social spending agenda this year, SEV warned the government against cultivating great expectations with its touting of a minimum wage hike.

SEV’s sobering intervention comes at a time that the government is cultivating rosy projections that the country is about to exit international fiscal oversight.

Regarding the minimum wage, SEV is demanding the “de-linking in practice of the setting and changing of the minimum wage, from the changes in wages in particular businesses and business sectors, which should be determined by the parties, based on the financial capabilities of the businesses and sectors”.

The statement is a thinly veiled response to government ministers who are promising a hike in the minimum wage.

Call for structural reforms

SEV underlines that if one does not want the salary levels of Bulgaria – which in Greece is often cited as an example of low wages – one is obliged to implement deep structural reforms, in order to modernise the state and open up markets”.

SEV is arguing that when an adjustment of the minimum wage is decided, it should not automatically be made the basis of wage increases at the level of particular businesses or business sectors.

Moreover, SEV underlines that as long as the minimum basic salary remains as is, based on the National Collective Bargaining Agreement, businesses and sectors can adjust their own salaries with freely conclude collective bargaining contracts.

The Greek industrialists are also saying, as they have for a long time, that they do not favour cutting the minimum salary.

First new jobs, then wage hikes

However, they stress that, at a moment when the economy is making its first, timid moves towards stabilising the GDP, the priority must be the creation of new jobs, and that re-setting the minimum salary at the levels of 2010-2012 is not a viable option.

The rise and fall of Greek wages

“The mistakes of the past must not be repeated. Between 2000 and 2009, Greece was increasing the minimum wage and salaries throughout the entire economy, at rates on average that exceeded: the level of productivity, the non-wage competitiveness of the economy, and the inflation rate in the eurozone and Greece,” SEV states.

“Paradoxically, the country continued increasing the minimum wage until 2011, as GDP was collapsing and as Greece was barred from the markets, only to lower it again legislatively by 22 percent in 2012.”

Maria Vourgana

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