Since the onset of the Greek sovereign debt crisis and in the midst of non-stop negotiations with the European Commission, the European Central Bank, and the IMF, Greece has been instructed to apply tight fiscal consolidation measures and implement a series of structural reforms to improve its competitiveness and boost its growth in return for desperately needed financial assistance and securitization of its bail out.
In this context, Greece has undergone extensive labor market transformations in an attempt to regain a competitive edge, enhance employability, and reverse the dramatic increase in the unemployment rate (now at almost 30%) that has been reported since the outbreak of the crisis.
Market transformations include, inter alia, reducing the minimum wage 22% to EUR 586 (and 32% to EUR 510 for market entrants under 25 years of age), limiting salary adjustments, and amending the employment protection regulation facilitating layoffs (i.e., by reducing the notice period and drastically cutting severance pay entitlements). Moreover, a series of reforms has been initiated to increase employment flexibility, reduce labor costs, and bend the rigidity of the Greek labor market, primarily by introducing new recruitment facilities for employers, allowing them to transform active employment contracts into part-time employment schemes, extending the maximum duration of fixed-term contracts to three years, and reducing the protections for employees during the one year trial period. Such changes clearly mark the current trend in labor law towards more flexible forms of employment.
According to OECD data, the percentage of part-time employees involuntarily working on a part-time basis has risen from 26% in 2008 to 44% in 2012, while the OECD average in 2012 was 17.8%. On the other hand, the average annual hours worked per employee has also increased during the same period, scaling up to the third highest in the OECD – 15% higher than the OECD average. Vulnerable population groups (young people, long term unemployed, women, etc.) face greater barriers when it comes to finding employment. In fact, in 2013, 58% of men and women under 25 were unemployed, securing for Greece the highest unemployment rate in the EU.
The majority of these reforms, including the introduction of laws reducing and freezing the minimum wage–normally established through collective bargaining agreements – have undoubtedly led to the deregulation of the collective bargaining system.
These reforms in the Greek labor market have resulted in great controversy among social groups. The reforms have received fierce criticism, on one hand, for being detrimental to both social dialogue (collective bargaining) and human rights and, on the other hand, for generating extremely poor results when it comes to creating new employment opportunities. Such criticisms, though not entirely groundless, fail to take into account the fact that the effects of labor reforms also depend heavily on the so-called “business cycle” which is seriously affected and undermined by the implementation of strict austerity and fiscal consolidation policies as the Greek recession continues.
Nonetheless, it is a fact that both the European Council and the International Labour Organization (ILO) have called on Greece to observe International Labour Conventions on fundamental human rights, such as the right to work, the freedom of association, and the right to organize, highlighting the absence of social dialogue and the need to strengthen and safeguard such fundamental human rights. Furthermore, it has been stressed that Greek authorities have failed to provide the social support required in order to tackle the sharp rise in unemployment, let alone protect the right to just and favorable conditions of work.
Six years since the first Memorandum was introduced in 2010, and after numerous wage and pension cuts, staggering unemployment rates, and a vicious circle of deficits and recession, a much more pervasive set of measures stemming from the third Memorandum (Law 4336/2015) adopted last August is yet to be implemented. These new reforms are rumored to pertain to mass layoffs, collective bargaining, additional wage and benefit cuts (including further reduction of minimum wage and the elimination of holiday and annual leave bonuses for private sector employees) and the introduction of new forms of employment, in a last effort to further encourage flexibility. The omens so far may not be good for the already traumatized Greek labor market, and it remains to be seen whether it will manage to survive and, after all, head towards its rebirth.
