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Victoria Mindova

The talks with Greek creditors are at a dead-lock following their visit to the Ministry of Employment. The relevant Minister Yiannis Vroutsis received in his office the extended mission of the International Monetary Fund, European Central Bank and the European Commission to discuss urgent changes in labour legislation. After two and a half hours of talking, the Ministry and the creditors could not reach consensus on any measures to be taken in the labour market in order to facilitate the movement of the labour force and reduce costs in the budget.

According to recent information, which the Ministry of Employment refused to confirm or deny, the creditors require reforms in the regulation of labour relations in Greece. Some of them are establishing a more flexible working environment, reducing the compensation for dismissals, reducing the period of notice for layoffs, eliminating the restrictions on working hours in commercial sectors and increasing the retirement age by one to two years.

Currently, the retirement age in Greece is set at 65 years. Each year of extension of this limit will save pension insurance funds around 900 million euro. The supervisors of the implementation of the bailout agreement urge to eliminate collective agreements that oblige employers to give employees increases and supplements for time served. The proposal is for the minimum wage to remain at the level of 586 euro compared to 740 euro until last year and to increase it only in case of recovered positive economic growth.

Another change that the Ministry should make as recommended by the creditors is to reduce the weight of those costs of employers that are not associated with higher productivity. The supervisory Troika proposed to reduce the employer's contribution to social security funds by 5% and to make it about 24% of the gross amount of salary instead of 28%. In addition, creditors urge to shorten the time in which the employer is required to warn the employees of upcoming layoffs.

Under current law, if the employer wants to dismiss an employee who has 12 years of service at that particular company, the employer has to pay him eight full salaries as compensation. If the employer warns the employee six months earlier, the employee will receive an amount equal to four monthly salaries as compensation.

These and many other issues related to labour legislation remained open. The Ministry was unable to answer the Troika’s questions and there will be another meeting next week, which will specify the final version of the labour market reforms. The less budget expenditures of other sectors are cut, the greater will be the burden of the measures the labour ministry will take. New cuts in pensions and salaries will be avoided if the government manages to effectively reduce tax unfairness and illegal employment (which brings losses of about five billion euro annually).

Meanwhile, trade union forces in the country are adamant that they will do everything to thwart the implementation of fiscal consolidation measures. The first step to sabotage the reforms was the occupation of the Ministry of Employment by PAME – the trade union organization of the Greek Communist Party. The Creditors’ representatives were to meet Minster Vroutsis in the office on Stadiou Street at 1 pm on Tuesday. Members of PAME blocked the two main entrances of the ministry and as a result, there was a two hour delay of the meeting between the Troika and the Minister. Trade unionists protested against the cut in salaries, retirement age extension and cancellation of collective bargaining. PAME is in talks with the trade union of employees in the private sector (GSEE) and the trade union of employees in the public administration (ADEDY) to organize a nationwide strike against the coming changes. The date of the national protest has not yet been agreed.