Greece got a taste of the tough stance the International Monetary Fund is expected to take during talks on a second round of reforms this fall in a report released on Friday in which the Fund underlines the reforms it expects Greek authorities to push through.
In its report, the IMF said it expects the Greek government to keep in place labor market reforms carried out by the previous conservative-led coalition, including the lowering of the minimum wage to 586 euros. The current minimum monthly wage, which was lowered from 751 euros by the previous government in 2012, must remain in place as it is one of the highest in the EU based on per capita gross domestic product, according to the IMF. The Fund also wants Greece to align its legislation on labor rights with “best practice” in the EU which would make it easier for Greek employers to fire workers.
The IMF, which has yet to confirm its participation in the country’s third bailout as it waits for reassurances of measures to lighten Greece’s debt, also called for action by Greek authorities on opening up closed professions. Despite years of pressure by creditors on a series of governments, Greece has yet to open up a series of cosseted occupations. The IMF called for priority action as regards engineers, lawyers and dock forklift operators. It also urged Greece to adopt recommendations by the Organization for Economic Cooperation and Development on overcoming barriers to competition in several sectors including logistics, bakeries and pharmacies.
The Fund also pushed Greek authorities to take action to manage the high rate of nonperforming loans that are burdening Greek banks. Cyprus, Ireland, Italy and Portugal share similar problems to Greece with NPLs, the Fund said.
A European official in Brussels commented on Friday that Greece will not be on the agenda of talks for the second Eurogroup in a row next Monday. The official indicated that authorities have not yet fallen behind in the implementation of reforms but emphasized that “there will be challenges over the summer.”
Separately on Friday, the European Commission decided to suspend the disbursement of 13.5 million euros in structural funding for construction projects in Greece as it awaits adequate reassurances from Athens that cartels are not operating in the sector.