ECONOMY

Employers worried about salary increase

Employers worried about salary increase

Expert and employer associations are expressing fear that the possibility of a significant raise to the minimum wage would lead to the consolidation of inflationary pressures and have a negative effect on productivity. Their comments come in the context of the public consultation ahead of a new minimum salary being adopted from May 1.

At the same time, data on salaries show that Greece is well below the European Union average. Only the countries of central and eastern Europe, the most recent entries into the bloc, have got lower minimum wages than Greece.

Ahead of the decision by Labor Minister Kostis Hatzidakis, expected toward the end of April, the feedback from associations indicate that any new measure would need to account for the broader economic environment, as fuel rates soar and the medium-term consequences of the Ukraine war are still hard to gauge. The associations also accept that recent developments on the inflation front have shrunk the minimum salary’s value in terms of purchasing power.

In their majority, the scientific and employer associations acknowledge that the debate is taking place ahead of a favorable macroeconomic environment, which works in favor of a minimum salary rise, while one in every three workers is in part-time employment.

The increase proposals range from 2.7% by the Bank of Greece to 18% by the National Confederation of Greek Labor (GSEE), while most associations agree the rise should, at least, meet the inflation rate.

Employers reiterate their proposal for the reduction of non-salary costs, while the Foundation for Economic and Industrial Research (IOBE) notes that a moderate increase could be combined with a further cut to social security contributions and state subsidies for vulnerable households.

The recommendations of the state-appointed Center of Planning and Economic Research (KEPE) refer to cautious hikes, while acknowledging that the majority of private sector employees are now on or near the minimum salary.

The Hellenic Confederation of Commerce and Entrepreneurship (ESEE) proposes a significant increase, based on the inflation rate, while the Greek Tourism Confederation (SETE) speaks in favor of an increase of 3-4%, thanks to the positive outlook for the economy this year.