ECONOMY

Pay hikes threaten ranking

Greece’s weak international competitiveness ranking will be further harmed this year due to public and private sector pay rises far outweighing productivity hikes, according to a report. Alpha Bank said in its weekly bulletin that Greece’s EU stability plan, submitted to Brussels last week, foresees spending on public sector wages rising to 12 percent of gross domestic product, from 11.3 percent in 2008. In the private sector, salaries per capita will be increased by 6.1 percent this year, down from a 7.6 percent hike in 2008. The figure will result in a 5.2 percent rise in the cost per unit of labor, one of the highest in Europe. In Spain, the figure stands at 3.8 percent and 2.2 percent for Italy. «This means that for one more year, Greece will have a significant loss in competitiveness in 2009 based on labor costs, as it also had in previous years,» the report said. The Greek government’s stability plan foresees the country’s economy expanding by 1.1 percent this year, versus 3.0 percent last year, largely supported by consumer spending.