Greece might have to reduce its minimum wage and private sector workers could have to accept severe salary cuts as part of the reforms needed to secure funding without which the country is likely to go bankrupt by March, Prime Minister Lucas Papademos told union leaders Wednesday.
For the first time since the economic crisis began, the issue of both the minimum wage and private sector salaries were laid on the negotiating table. So far, unions have sought to protect changes to both, although in reality thousands of private sector workers have seen their wages reduced over the last two years.
?We will have to accept limited sacrifices to prevent a catastrophic outcome — we have to give a little now so we do not lose a lot,? Papademos told representatives of Greece?s largest private sector union, GSEE, as well as the Hellenic Federation of Enterprises (SEV), National Confederation of Greek Commerce (ESEE) and the General Confederation of Greek Small Businesses and Traders (GSEVEE).
?It is my duty to inform you of the country?s real situation? these changes are not only necessary so we can get the next loan installment but in order to rebuild our economy and to restore lost competitiveness and fiscal stability,? said the prime minister.
Papademos made it clear that Greece?s competitiveness is not just dependent on wage levels — he mentioned other factors such as the country?s public administration, infrastructure, corruption and the quality of goods and services — but said that unions and employers would have to come to new agreements. Apart from the minimum wage, he indicated that the 13th and 14th monthly salaries that most private sector workers receive would have to be re-examined. The interim prime minister also suggested that automatic pay rises would have to be scrapped and that labor laws would have to be simplified.
Papademos said employers and unions would have to agree this month as Greece is under pressure from the European Union and the International Monetary Fund to carry out structural reforms that would secure further loans. ?Without an agreement with the troika and the ensuing funding, Greece faces the threat of a disorderly default in March,? said the premier.
Representatives of GSEE and GSEVEE rejected the notion of making changes to pay and terms in the collective labor contracts. ESEE is proposing a three-year salary freeze. SEV proposed that the unions meet on January 9.