Troika insists on salary reductions

Greece?s lenders put fresh pressure on the government Friday to oversee the reduction of private sector wages and to intervene so sector-specific collective contracts are phased out and employers are able sign individual agreements with their employees.

Representatives of the European Commission, European Central Bank and International Monetary Fund, known as the troika, met Friday with Labor Minister Giorgos Koutroumanis and his team. The outcome was that the two sides found themselves some distance apart and the troika insisted that salaries would need to come down.

Sources said that Koutroumanis had attempted to argue that the government should respect any agreement reached between labor unions and employers. The so-called ?social partners? have rejected the idea of reducing wages but are likely to agree on a wage freeze for the next few years. They have also proposed a reduction in social security contributions in order to reduce overall labor costs.

?The labor issue is turning into a crucial matter for the new loan agreement,? said Koutroumanis.

The troika is said to have rejected both proposals made by unions and employers. Sources said the visiting officials pointed out that minimum wages in Greece are higher than in Portugal and Spain, and that Greeks are better paid than workers in neighboring countries. They also argued that Greece was not doing enough to combat youth unemployment, which is over 40 percent.

The troika also wants wider use of individual, rather than collective, contracts in the private sector. They proposed that six months after sector-specific contracts expire, employers should be free to offer workers individual deals. Talks between Labor Ministry officials and the troika are due to continue Saturday.

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