The magic wand and our pockets
In the runup to the election, now-Prime Minister Kyriakos Mitsotakis said that increasing the minimum wage to 950 euros and the average salary to 1,500 euros was a “realistic goal” over a four-year horizon. Leftist main opposition SYRIZA accused him of populism, arguing that wages are not raised by ministerial decisions or televised announcements, forgetting that, in 2015, leader Alexis Tsipras had promised to tear up the bailouts Greece had signed with the country’s creditors to avoid default, with “one law and one article.”
But it is the economic policies of each government that obviously create the conditions that ultimately help wages flourish or decline, as we have learned first-hand.
Wages cannot be forced to rise with a magic wand. However, they can grow with a reduction in tax burdens and an increase in investments, with consistency and stability, by creating new jobs, ideally in sectors of high-added value, and by increasing productivity. It also helps to promote meritocracy, technology integration and skill development.
The state cannot and should not intervene in the free market to raise wages, which need to correspond to economic realities in order to be sustainable. Steps have already been taken in this direction: Unemployment is at its lowest in the last 12 years, Greeks now work 14 days less a year to pay taxes and contributions to the state, tourism – despite its side effects in areas such as housing costs – sustains the economy and government revenues. The EU Recovery Fund, a result of the Covid pandemic, is an unexpected investment tool.
On the other hand, inflation persists and, in fact, any income support, whether wage increases or subsidies, will only keep demand high and therefore prices, confirming the theory of the vicious cycle. There are fears of a global recession in 2024 due to the rise in interest rates. But the glass is probably half-full. The pandemic seems to be a thing of the past and Europe – despite the war raging in Ukraine – is finding footholds for its energy sufficiency, which will put further downward pressure on prices. Mitsotakis made citizens an offer they could not refuse. They would vote for him and he would see to it that their wages increased. The first part of the four-year agreement has been fulfilled. Now, there are no excuses. The government should direct any benefits from economic growth into an improvement in the standard of living, which is the main aim.
