BY EKA (Athens Labour Unions Organisation) The European Union has been undergoing a deep economic, political and social crisis for the last two years. Greece, with undoubtedly heavy economic and fiscal problems, is the first country where an austerity …

Walton Pantland

BY EKA (Athens Labour Unions Organisation)

The European Union has been undergoing a deep economic, political and social crisis for the last two years. Greece, with undoubtedly heavy economic and fiscal problems, is the first country where an austerity plan is being implemented. It is a peculiar experiment: monetary policies against the social welfare in a western European country. If this experiment ‘succeeds’, the European people’s future will become quite ominous.

The first agreement dated in March 2010, which signified Greece’s accession to European Financial Stability Facility (EFSF) was followed by a series of annexes  (’Memoranda’), which stipulated a set of stern measures in fiscal, and labour policies. A series of legislature have passed from 2010 to 2012, making radical changes to the employment relations.

Here, we must underline that although the Greek government has been insisting that all these tough measures are of vital importance for creating a more flexible labour market boosting employment, the reality is rather different. The recession policies and austerity measures have been quite damaging, as unemployment has soared to 21%, and the economy sunk into a deep depression.

The trade unions have realised that these reforms have as primary target their organisation. This policy would lead to the subversion of working people rights, through the weakening of trade unions. This is a similar pattern as that Margaret Thatcher used in order to debilitate British trade unions.

I. Main amendments of labour market and employment relationships

This is the outline of the major alterations of labour legislation that have passed by the Greek Parliament from 2010 to the February of 2012.

  1. The new legislation extended the probationary period for new jobs recruits to one year. Previously it was 2 months. This legislature enables employers to fire employees without giving them severance pay, despite the fact that may have worked almost a year.
  2. It limited significantly the notice period for terminating white-collar workers’ open ended employment agreements. It reduced the overall level of severance payments. This amounts to an indirect reduction of white collar workers’ severance pay by 50%.
  3. It lowered threshold for collective dismissals. That means that a greater number of employees is allowed to get fired.
  4. It reduced overtime costs by between 5% and 10%.

The next two amendments refer to the decrease of the minimum wage. The minimum wage is a social benefit for the working class. The government abolished one of the pillars of labour relation inGreece.

  1. It made an immediate curtailment to the minimum wage, determined by the national general collective agreement by 22% . From €751 (gross sum of month salary) to €586 (net €487).
  2. It made a further 10% cut, that means  a 32% drop in the minimum wage level determined by the national general collective agreement for youth under the age of 25.
  3. The above term is an obvious violation of the constitutional principle of equality of all Greek citizens, as it imposes lesser payment to younger employees (under 25 years of age) only because of their age.
  4. The allowances for the unemployed were slashed. From €461 they have been cut to €359 per month! The allowances for the unemployed are granted by OAED (Labour Force Employment Organisation) for a maximum  period of 12 months.
  5. It encourages greater use of temporary contracts and part time jobs, making labour market even more flexible.
  6. Social benefit programmes. Social benefit programmes. According to the Government’s allegations, Greece’s social spending (as a share of GDP) remains well above the euro area average.
  1. The Greek government has decided the closure of small earmarked funds such as OEK (Workers’ Housing Organisation), and OEE (the Workers’ Welfare and Recreation Centre). The abolition of the OEK is expected to have widespread repercussions in the construction sector and on state subsidised loans. OEK provided rent subsidies to 120.00 beneficiaries, issued 10,000 subsidised housing loans a year and built 1,500 annually.
  2. The second social organisation which is affected is the Worker’s Welfare and Recreation Centre OEE. The closure of this organisation puts an end to a number of social benefits that the state provided, such as cheap holidays, theatre and books. Furthermore, it is a direct challenge against the trade unions, because this organisation is the main contributor of funding their functions.
  3. Collective bargaining

In 1990 the principal law that sets the institutional framework for collective bargaining in Greece was voted in by the Parliament. According to its provisions, the minimum limits of protection for salaried workers throughout the country are set by the National General Collective Labour Agreement, which is signed by the third-level employers’ and workers’ organisations and has a force of law. Sector-related, business-related and occupation-related collective employment agreements must not include employment terms that are less favourable than the employment terms set by the National General Collective Labour Agreement.

If different collective employment agreements are in conflict, the principle of implementing the provisions most favorable to the workers applies (favourability principle or Gunstigkeitsprinzip). For the first time the favourability principle has been annulled by a recent law. The law stipulates a ‘special company-related agreements’ less favourable to workers than sectoral agreements. A greater deterioration of collective employment agreements derived from the next law 4024/2011.

This legislation stipulates that ‘company-related agreements’ can be signed not only by the company trade union, if no trade union does exist (if the employees are fewer than 20 persons according to law) but also by a group of persons – employees. This change is also a profound intervention into the social partner’s role.

  1. OMED (Organisation for Mediation and Arbitration)

If bargaining between the parties to conclude a collective employment agreement fails, interest parties may appeal to the Organisation for Mediation and Arbitration (OMED).  It includes two steps: The first is the mediation procedure and the second the arbitration. The mediator’s proposals are not binding. However, the arbitrator’s award is equated with a collective employment agreement and is binding. Any interested parties may request the appointment of a mediator. Where an employer rejects a mediator’s proposals, the workers union that accepts those proposals may refer  unilaterally to arbitration. Things have dramatically changed about the role and infectiveness of OMED, after the latest law 4046/2012, which abolished this unilateral possibility.

And why the abolition of the option of unilateral recourse to OMED? The answer is quite simple. Between employees and employers, the weaker part is undoubtedly employees. If the employers are not opting for a mutually agreement, they can simply choose not to appeal to OMED. Furthermore the employers can dictate their terms to employees!

The Greek General Confederation of Labour (GSEE), has repeatedly expressed its opposition to all these amendments, arguing that these measures are a blatant violation of the constitutional stipulations. The Greek General Confederation of Labour has also filed an appeal to the International Labour Organization asking for global support. Besides, GSEE is ready to file an appeal to the Supreme Administrative Court of Greece, trying to annul the above laws as violating the Greek Constitution.

II. Results – consequences in the real economy

The prolonged recession and the imposed austerity policy have had disastrous effects on the working class and social welfare.

More specifically

  1. Greek economy has been estimated that have shrunk about 15 per cent since 2008.  In 2011, economy declined by 7 per cent of GDP. For 2012 the estimation of European Commission is that recession will be much worse.
  2. Unemployment has vastly increased up to level of 21%. It reached the  1,033,507 in December 2011. 300.000 people have fired within a year.  820 employees lost their job each day in 2011. The active working force is only 3,899,319 people. Women’s unemployment has reached 25%. Among young people, 50% are jobless.

According to the European Commission estimations, the unemployment rate will continue to rise in 2012. Thousands of Greek people, especially young and highly qualified are being forced to emigrate either to Europe, or even to Australia.

This is the indicator of official unemployment. However this doesn’t represent unofficial unemployment. So things are probably much worse.

  1. According recent report of the National Confederation of Greek Traders (ESEE) since 2009, 60,000 enterprises have closed. If the recession continues, more than 50,000-60,000 small and very small enterprises will close until the end of 2012. In 2011, 28,260 people working for trade markets lost their jobs.
  2. Civil servants’ salaries reduced 30-35%.  But probably this is not adequate. Last February, an additional cut on pensions was approved by the Parliament. This new reduction was 10-12% for all pensions above €1300.
  3. The “haircut” of Greece’s debt and bond swap, that cut more than €100 billion from Greece’s total debt, has deprived €12 billion from Greek pension funds. The pension funds possessed €24 billion in Greek state bonds and are obliged to accept a haircut of their nominal value about 53,5%. This haircut entails further reductions in the future.
  4. The state’s debt to private enterprises is about €6 billion. According a report by the Ministry of Labour released last week, about 400,000 workers have between six months’ delay in their payments. The central government in order to limit the deficit in the budget stopped all the payments to private companies.
  5. The downsizing of salaries and pensions, the successive tax increases and the high inflation rate aggravated the economic environment and virtually destroyed the social cohesion inGreece.
  6. 20% of people in Greece live below the poverty line. More and more people are losing their homes, mostly in Athens.
  7. The IMF presses the Greek government to take additional measures. The IMF’s permanent representative in Athens, Bob Traa, speaking to finance ministry officials on last Friday, stressed the importance of adopting stern fiscal measures of more than €11 billion, for the years 2013 and 2014. This implies additional horizontal cuts in salaries and pensions.
  8. Furthermore, an extra cut to the spending of the public sector has been decided:  a) the closure of state owned corporations and b) the gradual decrease of civil servants by up to 150,000 by 2015. 15,000 civil servants  are to be fired by the end of this year, 2012.

III. Critique

The failure of the adopted economic policy has caused intense political strife. Public opinion is furious for the inability of Greek politicians, European and the IMF’s representatives, to handle the crisis.

The Labour Minister Mr. Koutroumanis claimed recently that pensions should not drop further. However, the European Commission made public a report stating that an extra amount of €11.7 billion in cuts will be necessary.

The Greek minister of finance, Mr. Evangelos Venizelos, argued for the bond swap. This would cut more than €100 billion from Greece’s €350 billion total debt. However he didn’t make any mention of the €80 billion that the country borrowed for the bond swap.

The futility of austerity policies is obvious. In 2009 the public deficit was 120% of GDP. In 2020 the debt will be similar to that of 2012, after 8 years painful sacrifices. This policy has only been deepening the recession and destroys the prospects of any economic recovery.

Greek public opinion, after the failure of the first Memorandum, has been very suspicious.  Many people believe that the current economic crisis of Greece is only a pretext for the implementation of an elaborate plan to subdue Greece. The profound purpose of this plan is to make Greece a low labour cost market and third world country.Greece is the first but not the last European country that will be subjected to this plan. We wish that all the above was a mere fantasy. But it is a harsh reality. The labour unions, the labour movement, must find ways to fight this policy on all the grounds, on European and international level. 

IV. Proposals made by the trade unions

Greek trade unions – The General Confederation of Labour (GSEE), and the Confederation of Civil Servants (ADEDY) – have expressed an alternative proposal in order to deal with the crisis. This proposal applies firstly to the change of the implemented economic and social policy and secondly to the confrontation of the structural problems of the Greek economy. The solution of the problems will come through:

a. Income redistribution, reduction of tax evasion, diminishing social security contributions evasion.

b. Setting up of a new model of economic development (productivity quality, products and services quality, quality of employment relations, income quality, social protection quality etc).

Furthermore, the Greek banking system must play a vital role in boosting economic growth, by rendering low interest loans to the enterprises and households. The government is committed to provide the money supply restoring confidence in the Greek banking system. But it has also the moral obligation to support Greek citizens during this period of crisis.

Since 2008 Greek banks have been subsidised with billions for the banking system to remain stable and sound. Now the European Financial Stability Facility announced recently it will immediately provide €25 billion for the recapitalisation of Greek banks. Banks must be encouraged to finance real economy and lend money to enterprises and investors at a minimal interest rate.

We are living in a period of crisis. The working class is under attack. Rights, which generations have gained with struggle and sacrifices, are now in danger. The trade unions must cooperate, coordinating their policies. They must voice their arguments to all European workers. And the unions must raise their brightest colours.

Someone gains respect only if their adversary acknowledges that they are willing to fight. When companies realise that their opponent is determined, they will be forced to compromise. Our weapon is our refusal. Refusal to accept poverty and exploitation. Refusal to accept the law of the jungle, that some people, some superior of superiors, is dreaming for our future.


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Walton Pantland

South African trade unionist living in Glasgow. Loves whisky, wine, running and the great outdoors. Walton did an MA in Industrial Relations at Ruskin, Oxford, and is interested in how trade unions use new technology to organise.

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