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Greece: Wage freeze recommended

Persistently high levels of unemployment and the strong pressure exercised by the pandemic on the economy do not favor a significant increase in the minimum salary, the Center of Planning and Economic Research (KEPE) argues in a report. The independent center recommends that the lowest salary remains at the current level of 650 euros a month and is only raised again when normality is restored and the economy recovers.

KEPE’s report, which has been seen by Kathimerini, contains the reservations being expressed by a commission of experts to Labor Minister Kostis Hatzidakis and proposes either a freeze on the minimum wage or an increase by no more than 4%.

Some of the experts asked for their opinion stressed the strong uncertainty and significant recession (if temporary) caused by the pandemic and insist on no increase at all. Others propose a small raise up to 4%, focusing on the anticipated rapid growth and the general trend for a minimum salary increase across most of Europe.

A minimum wage hike is likely to have an adverse effect on employment, as it will put more pressure on payroll costs, according to the Bank of Greece. Especially at the current juncture, an upward adjustment would mean increased pressure on sectors hurt by the pandemic with a likely impact on employment, the central bank explains in a report it also submitted to contribute in the consultation process.

The recommendations are not binding for the minister, who will make the final decision. Based on the timetable, the decision has to be made by the end of this month, so that it is put to the cabinet and a ministerial decision can be signed.

The process provided for the drafting of memorandums by the social partners, the scientific and research bodies, then the consultation and the submission of the final positions and reports to KEPE for the drafting of the consultation conclusions. That draft was written in cooperation with a committee consisting of five independent experts on economic matters, and mainly on the economy of labor, social policy and labor relations.