A new increase in the minimum wage, which could be +70 euros, is expected to be announced during the first 15 days of March by the Ministry of Labor to raise the minimum wage from the current 713 euros to 780 euros.
With high inflation and a difficult pre-election situation for the ruling party, restoring the minimum wage to its pre-memorandum level of 751 euros is taken for granted, while the economic staff is now actively discussing the possibility of raising the minimum wage even by 9%-9.5% to cover the loss of income of about 650,000 private sector workers from the increase in the consumer price index.
Of course, the Department of Labor recognizes that strong inflationary pressures, the high cost and exorbitant cost of energy are depleting the resilience of not only households but also businesses. Therefore, it is possible that any solutions will be combined, as demanded by representatives of employers’ organizations, with incentives to further reduce taxation and energy costs.
In 2012, the minimum wage was 751 euros, but then the purchasing power of the euro was at least 2 times higher. Even now, with the promised 780 euros, the standard of living will be 2 times lower than three years earlier.
In this vein, Minister of Labor Kostis Hatzidakis, speaking at ERT’s First Programme, spoke of a significant increase in the minimum wage, “but the needs of enterprises will be taken into account”, which, as the minister said, “should remain open and competitive.” “The increase will be fair, it will be significant, but it will not be such an increase that will create competitiveness problems for enterprises in the market and, ultimately, for the workers themselves,” he said.
This amendment is expected to be submitted to Parliament shortly. She will set a February 28 deadline for the submission of a final proposal by the Center for Planning and Economic Research (CPE) and an expert panel to the Department of Labor. In practice, this means that next week a letter will be sent to the scientific authorities (Bank of Greece, IOBE, INE/GSEE, IME GSEVEE, INEMY ESEE, INSEETE and OMED) to complete reports with their proposals by the first week of February. There will be a short period of oral consultations between stakeholders to ensure that the final memorandum is in the hands of CCEE members and an expert committee so that they, in turn, can submit their final proposal to the Department of Labor by the end of February. Of course, the final decision will be made by the competent Minister of Labor, Kostis Hatzidakis, in the first 10 days of March, after approval by the cabinet of ministers.
The increase in the minimum wage will be combined with incentives for businesses to further reduce taxation and energy costs. Where the money will come from for this, the authorities have not yet said.
A 5.5% increase, equivalent to 39 euros, to bring the minimum wage back to pre-memorandum levels (751 euros) from the current 713 euros, was deemed insufficient. Therefore, the authorities are considering “the needs of both society and business”, including in the scenario an increase in the minimum wage by at least 7.75% -8%, the same as the increase in pensions. This will bring the new minimum wage to between 768 and 770 euros (an increase of 55-57 euros), and given the 9.5% inflation rate, the new minimum wage could increase by 67 euros to 780 euros per month.
Some media believe that the government will go along with the proposal of the opposition, which is in favor of raising the minimum wage. up to 800 euros.
Employers’ circles point out that if the minimum wage is increased by more than 9%, the burden on business will be significant, with pressure from workers who currently earn close to 800 euros. For its part, the GSEE is calling for the return of the responsibility for setting the minimum wage to the social partners and bringing it up to 60% of the median full-time wage, those. about 850 euros.
According to the ECB, pEurozone wage growth to be ‘very strong’ this year, breaking historical records and partially leveling inflation, which has sharply depreciated the euro since 2021. The increase in wages will reflect “some convergence between wages and higher rates of inflation” seen since 2021, they note. In the euro area, annual consumer price growth fell below the symbolic 10 percent threshold in December after a year and a half of consistent growth. But because of the price disruption, “real wages are much lower” today than they were in 2019, “before the pandemic,” ECB analysts explain. According to EKT, the strong growth also reflects the good state of the labor market, despite the slowdown in the economy. Gross wages in the Eurozone rose by 4.5% in 2022 and is expected to grow by 5.2% in 2023, with average inflation more than 10%.