Minimum wage: the 5 steps for an increase

Through five steps, to be carried out at a rapid pace, the Ministry of Labor expects to have the proposal to raise the minimum wage in the private sector ready by May. This is a consultation process that began a few days ago with the first meeting of the relevant Consultation Committee, but it will last a little over three months. The Ministry of Labor’s goal is to complete the process by April 15 of this year at the latest. Moreover, Prime Minister Kyriakos Mitsotakis himself has pledged that minimum wages in the private sector will increase starting May 1 of this year.

The Minimum Wage Consultation Committee held its first meeting last Thursday, January 27. Chaired by Kostas Papadimitriou, Professor Emeritus of Law at the University of Athens and President of OMED, Kostas Papadimitriou, the necessary invitations were sent to the relevant academic and social organizations (GSEE, SEV, SETE, SBE, ESEE, GSEVEE, Bank of Greece).

The steps to be taken are as follows:

1. The special report must be prepared and submitted no later than February 28.

2. The Coordination Committee shall forward the memorandum and supporting documentation of each party to the consultation to the other representatives of the social partners, along with an invitation to an oral consultation, no later than March 15.

3. The submission of all memoranda and documentation from the parties involved in the consultation, as well as the report from the agencies to the Center for Planning and Economic Research (KEPE) for the preparation of a Draft Consultation Report, by March 31.

4. The draft consultation report is to be finalized by April 15 at the latest.

5. The proposal by the Minister of Labor and Social Affairs to the Council of Ministers regarding the setting of the minimum salary for civil servants and the minimum daily wage for manual laborers during the last half of April, so that the new minimum wages can take effect on May 1.

As a reminder, on January 1, the minimum wage increased by 2%, bringing it to 663 euros gross. This is the wage paid to at least 700,000 private-sector employees. In addition, the minimum wage affects 24 benefits provided by the OAED, including unemployment benefits.

There are already estimates that there will be a further increase to the 6% level, which means that the new minimum wages in the private sector will be set at around 700 euros gross.

«Documentation is »key”

Of course, much will depend on the positions taken by the scientists working at the various institutions, through the institutes that have been established. It will become clear there whether any growth in the Greek economy can be reflected in a simultaneous increase in wages. In other words, it must be demonstrated through relevant scientific evidence that the positive trajectory of the country’s economy will remain intact and continue unimpeded, provided there is a wage increase in the private sector. The critical factor is the competitiveness of the Greek economy in the international arena. Given that the pandemic has caused a comprehensive realignment of forces on the global economic landscape, it must be possible to support the view that Greek products will remain competitive, even with an increased minimum wage in the country.

However, based on recent Eurostat data, it appears that among the 21 EU member states that have adopted a minimum wage system, Greece ranks 11th, placing it in the third and lowest tier. In fact, given that 14 monthly salaries are paid, Greece’s minimum wage appears to be 774 euros.