Labor issues concern creditors

The heads of the creditors’ mission to Athens have, according to sources, expressed concern about the abolition of the subminimum wage during their meetings with political party representatives.

In doing so, they confirmed that the labor market and the issue of the minimum wage rank high among their interests, as they are worried about the competitiveness of the economy and that it may hinder the further reduction of the jobless rate.

The lenders’ representatives appeared to have no objection to a small increase in the minimum wage.

The government, on the other hand, has generated high expectations on this issue, pointing to recommendations by the special committee of the Labor Ministry regarding a 10 percent increase.

Further, Minister Effie Achtsioglou said during an interview with the state-run Athens-Macedonian News Agency last weekend that this is the government’s “most important and emblematic act” to support workers.

It therefore appears that the next few days will indicate where the two negotiating sides could converge.

A second cause for concern for the creditors, as emerged from yesterday’s meetings in Athens in the context of the second post-bailout assessment that formally gets under way today, is the possibility of a fiscal derailment in 2019, both due to court decisions on past cuts to pensions and workers’ bonuses and to the public sector hirings that may increase as the elections approach.

The creditors are also pushing for the faster repayment of the state’s overdue arrears, as a significant amount (900 million euros from the last bailout tranche) has been disbursed to that end without having reached its rightful recipients.

A key issue for the assessment will also be progress in the reduction of nonperforming loans, with the creditors telling party representatives that they have not yet received a concrete proposal from the government for tackling the issue.

The government is eager to extend the protection of borrowers’ main residences, but the creditors are worried about the fiscal impact of the Italian model that Athens is pondering, providing for the state subsidy of tranches payable by debtors in financial trouble.