Concerns in Greece and abroad over minimum wage hike

The announced increase of the minimum wage to 650 euros a month (gross) has generated concern domestically and abroad regarding the impact on the economy.

The managing director of the Foundation for Economic and Industrial Research (IOBE), Nikos Vettas, said on Tuesday that the hikes announced are out of line with the much smaller growth of productivity and the economy in Greece, and are even higher than the recommendation of the Labor Ministry’s task force.

Vettas argued that the improvement of salaries should take place through a drastic reduction of non-salary costs, mainly by slashing social security contributions.

At the same time, while Greece’s creditors have made no official comment on the hike, sources from their end underscored that financial logic dictates that the raises be proportionate to the increase in competitiveness. The creditors had voiced their concern last week in Athens, focusing on the impact on unemployment and undeclared labor.

Bloomberg reported on Tuesday that Prime Minister Alexis Tsipras is risking the wrath of Greece’s creditors, as the European Commission and the International Monetary Fund consider the reforms in the labor market, including the minimum wage, as one of the main feats of the bailout process.