Why salaries aren’t going up

Raising salaries is said to be the best medicine for rising prices; it is easy, it is clear – and it is wrong. Runaway prices can only be reined back in by liberating competition from the constraints of the cartels and exercising proper oversight of the entire supply chain. Raising salaries, at the very best, will merely offset the impact of high consumer prices on purchasing power. Even so, the Greek government, which often talks about how great it would be for salaries to go up, is doing everything that needs to be done to keep them low.

One-third of salaried employees in Greece are paid below 800 euros, 53% earn up to 1,000 euros a month and just 10% make 2,000 euros or more – all before deductions. This is the reality and it won’t change no matter how many “Greek statistics” are bandied about in the hunt for votes. The Greek model is based on cheap labor and is defined by a burgeoning class of so-called “nouveau pauvre” – people who are being driven to poverty not because they’re unemployed, but because they’re badly paid.

Let’s not kid ourselves; what it comes down to is the balance of power between society and the governing class. The economic crisis and the austerity measures that came with it effectively froze collective labor agreements and allowed them to be gradually replaced by contracts at the individual or business level, which chipped away at employee rights. The profound devaluation of labor restored the competitiveness of the Greek economy. Collective bargaining is supposed to be back on track now, but that’s just in theory. In practice, it has been abolished, because any business that is not interested in negotiating can refuse to do so without consequence, thanks to laws giving businesses a free pass to do whatever they want.

How would a government that was amenable to the very European principles of consultation, participation, social negotiation and collective agreements act? Well, it would do the following three things for starters:

First, it would strengthen the negotiating framework and encourage workers and businesses to sit down at the table for talks in a spirit of goodwill. Anyone who arbitrarily refused to do so would be faced with the threat of recourse to arbitration by the other party.

Second, it would strengthen sectoral labor agreements, which are binding only for the businesses and employees of a specific group of businesses. The 51% threshold could easily be reduced to, say, 30% in order to ensure greater participation and avert social dumping. 

Third, it would restore negotiations with unions on the question of minimum wage, so as to inject substance into public consultation (in the past, the minimum wage was set according to what the business federation, SEV, and the umbrella union GSEE decided). This would strengthen the role of the social partners and trust in public dialogue.

In its latest regulation, the European Union dictates that 80% of member-states’ salaried workforces need to be covered by collective labor agreement and that when this is not the case, a roadmap needs to be designed to achieve this target. In Greece, salaried labor remains at the mercy of the whims of the higher-ups. At best, 15% of the salaried workforce is covered by some form of collective agreement. And this is why salaries are not going up.