Advisers at odds over Greek labour reforms ahead of bailout review

Euclid Tsakalotos, Greek Minister for Finance and Christine Lagarde, Managing Director of the IMF. [European Council]

A group of advisers charged with helping Greece and its foreign lenders on labour reforms disagree among themselves on key issues, a draft report seen by Reuters showed, reflecting the complexity of talks which are due to start in mid-October.

Eight professors appointed by Athens and its EU and IMF lenders have reviewed Greek law on issues including the minimum wage, collective wage agreements, mass layoffs and strikes.

Greece wants their recommendations to form the basis of its talks next month with the International Monetary Fund and European Union. A successful conclusion would unlock additional funds under a bailout worth up to €86 billion.

The report said the group had reached agreement on many of the issues, but added: “… there were fundamental differences in terms of interpreting events in the past, the present situation in the labour market and some of the recommendations to improve the Greek labour market”.

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The differences focused on the minimum wage and collective bargaining, which leftist Prime Minister Alexis Tsipras has promised to revive despite the lenders’ opposition.

“Complicated – the review will be complicated,” said senior analyst at IHS Blanka Kolenikova, commenting on the differences.

Collective bargaining and the minimum wage are contentious issues in Greece, where up to a quarter of the population is unemployed and workers have lost a quarter of their income.

Under a conservative-led government, Greece froze the mechanism of collective bargaining in 2012, cutting the minimum wage by 22% to €586 for those above 25 years old, and by 32% for younger workers.

It also liberalised mass dismissals and introduced flexible contracts as part of EU/IMF-prescribed reforms aimed at boosting jobs and making Greece more competitive. The jobless rate currently stands at €23.4, with youth hit hardest.

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A majority of the committee members – all professors at EU universities – said the minimum wage should be agreed under “a national collective bargaining agreement”, a view likely to boost the left-led government’s negotiating stance in the talks.

But two members said, “the government should decide on the minimum wage after consultation with the social partners and experts”. The chairman supported that stance.

Minimum wage levels are set by collective agreements or by law across the EU.

On mass dismissals, the committee said a pending ruling by the European Court of Justice on the issue was crucial. It also said that there was no need to tighten rules on strikes or allow lock-outs, a way for employers to ban workers during strikes.

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