Austerity knows no bounds in Greece

While last week’s announcement that Greece entered deflation for the first time in 45 years was not entirely unpredicted, the case put forward by the Troika for slashing wages and dismantling the country’s industrial relations system should be challenged.

Workers’ rights are being rolled back further in Greece as austerity deepens

While last week’s announcement that Greece entered deflation for the first time in 45 years was not entirely unpredicted, the case put forward by the Troika for slashing wages and dismantling the country’s industrial relations system should be challenged.

The impact of the drastic reduction in demand caused by rampant unemployment and the diminution of purchasing power is still being felt. Although exporters and consumers may see the lowering of prices as positive news, further catastrophic wage reductions may be on the horizon if prices do not stabilise soon and Greece sets off on a deflationary spiral accompanied by high unemployment (now at 27 per cent) as businesses seek to maintain margins.

The fear is that such wage reductions may be easier to implement following the Troika-led reforms of Greece’s collective bargaining and wage setting systems. Contained in the memoranda of understanding accompanying the Troika’s bailout agreements were among other things commitments by the Greek government(s) to lower public and private sector wages, reform the legal framework for wage bargaining and decrease minimum entry level wages.

Extreme measures

As a result of these commitments no less than six major pieces of industrial relations legislation have been passed altering the Greek industrial relations model.

Pre-crisis, wage rates and minimum standards of employment were determined by the social partners and laid down in the National Greek Collective Agreement (NGCA). Sectoral, Occupational and Enterprise level agreements were also permitted under Greek law with provision for those workers not covered to accede to an appropriate agreement.

The new legislation has undone this system and introduced (among other things) the following extreme measures:

–          A 22 per cent reduction in the minimum wage agreed by the social partners in the NGCA (32 per cent for those below 25)

–         New minimum wage to be defined by law and not collective bargaining

–          Professional and enterprise level agreements are now allowed to deviate from the minimum standards set out in the NGCA (i.e. the ability to lower wages)

–          Young unemployed workers entering the workforce for the first time are excluded from the NGCA

–          A reduction in the duration of collective agreements and limits on ‘extension’ to all workers

By adopting this legislation, Greece has violated its own statutory obligations to uphold collective agreements and intervened with permanent provisions of law in a free collective bargaining system by setting minimum wages.

As the Greek unions have pointed out, this was done despite the lack of any clear relationship between these measures and the need to ensure fiscal discipline to address the country’s debt and budgetary problems. In fact, even the employers’ associations have spoken out against the assault on free collective bargaining.

Anti-trade union violations

The International Labour Organization (ILO), a UN agency responsible for setting and monitoring labour standards, shares these concerns. While aware that these measures were taken within an exceptional context, it found that “there were a number of repeated and extensive interventions into free and voluntary collective bargaining” together with an “important deficit of social dialogue”.

The upshot of this analysis is that Greece may be breaching ILO conventions and principles it has ratified – sources of international law.

Not only is Greece in the dock for possible violations of European and international law, the European Union institutions in the Troika are arguably acting outside the scope of the EU Treaties and Charter of Fundamental Rights.

The EU’s legal obligations founded on the values of ‘human dignity, freedom, democracy, equality, the rule of law and respect for human rights’ are quite clearly at odds with its heavy handed approach to dealing the Greek people.

With Greece having already been berated by the European Committee on Social Rights for its pension reforms, the legal foundations for these Troika-inspired measures are looking increasingly weak. Furthermore, the Greek government has even invoked marshal law (from the days of the military dictatorship) to break lawful strikes.

Austerity knows no bounds.

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2 Responses to “Austerity knows no bounds in Greece”

  1. LB

    Shows you the consequences of a government running up debts it can’t pay.

    Since the true UK debt is 7,000 bn, its coming to a town near you, soon.

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