Greece raises minimum wage to pre-bailout levels; Imperative and fair says Labor Min.
“I have no illusions. We know that in our country, wages are still low, and they are being squeezed even more by inflation,” said Mitsotakis, whose center-right government faces a general election in the spring.
Under pressure from lenders, Greece imposed severe pay cuts in 2012 during bailout programs funded by a European Union rescue fund and the International Monetary Fund. As the country was on the brink of bankruptcy, the government took control of wage policy ‒ previously set through labor negotiations ‒ and slashed the minimum monthly pay from 751 euros to 586 Euros. Greek salaries are paid out over 14 installments annually, to provide extra at Christmas, Easter and the summer holidays. Averaged over 12 payments, the new gross minimum monthly pay will rise to 910 Euros.
More specifically, the Hellenic Labor Minister stated that the increase of the minimum wage to 780 Euros is imperative and fair:
"The increase in the minimum wage to 780 Euros per month from April 1st, 2023, is imposed by the increased needs of employees and is based on the momentum that the economy has built up over the last four years. It is a significant and fair increase, which takes into account, on the one hand, the debt to support employees, especially in conditions of increased imported inflation, and on the other hand, the capacity of businesses," Labor and Social Affairs Minister Kostis Hatzidakis said on Friday.
The minister was speaking at a press conference where he presented details of the government's decision to increase the minimum wage and daily wage to 780 Euros and 34.84 Euros, respectively, from April 1st, 2023.
Hatzidakis underlined that the following factors were taken into account when determining the minimum wage: unemployment, which fell from 17.5% in 2019 to 10.8% in January, the improvement in competitiveness resulting from the increase in investments and exports, the recovery of the economy, which is expected to continue this year, the course of inflation, which, although decelerating, will remain at high levels and Greece's position in the European Union, based on GDP and the level of the minimum wage.
“Obviously, this new rise will not solve the problem. But it will offer, for sure, a very important relief,” he said, adding that the rise was the maximum the government could offer within the country’s financial capacity.
He said the increase will benefit around 600,000 workers.
Since 2020, Greece has spent more than 40 billion euros in subsidies and financial aid for households and businesses that struggled to cope with the Covid-19 pandemic and rising energy costs following the war in Ukraine.
This year, it also introduced an 8% payment rise for pensioners, the first since 2010, when its decade-old debt crisis erupted forcing it to slash pensions until 2018
He noted, however, that unemployment does not fall automatically.
"It fell from 17.5% to 10.8% because a series of political and economic conditions came together, namely government stability, seriousness and a positive climate in the economy. If these do not exist, unemployment will rise again," he stressed.
Hatzidakis pointed out that the raise will also lead to an increase in 19 benefits, including unemployment, maternity and others. The unemployment benefit will now reach 479 Euros a month, he said.
“We are all aware that salaries in our country are still low, while imported inflation is putting additional pressure on them,” PM Mitsotakis said.