Tuesday, February 24, 2015

Odd Philosophies: Greek Government Hopes Minimum Wage Rise Will Give a Boost to the Economy


POISON PILL: There is only so much profit in the private sector. Higher pay causes less people to have jobs. You can have less people earning more or more people earning less. The ammount of money being spent in the economy will be relatively the same, either way.

ATHENS – Greece’s Labor Minister Panos Skurletis says he is confident that increasing the minimum wage next year will help boost the Greek economy.

However, the minister acknowledged in an interview with Efe, the financial position of companies must be improved first.

“Companies are not afraid to increase the minimum wage to 751 euros gross like it was before (it was lowered to 586 euros by the previous government),” Skurletis said.

But he added that “what worries them are other things that for us are also priorities, such as companies’ debts to banks and to the Treasury or Social Security.”

The leftist politician said he believes an increase of “tens of euros” will bring no substantial hardship to a small business that “has maybe three or four employees,” but that increase will help people with low incomes to inject additional money into the market.

“This small positive boost to the economy in the medium term will help create jobs,” the Greek minister argues.

“Increasing the minimum wage will begin starting next year,” noted the official, adding that other laws aiming to improve the economy have top priority at the moment.

The first bill will be introduced this week and refers to the payment of debts amounting to 75 million euros in installments to the Greek Ministry of Labor and Social Solidarity.

The aim of the measures us to improve the economic position of families and small and medium-sized enterprises, thus reviving the economy, said the minister.

The current government considers that legislation passed by its predecessor which offered the possibility of postponing the deadline for repaying debts up to 100 times, was riddled with exceptions that are incompatible with the law.

“One of the challenges faced by the new government is represented by the fight against illegal employment, in which 40 percent of the workers are not registered for Social Security, or work for fewer hours,” Skurletis explained.

“In order to fight this scourge, which has contributed to the erosion in the coffers of the Social Security system, we must strengthen labor inspection measures in terms of human resources and material capabilities,” the minister said.

To improve the long-term outlook for the Social Security fund the government of Alexis Tsipras seeks to establish a new national fund, in addition to encouraging contributions by employees and from employers obtaining revenue flows from the use of public property.

Among the emergency measures that should not be implemented are the series of commitments by the previous government that led to an average 30 percent plunge in the value of pensions over six years.

In terms of labor rights, the Government will restore collective bargaining agreements and protection against layoffs, in a package of measures to be developed in cooperation with the International Labor Organization and implemented next March.

The minister explained that “collective bargaining agreements have lost all value, because in practical terms, there are only individual contracts. In those cases, workers are subject to permanent blackmail and likely to accept jobs under sub-standard working conditions.”


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