Transcript Flex Work Research Centre International Conference on Flexicurity “Flexibility and the rule of law in ‘active’ labour market policies – Policy dilemmas for the.

Flex Work Research Centre
International Conference on Flexicurity
“Flexibility and the rule of law in ‘active’
labour market policies – Policy dilemmas for
the rudimentary Greek social model”
Dr. Gabriel Amitsis
Assistant Professor of Social Security Law
Technology Educational Institute of Athens
37, Poulopoulou Str., GR 118 51 Athens
e-mail: [email protected]
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INTRODUCTION
This Presentation highlights the most important
dilemmas to promote flexicurity patterns in Greek
labour market policies during the recent financial
and economic crisis. Current conditions put into
question the balance between the rule of law
(National Constitution, legislation, collective
labour agreements) and external
donors’
expectations (EC, ECB, IMF), strongly needed
particularly for Mediterranean countries like
Greece, faced with serious setbacks in economic
growth, public budgets, financial stability,
employment and social protection
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BASIC FACTS ABOUT GREECE
2010 General Government deficit:10.5% of GDP
Public Debt: 142.8% of GDP (August 2011)
Population (National Survey May 2011): 10.787.690 (9,3% foreigners)
Over 65: 18%
Elderly dependency ratio (population over 65 divided by the population
aged 15-64) : 25%
Poor elderly: 472.300 people in 2010 according to Eurostat poverty line
definitions
Average rate of basic pensions: 490€
Fertility rate: 1,29
Poverty rate (August 2011): 21%
Suicide rate: + 17% (2007-2009) / + 40% (2009-2010)
Employment rate (March 2011): 64,2%
Minimum wage: 715€
Unemployment rate (August 2011): 16,4%
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Unemployment rate of young persons below 25 (August 2011): 36,4%
THE GREEK SOCIAL SECURITY
SYSTEM
The Greek Social Security System is a rather
complex model of social protection mechanisms
that supplement the traditional role of families
and community networks as the main providers
of care against risks and needs. It is promoted
through the application of three different
techniques: social insurance for persons active
in the labour market, social assistance for needy
uninsured persons and a national health
scheme for all persons living in the Greek
territory.
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THE TREATMENT OF POOR PEOPLE
In principle, the Greek social policy model pays marginal
attention to the coverage of poor persons outside the
labour market, due to the lack of a statutory general
guaranteed minimum income scheme for needy persons.
Greece and Hungary are the sole EU Member States
without an institutional guarantee for sufficient
resources to poor people. However, the current Greek
framework includes values, objectives and mechanisms
of an internal social solidarity paradigm as a means
to advance non public coverage of persons outside the
labour market: family and kinship networks,
entrepreneurship, volunteerism.
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THE GREEK LABOUR MARKET
• Hourly labour productivity increased sharply since 1999; average
annual working hours are the longest in Europe.
• Due to strong differences in wage setting, Greek nominal unit labour
costs increased by more than 30% since the start of EMU.
• Monopolistic price setting is also critical, enabling firms to pass on
higher wage costs or imported prices onto domestic prices.
• Non – declared employment is expected to reach 1.000.000 persons
in 2010.
• Regulatory actions are split between the central government and the
social partners; working conditions are regulated by the following
Collective Labour Agreements: (a) The National General
Collective Agreement that sets minimum wages and salaries
pertaining to workers all over the country, (b) The Sectoral or
Industry Collective Agreements, (c) The Company Collective
Agreements, (d) The National and the Local/Regional
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THE CRISIS DIARY
• 23 April 2010: Greece requests financial assistance from the euroarea Member States and the IMF;
•
27 April 2010: 2-year bond spreads reach 1552 basis points; 10years bond spreads reach 755 basis points;
•
2 May 2010: Greece, the Commission, the ECB and IMF
announce an agreement on a three-year programme of economic
and financial policies. The Eurogroup unanimously agrees to
activate stability support to Greece via bilateral loans centrally
pooled by the European Commission;
• 6 May 2010: The Greek Parliament adopts Law No. 3845 /
6.5.2010 on “Measures to implement the Financial Stabilisation
Mechanism of the Greek Economy” that ratified the Agreement
between Greece, the European Commission, the European Central
Bank and International Monetary Fund on a three-year programme
of economic and financial policies;
• 9 and 10 May 2010: The Council and the EU Member States
endorse a Financial Stabilisation Mechanism
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ONE YEAR LATER…
• Rise in poverty rates (18,9% April 2010 – 20,2% April 2011)
• Sharp rise in suicide rates (over 40%)
• Rise in unemployment rates (11,9% April 2010 – 16% April 2011)
particularly for the group 15-24 years: (30,8% April 2010 – 43,1%
April 2011)
• Rise in overindebted households (+7%)
• Introduction of flexible work patterns
• Reduction in the amount of first pillar compulsory pensions / rise
in pensionable age
• Cuts in social spending - overall reduction of 9.6% or 3.4 billion
Euros (1.5% of GDP) on pensions, illness and pharmaceutical
benefits in 2010
• Increase of taxation (both in income taxation and VAT)
• No welfare support for poor / excluded persons
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THE FLEXIBILITY ISSUE – OECD 2009
The OECD 2009 Report on Greece emphasised that
enhancing labour market flexibility is important in the
current situation to avoid the expected rise in
unemployment,
which
is
likely
to
affect
disproportionally the young and women, becoming
structural. Flexibility would also boost productivity and
help narrow the real income difference between Greece
and the most advanced countries, as this is entirely due
to a productivity gap. Labour utilisation is relatively
high, mostly because of the large number of hours
worked. Its contribution to growth can be increased
further by reducing the particularly high level of
unemployment among the young and women, and by
raising female participation.
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OECD RECOMMENDATIONS
Further reforms are needed to improve labour market
performance:
• Minimum wages, which are determined by the social
partners in Greece, should be set taking into account high
unemployment rates of youth and women; in other
words, minimum wage increases should be more
moderate, so that minimum wage levels do not act as a
disincentive for hiring young people.
• The government should encourage decentralised wage
bargaining by not administratively extending collective
agreements to firms not directly represented in the
agreement.
• Employment protection legislation, which is particularly
restrictive for the white collar and temporary workers,
should be eased.
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THE FLEXIBILITY ISSUE – IMF 2010
Labor market reform under preparation is sound and needs to be
implemented forthwith. However, product and services market
reforms are too timid for now and need to be strengthened and
deepened. The thought persists that Greece’s closed nature and
inability to generate inflation below the euro-area average, even in
the midst of a deep recession, is evidence of poorly contested
internal output markets. As expected, strong resistance is being put
up by closed professions (e.g. truckers, lawyers, notaries,
architects, etc.) and more needs to be done to overcome such
resistance. This will also help generate broad support for the
program by preserving fairness in the distribution of the
adjustment burden between dependent labor, the self employed,
and capital owners. The authorities can send a further strong signal
to the markets by being uncompromising in their resolve and
speed to privatize or close down the numerous state
enterprises which have proven to cost tax payers large sums of
money, rather than yielding adequate dividends, and which may
well be obstacles to more efficient market structure as long as they
remain in the public hands.
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THE FLEXIBILITY ISSUE – EU 2010
In line with the lowering of public sector wages, private sector
wages need to become more flexible to allow cost moderation
for an extended period of time. Following consultation with
social partners and within the frame of EU law, the government
will reform the legal framework for wage bargaining in the
private sector, including by eliminating asymmetry in arbitration.
The government will adopt legislation for minimum entry level
wages in order to promote employment creation for groups at risk
such as the young and long-term unemployed. In parallel, the
government will implement the new control system for
undeclared work and modernize labor market institutions.
Employment protection legislation will be revised, including
provisions to extend probationary periods, recalibrate rules
governing collective dismissals, and facilitate greater use of parttime work.
The scope for improvements in the targeting of social
expenditures will be revised in order to enhance the social safety
net for the most vulnerable.
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NEW LABOUR MARKET POLICIES UNDER THE
MEMORANDUM OF ECONOMIC AND FINANCIAL
POLICIES
• Wage reductions. The 13th and the 14th wage
payments was eliminated for all public employees. To
protect the lower income segment, for those receiving
less than €3.000 a month, a flat bonus payment of €1.000
a year per employee will be introduced, which will be
financed through cutting salary allowances for higher
income segments.
• The MOLSI designed an Action plan for reduction of
undeclared employment and contribution evasion
• Introduction of solidarity contribution for unemployed to
be paid by public sector employees, self-employed and
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private sector employees.
NEW FLEXICURITY POLICIES?
•
•
•
•
•
Establishment of a fully symmetric arbitration system;
Reduction in severance payments by 50%;
Cut in overtime remuneration by 20%;
Extension of probation period from 3 to 12 months;
Increase of permissible dismissals from 2 to 5% per
month;
• Introduction of firm level agreements (these may violate
advantages established by Sectoral / Industry Collective
Agreements as far as salaries and working conditions are
concerned, but should not violate advantages established
by National General Collective Agreements);
• Introduction of measures promoting part time
employment.
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•
•
•
•
•
•
NEW PROJECTS IN PROGRESS
Adapt
legislation
establishing
a
simplified
remuneration system covering basic wages and
allowances that applies to all public sector employees;
Reform legislation on fixed-term contracts and on
working-time management;
Adapt legislation on tackling undeclared work to
require the registration of new employees before they
start working;
Introduction of short working time arrangements in the
context of the relevant German scheme;
Development of activation measures for job seekers
(695.259 in September 2011) and unemployment
beneficiaries (213.335 in September 2011);
Development of subcontracting techniques between
PES and Private Employment Firms.
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LESSONS FROM THE GREEK CASE
• Economic and fiscal policies should not underestimate the social
values of employment.
• Anti-poverty and inclusion targets should accompany long term
financial sustainability objectives.
• Deregulation of labour markets destroy family networks and internal
support mechanisms.
• There should be a greater recognition of non economically active
persons as citizens and a systematic adoption of a decent living
standards perspective in future financial stabilisation measures.
• Efforts should be made to create stronger employability awareness
and perceptions of the right of workers / unemployed people to
access good quality services provided in an equitable and
accountable way.
• Networking between PES and Private Employment Firms should be
adapted to employability targets and pluralism values.
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AND THE JOURNEY TO
THE ITHACA
CONTINUES….
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