Social Europe

politics, economy and employment & labour

  • Themes
    • Global cities
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter
  • Membership

Collective Bargaining And Greek Labour Market Reforms

Dimitris P. Skalkos 20th November 2018

Dimitris P. Skalkos

Dimitris P. Skalkos

The main feature of the successive economic adjustment programs implemented in Greece in the period 2010-2018 concerning industrial relations was a radical decentralization of the collective bargaining system and the government setting (more explicitly: the reduction) of national minimum wages. Today, despite the almost complete decentralization of that system, the performance of domestic labour markets fails to meet the policy objectives pursued. The dynamics of employment growth and the reduction of unemployment are weak. Wages have fallen to extremely low levels, contributing to the intensification of in-work poverty, while productivity gains have been marginal.

From governmental corporatism to radical decentralization

Long before the economic crisis, the institutional framework of the Greek labour market was dominated by active state intervention. This governmental corporatism in the field of labour relations remained intact despite the process of Europeanization of the Greek economy and participation in the Eurozone. These policies resulted in segmented labour markets and the phenomenon of ‘jobless growth’ where the job but not the employee were protected.

Interventions in the labour market were organized and promoted through the three successive bail-out programs of the Greek economy under Troika supervision for the period 2010-2018 (Memorandum I, II and III). The most important reforms were a major departure from the previous system of Free Collective Bargaining. These changes include abolishing the “principle of favourability”, suspending the obligatory extension of collective agreements until the end of the economic adjustment program, reducing the time expired collective agreements remain in force to three months from six, introducing non-union representatives into firms with the right to conclude company-level collective agreements (the so-called “associations of persons”) and establishing a legal minimum wage (cut by 22 per cent), not by collective agreement, with sub-minimum rates for employees under 25 years old.

The reforms introduced in the labour market, contrary to policies set out under the European Economic Governance and the Country Specific Recommendations where a deregulation effort was also observed but in a social partnership context (Voskeritsian et al, 2017), promoted a policy of complete decentralization of the collective bargaining system without prior consultation with the social partners. These policies resulted in fragmentation and individualization of collective bargaining practices, after a process of disorganized rather than organized decentralization (Koukiadaki and Grimsaw, 2016).

What were the results of the reform changes in 2010-2018? First, there was a steady increase in flexible forms of employment. Second, wages fell by around a fifth, (20 percept) which has led to an increase in the phenomenon of in-work poverty in the private sector affecting thousands of workers. Third, contrary to mainstream neo-classical theory, labour market reforms have not brought a job-creating economic recovery, as the fall in unemployment has been rather anaemic (to 19 per cent). Fourth, we must not underestimate the impact of these changes on job quality. According to the European Jobs Quality Index 2005-2015, Greece not only records one of the worst performances, but in 2010-2015 a further deterioration as a consequence of both the downward phase of the economic cycle as well as the deregulation of employment.


Become part of our Community of Thought Leaders


Get fresh perspectives delivered straight to your inbox. Sign up for our newsletter to receive thought-provoking opinion articles and expert analysis on the most pressing political, economic and social issues of our time. Join our community of engaged readers and be a part of the conversation.

Sign up here

Last and most important, the significant reduction in labour costs did not lead to an increase in total labour productivity and consequently in the competitiveness of the Greek economy, as shown in the graph below:

skalkos graph01

The role of social trust

Let us now examine the role of collective bargaining in the economic efficiency of labour and, in particular, its importance in the Greek labour market during the economic crisis. The concept of voice plays a central role in the economic behaviour of collective bargaining. Voice is the alternative response to the crisis of organizations and businesses instead of exit. In some cases, voice has lower costs than exit, allowing organizations to adapt to new conditions. The positive collective voice/institutional response can change the nature of the employment relationship and, in doing so, increases levels of productivity and equality in many settings.

Nevertheless, an effective collective voice presupposes high levels of trust between social partners. Strong statutory regulation undermines the possibilities of effective labour relations. Indeed, a negative correlation exists between the degree of cooperation among social partners and that of state intervention in the determination of industrial relations (Aghion, Algan and Cahuc, 2008). Therefore, voice, in the form of social dialogue, is the key feature of an effective co-ordination mechanism in labour markets. Without adequate voice, co-ordination becomes inefficient, owing to incomplete and asymmetric information. Thus, the main issue is how far the institutional framework for collective bargaining is sufficiently representative and inclusive.

Low trust is one of the main features of the Greek labour market. Since 1990, the statutory regulation of the collective wage bargaining system has prevented a representative social dialogue from functioning. A multitude of professional groups and social categories remained on the periphery of collective bargaining, conducted under state regulation, and with unions, mainly in the public sector, being over-represented. On the contrary, the unemployed and the private sector employees were kept at the margins of the Greek dual labour markets. The low level of trust in the Greek labour market is evidenced by a series of indicators such as the low participation in trade unions (low union density) and the high numbers of strikes before and during the recession. Therefore, the collective voice was not representative and social dialogue was ineffective. Interestingly, Greece is the only EU country where the minimum wage is fixed unilaterally by the state at the final stage without prior consultation of the social partners. Thus, communication was blocked, the landscape of labour relations was deeply confrontational, and there was little room for cooperation.

The radical deregulation of the Greek labour market has led to the disintegration and disorganization of labour relations and almost complete individualization of wage bargaining. Labour market institutions are deeply rooted in national histories and social norms. “One-size-fits-all” policies for wage bargaining co-ordination rarely work. The Greek economic crisis and the subsequent adjustment of labour markets leave room for useful institutional experimentation based on the specific characteristics and needs of the Greek labour market. That could be an appropriate firm-level bargaining system combined with a national framework for setting wage floors.

Dimitris P. Skalkos
You are here: Home / Politics / Collective Bargaining And Greek Labour Market Reforms

Most Popular Posts

Russia,information war Russia is winning the information warAiste Merfeldaite
Nanterre,police Nanterre and the suburbs: the lid comes offJoseph Downing
Russia,nuclear Russia’s dangerous nuclear consensusAna Palacio
Belarus,Lithuania A tale of two countries: Belarus and LithuaniaThorvaldur Gylfason and Eduard Hochreiter
retirement,Finland,ageing,pension,reform Late retirement: possible for many, not for allKati Kuitto

Most Recent Posts

Nagorno-Karabakh,European Union,EU,Azerbaijan,Armenia Azerbaijan exploits vacuum on Nagorno-KarabakhGeorge Meneshian
Abuse,work,workplace,violence Abuse at work: who bears the brunt?Agnès Parent-Thirion and Viginta Ivaskaite-Tamosiune
Ukraine,fatigue Ukraine’s cause: momentum is diminishingStefan Wolff and Tetyana Malyarenko
Vienna,social housing Vienna social-housing model: celebrated but misusedGabu Heindl
social democracy,nation-state Social democracy versus the nativist rightJan Zielonka

Other Social Europe Publications

strategic autonomy Strategic autonomy
Bildschirmfoto 2023 05 08 um 21.36.25 scaled 1 RE No. 13: Failed Market Approaches to Long-Term Care
front cover Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship

Hans Böckler Stiftung Advertisement

WSI European Collective Bargaining Report 2022 / 2023

With real wages falling by 4 per cent in 2022, workers in the European Union suffered an unprecedented loss in purchasing power. The reason for this was the rapid increase in consumer prices, behind which nominal wage growth fell significantly. Meanwhile, inflation is no longer driven by energy import prices, but by domestic factors. The increased profit margins of companies are a major reason for persistent inflation. In this difficult environment, trade unions are faced with the challenge of securing real wages—and companies have the responsibility of making their contribution to returning to the path of political stability by reducing excess profits.


DOWNLOAD HERE

ETUI advertisement

The future of remote work

The 12 chapters collected in this volume provide a multidisciplinary perspective on the impact and the future trajectories of remote work, from the nexus between the location from where work is performed and how it is performed to how remote locations may affect the way work is managed and organised, as well as the applicability of existing legislation. Additional questions concern remote work’s environmental and social impact and the rapidly changing nature of the relationship between work and life.


AVAILABLE HERE

Eurofound advertisement

Eurofound Talks: does Europe have the skills it needs for a changing economy?

In this episode of the Eurofound Talks podcast, Mary McCaughey speaks with Eurofound’s research manager, Tina Weber, its senior research manager, Gijs van Houten, and Giovanni Russo, senior expert at CEDEFOP (The European Centre for the Development of Vocational Training), about Europe’s skills challenges and what can be done to help workers and businesses adapt to future skills demands.

Listen where you get your podcasts, or for free, by clicking on the link below


LISTEN HERE

Foundation for European Progressive Studies Advertisement

The summer issue of the Progressive Post magazine by FEPS is out!

The Special Coverage of this new edition is dedicated to the importance of biodiversity, not only as a good in itself but also for the very existence of humankind. We need a paradigm change in the mostly utilitarian relation humans have with nature.

In this issue, we also look at the hazards of unregulated artificial intelligence, explore the shortcomings of the EU's approach to migration and asylum management, and analyse the social downside of the EU's current ethnically-focused Roma policy.


DOWNLOAD HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube