1999 Annual Review for Greece

This record reviews 1999's main developments in industrial relations in Greece

Economic developments

During 1999, moves towards convergence between the Greek economy and the rest of the EU continued – the GDP growth rate in Greece stood at 3.5% compared with a rate of approximately 2.1% in the EU as a whole. According to all forecasts, this development is expected to continue. Inflation fell dramatically during the 1990s period as the result of an exchange policy aimed at reducing inflationary pressures – the rate fell from 20.4% in 1990 to 2.5% in 1999.

The recovery of the Greek economy, which began in 1995, has continued as a result of an increase in demand – this rose by 3.5% in 1999 and is expected to increase by 3.9% in 2000. Unit labour costs fell by 15% between 1990 and 1998 and are now at levels comparable to the lowest levels for the 1980s. The rate of unemployment stood at 10.9% in 1998 and, according to government estimates, fell to 10.5% in 1999. During the five-year period between 1995 and 1999, although the value of pay increased in real terms by 15%, this failed to drive actual wages to higher levels than the average for the 1980s. This is because the value of pay fell spectacularly during the first half of the 1990s and has been struggling to achieve former levels, and because part of the increase in incomes has been achieved by increasing the levels of overtime worked.

The government deficit has been on a downward course as part of a policy to reach the levels deemed necessary for Greek membership of the third stage of EMU. In 1999, the deficit stood at 1.6% of GDP, compared with 2.5% in 1998. The deficit is expected to be reduced to 1.2% in 2000 and to be zero in 2001. Meanwhile, government debt remains very high (at 103.8% of GDP), although it has been on a constant downward course since 1993, when it stood at 110.2%.

Political developments

The Pan-Hellenic Socialist Movement (Panelino Socialistiko Kinima, PASOK) remains in government and national parliamentary elections are expected to take place in mid-2000. The most important political events of 1999 were achieving the criteria for membership of EMU, and improving diplomatic relations between Greece and Turkey.

Collective bargaining

As has traditionally been the case in Greece, collective bargaining in 1999 remained centralised, as the 1998-9 National General Collective Agreement entered its second year (GR9805171N). According to the Ministry of Labour and Social Security and the Mediation and Arbitration Service (OMED), collective bargaining was significantly strengthened between 1990 and 1998, resulting in an increase in the number of collective agreements at all levels. The table below shows the number of agreements concluded at the various levels in 1997 and 1998. The slight decrease in company-level agreements between 1997 and 1998 is due to the fact that many of the agreements concluded in 1997 were for a two-year period.

Ministry of Labour and Social Security and OMED.

Pay

In terms of the content of collective agreements, economic and pay issues were predominant in 1999. The pay increases set out in the National General Collective Agreement refer to the minimum wage, and such increases are taken as the reference point for sectoral agreements, in which the pay increases are usually set slightly higher. According to estimates by the Institute of Labour (INE) of the Greek General Confederation of Labour (GSEE), the average increase in basic pay for 1998, excluding elements such as bonuses and overtime, was 5.6% at current prices and 0.8% at constant prices; for 1999, the figures were 4.1% and 1.6% respectively.

Working time

The average contractual working week was 40 hours in Greece in 1999. This contrasts with the average actual working week of 41 hours in 1998, and around 41.2 hours for 1999. A total of 6% of the workforce was employed on a part-time basis in 1998, compared with 4.6% in 1997.

Calls for a reduction in weekly working time to 35 hours without loss of pay were at the forefront of industrial relations debate during 1999. A draft bill on the introduction of the 35-hour week, presented by the Coalition of the Left and Progress, was discussed in parliament but failed to be adopted (GR9910154F).

The dialogue over the 35-hour week between the social partners at national level ended inconclusively in December 1999. The GSEE expert bargaining committee and the corresponding negotiators for employers' organisations (GR0001159N) were unable to agree a basis for continuing the dialogue. However, at the sectoral level, the new industry-wide collective agreement in the banking sector for 1999 and 2000 contained provisions to introduce for the first time a pilot scheme to implement the 35-hour week (GR9906135F). In other sectors such as telecommunications (GR9906136N) and energy (GR9906137N), employers and unions made a commitment in the respective collective agreements for 1999-2000 to implement the 35-hour week, but have not set a starting date for its implementation. At company level, in January 1999 a collective agreement was signed on implementation of the 35-hour week at Intracom SA (GR9902113N).

Equal opportunities, job security and training

With regard to other issues such as equal opportunities, job security, vocational training and skills development, no major developments were noted during 1999.

Legislative developments

The most important legislative change that took place during 1999 in the area of labour relations concerned the enactment of Law 2738/1999 on "collective bargaining in the public administration, permanent status for workers employed under open-ended contracts and other provisions" (GR9911155F). For the first time, this law lays down the right of public servants to negotiate their terms and conditions of employment, excluding pay and pensions, and to conclude collective agreements. It meets a long-standing demand of public servants' trade unions and contributes to the further modernisation of the Greek system of industrial relations.

Other important developments in the area of social and labour policy were:

• Presidential Decree No. 151 regarding "regulation of matters for the protection of workers in the event of employer insolvency", aimed at bringing Greek law fully into line with EU Directive 80/987/EEC (GR9908149N); and
• amendments to law 1387/1983, aimed at bringing Greek law fully into line with EU Directive 98/59/EC on collective redundancies (GR9907142N).

1999 saw problems regarding both the ineffectiveness of parts of the current legislative framework – as in the case of collective redundancies (GR9904122F) – and the lack of the clarity and precision in that framework – as in the case of the introduction of a legal framework for concluding "local employment agreements" (GR9901107F). In addition, problems have arisen in relation to the violation and inadequate implementation of existing legislation (GR9903116F and GR9908146N).

The organisation and role of the social partners

There were no notable changes to the organisation of the social partners during 1999. However, trade unions in particular were active in a number of areas, notably unemployment. In July 1999, GSEE issued a statement calling for emergency measures to be taken in order to deal with rising unemployment (GR9907143N). This came after the publication of data showing that the unemployment rate had reached 10.8% of the workforce. This was followed in September 1999 by GSEE calls for higher unemployment benefits, following the depreciation, in real terms, of unemployment benefit in recent years (GR9909151N). September 1999 also saw the presentation of GSEE proposals in the area of pensions, calling for a reform which would ensure social protection and satisfactory living conditions (GR9909150F).

In terms of social dialogue, GSEE decided in February 1999 not to participate in a dialogue on tax reform organised by the government (GR9903118N), arguing that more radical reform of the tax system is needed, rather than what it saw as insubstantial amendments to the current regime.

Industrial action

Data regarding the number of strikes that took place during 1999 were not yet available from the Ministry of Labour and Social Security in early 2000. Even the data for 1997 and 1998 are not sufficient to allow conclusions to be drawn about the situation regarding industrial action in Greece - mainly because the Ministry, the only competent body for recording such information, does not collect any analytical data or data concerning strike content or sector of economic activity.

According to the available data, a small increase in total strikes was noted during 1998, rising from 15 in 1997 to 30 in 1998. The increase was due notably to the number of strikes in public utilities and services and in banks. By contrast, in the private sector there were significantly fewer strikes, falling from 21 in 1997 to eight in 1998. Overall, there was a significant decrease in social tensions during 1999 – there were no general strikes, as had occurred in 1998 (GR9812108F), and only isolated cases of industrial action taking place in specific industries such as Athens-Piraeus trolley bus services (GR9904123F) and the construction sector (GR9903119N).

National Action Plan (NAP) for employment

The Greek 1999 National Action Plan (NAP) for employment was produced by the Ministry of Labour and Social Security rather than directly being the result of dialogue between the government and the competent social partners. Nevertheless, the social partners played an active part in drawing up the NAP. During the course of 1999, the government called on the employers and the unions to participate in drafting the NAP by submitting relevant proposals. The proposals of the employers' organisations and of the trade unions (GR9906133F) once again highlighted their important differences with regard to employment strategy and industrial relations in Greece.

Employers see the NAP as a means of intervening in the way the labour market operates in order to facilitate their objectives of lower labour costs and increased competitiveness. By contrast, the trade unions believe that the changes contained in the NAP must not affect terms and conditions of employment negatively, and must not weaken the institutional framework for employee protection. The references to industrial relations in the final text of the NAP submitted by the Ministry of Labour (GR9906134F) - relating to increasing labour market flexibility, and in particular to enhancing working time flexibility and flexible forms of employment - are worded in an extremely general and vague way and do not appear to take more than minimal consideration of the proposals submitted by the employers' organisations and the unions.

The impact of EMU on collective bargaining and industrial relations

The effects of EMU on industrial relations do not appear to be of particular concern, for the time being at least, to the social partners in Greece. It is also noteworthy that there is a lack of interest in the academic community. A study on the expected impact of Greek membership of EMU on pay and employment (GR9812108F) from the trade union-linked INE/GSEE institute was the first attempt in Greece to describe the evolution of pay and employment within the macroeconomic framework of EMU, while a study by INE/OTOE on the effects of EMU on employment and labour relations in the banking sector (GR9905127F) offered new data concerning industrial relations aspects, albeit restricted to the sectoral level.

New forms of work

The development and study of new forms of work organisation, whether resulting directly from EU initiatives in this area or indirectly from the broader controversy regarding new theories on industrial relations and human resource management, are still in the first stages in Greece.

As a result, this area was not a particular subject for discussion and negotiation between the social partners during 1999. The few instances in which new forms of work were implemented were restricted to the enterprise level and principally initiated by employers. Over the past two years, the social partners have been more concerned with particular issues such as education and training and working time flexibility, even though no specific action has been taken on the practical level. On the government side, the policy of encouraging a more flexible approach to industrial relations, and the passage of Law 2639/1998 on "regulation of industrial relations, formation of a labour inspection body and other provisions" (GR9808185F), are potentially an indirect and unelaborated attempt to create the preconditions that will facilitate a new organisation of work.

Outlook

During 1999, it became obvious that a basic objective of the government was implementation of the programme of structural reform with a view to securing entry to the third stage of EMU. The announcement that the Ministry of National Economy's programme of privatisations and capital sell-offs introduced in September 1999 would be stepped up was clearly a means of achieving this objective, and signalled government policy for the coming months.

The programme of mass privatisations to be pursued in 2000, the extension of wage moderation for another year, and the further increase in industrial relations flexibility being sought by the government and employers, may create a climate of social tension involving a substantial increase in industrial unrest.