Greece’s creditors have proposed more flexibility and mobility regarding employment and suggested the Danish model for labor legislation.
The proposals came to light after the conclusion of the first bailout program review. They are included in the latest Parliamentary Budget Office report on the economy.
Creditors propose that Greece adopts the Danish model, which provides greater wage flexibility and greater employee mobility, in order to reduce unemployment.
The main features of the Danish model is a deregulated employment protection framework, active labor market policies, lifelong learning and social dialogue. This is a model which allows for employment flexibility and wage flexibility with simultaneous provision for social benefits.
The Danish model is a result of social dialogue. Labor mobility is the main component of this model, but is accompanied by a comprehensive safety net for the unemployed, something that is difficult to fund under present circumstances of the Greek economy.
What do creditors want regarding labor laws
Creditors ask for an increase in the authorized rate of mass layoffs from 5% to 10%, elimination of three-year raises, increases in the minimum wage, prevalence of company contracts over sectoral contracts and changes in trade union law, among other demands.
The deadlock in negotiations regarding labor legislation, as recorded during the first visit of the mission heads of lenders in Athens, is described clearly in the Parliamentary Budget Office report, as their analysts have the official positions of creditors in their hands.
According to the report, lenders support the expansion of business contracts because they help businesses adapt in times of economic distress. They point out that the minimum wage should remain in the hands of the State, but free from surcharges for experience (seniority – three-year periods). As mentioned, from 2017 on, the minimum wage should be a single reference amount, not including any benefits.
Regarding mass layoffs, creditors insist on 10% instead of 5% and consider it necessary to repeal restrictions on mass layoffs. With this practice, they say risks of mass unemployment are reduced, as in the cases of large big companies like Ilektroniki Athinon, Softex and Sprider, that were forced to shut down and hundreds of workers lost their jobs in each case.
On union laws, creditors say that there have not been any changes in the structure and organization of trade unions to ensure the representation of all workers, including the implementation of the lockout. Lenders also aim for reforms that would create incentives for recruitment, working time, reducing non-wage costs by combating undeclared work and strengthening active employment policies, so as to integrate the unemployed in the labor market.
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