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Greek Private Sector Salaries Now Being Cut Too

Workers in Greece's companies are feeling the pinch like their counterparts in the public sector (PHOTO/KATHIMERINI)

ATHENS – Less than two months after Greece’s hybrid government agreed to cut pensions and the minimum wage to satisfy international lenders and avert cuts in private sector salaries, companies are – as analysts predicted – cutting their workers’ salaries up to 20 percent and more, according to data collected by the country’s Labor Inspectors’ Squad. Reductions in the minimum wage of 22 percent – 32 percent for those under 25 – gave companies the reason they needed to make unilateral cuts in private sector salaries.
It will get worse, as part of the deal Greece worked out with the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) to get a second bailout of $172 billion on top of a first for $152 billion, was to also phase out collective bargaining rights, which means companies can pay people what they want. Workers who don’t like their new pay will have a tough time as austerity measures attached to the bailouts have put 21 percent of workers – 51.5 percent of those under 25 – out of work and more than 111,000 businesses have closed, giving people few alternatives but to stay in their jobs no matter how much their pay is cut.
The data showed that at 45 businesses employing over 50 people there were new contracts with an average salary decline of 20.094 percent. Within just one month from the application of the law providing for a 22 percent reduction in the minimum wage, as agreed with the country’s creditors, there have been 45 new corporate contracts in Athens and Thessaloniki, while in the preceding four-month period, from October to February, there had only been 65 new contracts throughout the country. Since February 14, some 3,231 small enterprises, employing fewer than five people, have submitted details of their employees’ individual contracts with an average salary drop of 20.63 percent. These reductions concern some 15,000 workers. The Labor Ministry is to present Parliament with a regulation that will reward businesses that are consistent in paying their social security contributions: From early October they will get a 5 percent reduction in their contributions to social security funds.
The Troika argued that lower wages would make Greece more competitive with other countries, but neighboring countries such as Bulgaria have average wages far lower than those in Greece, where the cost-of-living is much higher. Pay cuts have been combined with a doubling of income and property taxes, taxes on the poor and pushed gasoline prices to 1.80 euro cents per liter, equivalent to about $9 per gallon, and put thousands of stations out of business as well.
Greece’s biggest telecom operator, OTE, is also planning deeper wage cuts as government regulations have caused deep losses aggravated by the recession as the company is losing 100,000 customers a month to smaller, alternative carriers. OTE has 65 percent of Greece’s fixed-line business. “The regulator is causing OTE a bigger problem than the economic crisis,” Chief Executive Michael Tsamaz told Reuters in an interview. “We feel like sitting ducks… the company can’t continue like that, it’s a matter of survival,” he said. OTE, 40% owned by Germany’s Deutsche Telekom, will soon start talks with employees at its fixed-telephony unit to reduce the benefits it pays on top of basic salaries and to scrap the practice of automatic pay increases with each year of employment, Tsamaz said. These changes would help the company reduce its labor costs over the next three years by more than the 160 million euros ($212 million) targeted in a 2012-2014 wage deal that was agreed upon last year. The announcement boosted the company’s stock but left workers fearful for their future as the anxiety that began with public sector wage cuts and firings is set to spread to workers in private companies.
Under the deal struck in September, the first of its kind for a major Greek company, OTE’s fixed-line employees agreed to wage cuts of about 11%, obtaining instead a no-firing guarantee. Tsamaz said he would stick to the deal, despite a new law passed last month as part of Greece’s bailout that scraps jobs-for-life status for older employees in former monopolies like OTE, where the government still holds a 10% stake. “The new law abolishes permanent jobs at OTE, so it’s in the labor union’s interest to maintain the deal we have for the next three years and mutually agree on further cuts,” Tsamaz said, giving workers no option but to keep taking wage cuts or lose their jobs. Labor unions at big companies have grudgingly accepted wage cuts but are still wielding enough political and organizational clout to resist outright firings, so far.

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