The Greek government announced on Monday that beginning on January 1, 2022 the minimum wage in Greece will increase by 2 percentage points, bringing back to the spotlight the turbulent history of the Greek minimum wage.
The pay rise comes as a result of the consultation that the Greek government held for months with the country’s social partners, including trade unions, business and employer associations.
The new minimum wage in Greece will go from €758.33 ($894) per month to €773.50 ($912).
It should be noted, however, that employees in Greece are entitled to 14 payments a year rather than 12.
This means that beginning on January 1, 2022 they will be getting €663 per month, instead of €650.
In April, every employee in Greece’s private sector gets an additional 50% as an ”Easter bonus”; in July another 50% as a ”Holiday bonus” and in December they get a 100% boost as a ”Christmas bonus.”
This way, Greece’s private-sector employees get a total of 14 payments on an annual basis rather than 12.
The same used to apply for everyone in Greece for decades; however, one of the first cuts that the 2010 financial crisis brought to the country was the abolishment of the Easter, Christmas and Holiday bonuses to every public servant as well as every pensioner in the country.
These groups now only get 12 instead of 14 salaries/pensions per annum.
Where Does Greece’s Minimum Wage Stand in the EU?
The European Union does not oblige its member states to have a minimum wage, although many political parties in the European Parliament have been asking for a European minimum wage for years, similar to the federal minimum wage of the US.
Thus, it’s a matter of national decision for the member states whether they will introduce minimum wages or not. However, 21 out of the 27 member-states have a legal requirement of a minimum wage in place.
The countries that do not are Cyprus, Italy, Austria, and the Scandinavian trio of Denmark, Sweden and Finland.
Now, there is a common misconception in Greece that the country has one of the lowest –if not the lowest– minimum wages in Europe. It is obvious that more than ten years of austerity, pay freezes and cuts have left a strong mark in Greek society.
Many might still remember that the political debate in Greece was once focused on when the salaries of the country will reach the levels of France, Germany and Britain, with mainstream political parties fighting over which would be the one to make such a promise reality.
Now, of course, the early 2000s are long gone, and the Greek financial crisis has made these discussions not only obsolete but something more of a bad dream.
However, the belief that the Greek minimum wage is the lowest in the EU is wrong.
Greece, with its €773.50 stands in the mid-tier of the European minimum wages, next to Portugal, which offers only €2 more per month.
Only eight EU nations offer a minimum wage that is above the €1,000 threshold, with Slovenia and Spain being the last ones to join the club.
Spain, for example, used to have a similar minimum wage to that of Greece for decades. However, the current left-wing government in Madrid raised the wage significantly, offering €950 per month, in 14 instalments, thus averaging a monthly salary of €1,108.
Spain is the only other EU state to offer 14 monthly salaries, along with Greece.
In real terms, and after ten years of austerity, Greece stands 11th in the EU, placing the country right in the middle tier of countries that offer between €700 and €1,000.
The low-tier countries that have a minimum wage below €700 are Hungary, Poland, Romania, Bulgaria, Croatia, Czechia, Slovakia, and the Baltic states of Lithuania, Latvia, and Estonia.
The lowest minimum wage in the EU right now is in Bulgaria, where employees in minimum wage do not earn more than €332.34 ($391) per month.
On the opposite side of the spectrum, one can find the tiny nation of Luxembourg. Those on minimum earnings there, get at least €2,201.93 ($2,595) per month, a figure that seems extraordinarily high to many of the European East and South.
The minimum wage is a major political issue in Greece
The minimum wage in Greece which was introduced in 1998, was set at €550.40 (188,000 Greek drachmas) per month.
From 1998 until 2012, the minimum wage in the country was constantly increasing. It reached its highest point of €884.40 ($1,043) in 2012.
However, as Greeks were being paid with the 14-salary system — where most salaries are lower amount and some others a significantly higher — led to the belief that the minimum wage was €751, which was the figure for the months without any bonuses.
Nobody knew that this number, 751, was meant to become one the most heated topics of political debate in the country for the years to come.
When in 2012 the government decided to cut the minimum wage to €612.05, the previous minimum wage became a symbol; a symbol of how things were before the crisis.
All opposition parties at the time, with the left-wing SYRIZA one at the forefront, turned the 751 figure into a political slogan.
Alexis Tsipras, the leader of SYRIZA and later Prime Minister, had promised that one of his administration’s first policies would be the reintroduction of the €751 minimum wage (€884.40 in real terms).
However, following the turbulent year of 2015, the Greek referendum, and the danger of Grexit, this promise never materialized.
Years later, Tsipras acknowledged that he did not manage to reintroduce the €751 wage, due to the dire situation of the economy; however, his administration did bring the first pay rise in the country in six years.
His government raised the minimum wage by 11 per cent in 2018, and left it at €650 (€758.33 in real terms), which is still the minimum wage of the country.
The current administration of Kyriakos Mitsotakis had promised in 2019, that when he assumes office his government would introduce a system where the minimum wage would be getting a rise of double the amount of the annual growth rate of the Greek economy every year.
However, the coronavirus pandemic has halted these plans, as the economy not only didn’t grow, but it saw a huge retraction due to the repetitive lockdowns.
Now, Tsipras, leader of the opposition yet again, has pledged a much higher boost, if he returns to power.
His party promised recently that they will raise the minimum wage to €800 per month (€933.33 in real terms, with the bonuses included) and the introduction of a 7-hour working day, according to the French model, where people work for 35 hours a week instead of the 40 that they do in Greece.
Will the voters believe him? Is this promise going to play a role in turning the public opinion in favor of his party once again? Only time will tell. However, one thing is for sure: Greece’s minimum wage will remain at the forefront of the political debate, no matter who is in power.