Observation (CEACR) - adopted 2011, published 101st ILC session (2012)

Protection of Wages Convention, 1949 (No. 95) - Greece (Ratification: 1955)

Article 11 of the Convention. Wages as privileged debts. In its previous observation, the Committee had noted the comments of the Greek General Confederation of Labour (GSEE), which drew attention to section 41 of Act No. 3863/2010 granting the same rank of privilege to workers’ wage claims and to those of social security institutions. The GSEE referred to the Protection of Workers’ Claims (Employer’s Insolvency) Convention, 1992 (No. 173) – which requires workers’ claims to be given a higher rank of privilege than most other privileged claims, and in particular those of the State and the social security system – as being the international minimum standard and considered that the Government contravened its obligation to secure full payment of workers’ claims before other ordinary creditors establish any claim to a proportionate share of the employer’s assets. The Committee notes that, in its reply to the GSEE comments, dated 16 May 2011, the Government makes no reference to the revised order of distribution of liquidated assets, which effectively reduces the practical value of privileged protection of workers’ claims to the extent that these claims and those of the social security system now rank equally between themselves.

The Committee recalls, however, that Article 11(3) of the Convention requires only that the relative priority of wages and other privileged debts is to be determined by national laws or regulations, and further that Greece has not ratified Convention No. 173, and is therefore not bound by the provisions of Article 8(1) of that Convention, which give a higher priority to workers’ claims than to those of the social security system. Also, the Committee notes that a wage guarantee fund – similar to that envisaged by Part III of Convention No. 173 – has been established under Presidential Decree No. 1/1990. In view of the potentially important role of this fund in the context of the major economic crisis facing the country, the ILO high-level mission, which took place in September 2011, noted in its conclusions that the Government was requested to provide additional information on the functioning of the wage guarantee fund but it seems that such information has not been provided so far. The Committee asks the Government to provide detailed information on the operation of the wage guarantee fund, particularly the number of claims received and amounts paid since the beginning of the current crisis.

Article 12. Timely payment of wages – Prompt settlement of wages upon termination of employment. The Committee notes the reference made in the report of the ILO high-level mission to a potential problem of non-payment or delayed payment of wages as a result of widespread insolvencies and lack of liquidity. According to information obtained by the high-level mission, while small and medium-sized enterprises (SMEs) represent the vast majority of undertakings and account for a major part of employment in the country, 150,000 of them (one in four) have closed down and another 100,000 are expected to close this year. In the public sector, the high-level mission was informed that retroactive measures had been taken by the Government in certain instances, including the case of a former public institution that had maintained public sector wages through collective bargaining after its privatization, whose employees were obliged to pay back the difference in the salaries paid over the last ten years. The Committee notes that, according to several accounts, instances of several months’ delay in the payment of wages are rising in sectors such as industry, commerce and health care. The Committee wishes to recall in this regard that, in its General Survey of 2003 on the protection of wages (paragraph 355), it highlighted that “the quintessence of wage protection is the assurance of a periodic payment allowing the worker to organize his everyday life with a reasonable degree of certainty and security. Inversely, the delayed payment of wages or the accumulation of wage debts clearly contravene the letter and the spirit of the Convention and render the application of most of its other provisions simply meaningless.” The Committee therefore asks the Government to provide documented information on any difficulties experienced in the timely payment of wages, in particular the sectors of activity concerned, the number of workers concerned and the amounts due, and to specify any measures taken or envisaged in order to tackle these problems, including the question of retroactive reimbursement of wages already received.

Furthermore, the Committee notes that in its comments the GSEE referred to section 75 of Act No. 3863/2010, which authorizes the payment of severance pay in instalments rendering it uncertain and precarious especially in times of financial crisis. In its reply, the Government indicates that part of the severance pay – equal to two months’ remuneration – is payable at the time of dismissal and the remaining amount in two monthly instalments, each of which cannot be less than two months’ remuneration. The Government also explains that this arrangement aims at facilitating undertakings facing crucial financial problems due to the financial crisis and wishing to make redundancies so that they might avoid bankruptcy. The Committee observes that the possibility of paying the severance pay in instalments may, in some cases – particularly in an environment of recession and widespread liquidity problems – compromise the full and prompt payment of termination benefits and thus limit the workers’ right to receive without delay upon termination of employment all sums due to them. The Committee accordingly asks the Government to indicate any measures taken or envisaged to ensure that the high numbers of workers who are being dismissed at the present difficult juncture collect swiftly all entitlements due to them.

More generally, the Committee is concerned about the considerable wage cuts in the public sector decided as part of the austerity measures to reduce the public deficit. According to information obtained by the high-level mission, wages have been reduced through legislative measures by at least 20 per cent, while according to the Confederation of Greek Public Servants’ Unions (ADEDY), almost 40 per cent of public employees’ income has vanished within the last two years. The Committee considers that by their scale and recessionary effect on the entire economy, these wage cuts represent a major challenge to the notion of wage protection that is at the heart of the Convention and risk undermining its basic objectives (even though, in a strictly legal sense, compliance with the technical standards of the Convention that deal with the modalities of the payment of wages may not be at issue). In this connection, the Committee recalls its Note on the “Relevance and application of ILO wage-related Conventions in the context of the global economic crisis” (paragraph 119 of the Committee’s 2010 Report, page 35), in which it emphasized that wage protection takes on particular importance in times of crisis and therefore relevant standards should not be undermined but rather put at the centre of crisis responses, as is underlined in the Global Jobs Pact. It also considered that ILO wages-related standards and principles serve as a reminder of the special nature of wages as the workers’ principal, if not sole, means of subsistence, and hence of the need for targeted and priority action in this field, and expressed the hope that ILO member States would act positively in the economic downturn by carrying out the necessary reforms in wage legislation and wage policy consistent with those standards and principles. The Committee also recalls that the Global Jobs Pact insists that action for promoting recovery and development must be guided by the Decent Work Agenda and invites governments to avoid protectionist solutions as well as the damaging consequences of deflationary wage spirals and worsening working conditions in their response to the crisis, and to engage in social dialogue. The Committee accordingly requests the Government to provide full particulars on any new anti-crisis measures and policies that impact on wages, including information on the necessary consultations with the employers’ and workers’ organizations concerned on these measures.

[The Government is asked to reply in detail to the present comments in 2012.]