Observation (CEACR) - adopted 2012, published 102nd ILC session (2013)

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

Article 11 of the Convention. Wage claims as privileged debts in bankruptcy proceedings. Further to its previous comment concerning the functioning of the wage guarantee fund, the Committee notes the Government’s explanations about the legal framework regulating its operation, i.e. Act No. 1836/89 and Presidential Decree No. 1/1990 as well as Presidential Decrees No. 151/1999 and No. 40/2007 issued to align the national legislation with relevant EU Directives. The Government indicates that the wage guarantee fund is operated by the management Board of the Manpower Employment Organization (OAED) and is financed through a compulsory employers’ contribution, currently set at 0.15 per cent of the worker’s remuneration, and a state subsidy. The Fund principally covers claims for up to three months’ unpaid wages arising from a contract of employment and falling within the six month period prior to the publication of a court ruling declaring the employer bankrupt. The Government’s report also provides statistical data on the expenditure and number of beneficiaries of the Fund for the period 2000–10. According to these statistics, in 2009, the Fund paid a total amount of €1.44 million to 148 beneficiaries while in 2010, a total of €2.57 million were paid to 530 beneficiaries. Noting that a wage guarantee institution is a useful complement to the privileged protection of wage claims afforded by this Article of the Convention, the Committee requests the Government to provide additional information, including statistics if available, on the impact the current economic crisis might have on the operation of the fund, particularly as regards its financial sustainability in view of the increasing number of bankruptcies, and any measures taken or envisaged in this respect such as the possible readjustment of the level of the employers’ contribution.

Article 12. Timely payment of wages. Prompt settlement of wages upon termination of employment. In its previous comment, the Committee had asked the Government to communicate information on any difficulties experienced in the timely payment of wages, indicating among others the number of workers and the sectors concerned, based on information that problems of non-payment or delayed payment of wages may rise as a result of widespread insolvencies and lack of liquidity. The Committee notes that the Government’s report is silent on this point. It observes, however, that according to several sources, the country is experiencing growing difficulties with the regular payment of wages and situations of accumulated wage arrears are reported in several sectors of activity. The Committee notes, for instance, that according to the 2011 activity report of the Labour Inspectorate (SEPE), published in April 2012, the non-payment of wages represents 68.8 per cent of all labour law infringements observed in 2011 and the non-payment of annual holiday pay 20.6 per cent, that is a marked increase compared to 2010 when 50.5 per cent of all violations related to delayed payment or non-payment of wages, 14.8 per cent to non-payment of holiday pay and 5.6 per cent to non-payment of end-of-year bonus. The SEPE report also shows that by reference to the number of reports filed and amount of fines imposed, the situation appears to concern mostly the sectors of retail commerce, restaurants and catering, construction, hotels, and the food industry.

The Committee understands that the deepening economic and social crisis in the country impacts heavily on the business climate and under the circumstances problems of non-payment of wages can only be expected to persist, if not increase. The Committee notes, for instance, that according to a research conducted by the Institute of Small Enterprises (GSEBEE) and published in January 2011, 84.2 per cent of the enterprises reported that their financial situation had worsened in the last semester and 68 per cent foresaw a further deterioration in the following semester. The same research indicates that 215,000 small enterprises (25.9 per cent) were likely to close down with a total loss of 320,000 jobs. According to another report published by the Institute of Commerce and Services (INEMY) in September 2011, 25 per cent of all registered commercial enterprises had ceased their activities by August 2011, as compared to 15 per cent in the summer of 2010.

The Committee expresses its deep concern about the marked intensification of infringements of the labour legislation concerning the regular payment of wages and urges the Government to continue to take active steps in order to prevent the spread of problems of non-payment or delayed payment of wages, such as the reinforcement of controls, the strengthening of sanctions, or the use of appropriate incentives. In this connection, the Committee requests the Government to provide detailed information on the effectiveness of the system of enforcement and compliance following the labour inspectorate reform of 2009.

Furthermore, the Committee recalls that in its previous observation it had also raised the question of considerable wage cuts in the public sector decided as part of the austerity measures to reduce public deficit and had asked the Government to give a detailed account on any new anti-crisis measures affecting wages, including on the necessary consultations with the employers’ and workers’ organizations concerned. While noting that the Government’s report does not contain any new information on this point, the Committee understands that additional fiscal measures have been adopted in November 2012 under the Memorandum of Understanding on the Medium-Term Fiscal Strategy 2013–16 (Memorandum III), including further cuts of up to 35 per cent in the monthly wages of employees under special wage regimes such as judges, diplomats, doctors, professors, members of the armed forces and police, and airport personnel and the elimination of seasonal bonuses of employees of the state and local governments. The new measures are part of fresh budget cuts deemed necessary to ensure the country receives its next bailout instalment from its international creditors.

The Committee understands that the successive rounds of harsh austerity measures are decided under the overall guidance of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) which have been advising the Government since May 2010 on planning a broad range of reforms for raising the competitiveness of the national economy and the modernization of the public administration. It also understands that most of these measures are meant to reduce an alarmingly high public deficit. The Committee remains seriously concerned, however, about the cumulative effect these measures have on workers’ income level and living standards and compliance with labour standards related to wage protection. As the Committee has already indicated in its previous observation, wage reductions as such are not dealt with in any of the provisions of Convention No. 95. However, when by their nature and scale wage reductions have dramatic effects on large parts of the workforce to the point of rendering practically meaningless the application of most of the provisions of the Convention, the Committee feels obliged to address the situation through the lens of “wage protection” in a broader sense.

In a related development, the national minimum wage was recently reduced by 22 per cent and even by 32 per cent for workers below the age of 25. Available statistics suggest that the continued downward pressure on wages may result in one fourth of the population falling below the poverty line. According to the 2012 annual report on the Greek economy and employment, published by the Labour Institute of the Greek General Confederation of Labour (GSEE) in August 2012, the purchasing power of the average wage has shrunk to 2003 levels and that of the minimum wage has slumped to the level of the second half of the 1970s. In the light of such developments, the Greek National Commission for Human Rights, in its capacity as an advisory body to the Government in matters of human rights protection, has issued a recommendation in December 2011 expressing its deep concern at, among others, the ongoing drastic reductions in even the lower salaries and pensions.

Under the circumstances, while acknowledging the crucial challenges faced by the country, the Committee recalls the Government’s responsibility to strengthen – and not to undermine – labour standards related to wage protection, especially at times of crisis when social justice and income security are dearly needed. As the European Committee of Social Rights has concluded in a recent case (complaint No. 65/2011 filed by the General Federation of the National Electric Power Corporation and the Confederation of Greek Civil Servants’ Trade Unions, Decision of 23 May 2012), “the economic crisis should not have as a consequence the reduction of the protection of the rights recognized by the [European Social] Charter” and “while it may be reasonable for the crisis to prompt changes in current legislation and practices in order to restrict certain items of public spending or relieve constraints on businesses, these changes should not excessively destabilize the situation of those who enjoy the rights enshrined in the Charter”.

The Committee also draws attention to the importance of open and continuous dialogue with the social partners. As the Committee noted in paragraph 374 of its 2003 General Survey on protection of wages, social dialogue is the only way of sharing the burden of economic reforms while preserving social peace and negotiated solutions have a much better chance of succeeding in a context where social consensus is the only solid basis for the continuation of painful structural changes. The Committee wishes to refer, in this connection, to the conclusions of the Committee on Freedom of Association, approved by the Governing Body in November 2012, following a complaint filed by several trade union confederations against the Government of Greece (Case No. 2820), according to which the Government should promote permanent and intensive social dialogue as it would be essential to the efforts for social peace in the country that consultations take place with the employers’ and workers’ organizations concerned, as a matter of urgency, to review any austerity measures with a view to discussing their impact and to agreeing on adequate safeguards for the protection of workers’ living standards (365th Report of the Committee on Freedom of Association, paragraphs 989–990). The Committee accordingly urges the Government to fully consult the representative organizations of employers and workers before the adoption of any new austerity measures and to make every possible effort to avoid any new curtailment of workers’ rights in respect of wage protection in either the public or the private sector and to seek to restore the purchasing power of the wages that has been drastically diminished. The Committee requests the Government to provide a comprehensive report on all wages-related measures adopted in the last three years, the scope of any tripartite consultations held prior to their adoption, and their social impact.

[The Government is asked to reply in detail to the present comments in 2013.]