Vassilis Monastiriotis is Professor of Political Economy at the European Institute, London School of Economics and holder of the Eleftherios Venizelos Chair in Contemporary Greek Studies at the Hellenic Observatory. He is Affiliated Professor at the Department of Geography and Environment, LSE, and Deputy Director of the LSE Research unit on Southeast Europe (LSEE). His research focuses on economic policy and performance at the regional, national and supra-national levels, with emphasis on labour markets and economic development. He has published numerous articles in economics and regional science journals and has received various distinctions including the Moss Madden Medal in Regional Science (2008). In 2018-2021 he served as member at the Independent Experts Committee on the Minimum Wage in Greece. He is Co-editor of Spatial Economic Analysis (Taylor & Francis).

Vassilis Monastiriotis spoke to Rethinking Greece* on the priorities of research on contemporary Greece for the Hellenic Observatory, on the effects of the prolonged ‘pre-accession’ process in the Balkans and the role Greece can play as a provider of political and geo-political support to democratic consolidation, on the state of the Greek labour market almost 15 years after the crisis and finally, on the ability of the Greek economy to follow the ‘twin transition’ towards a green and digital future.

The role of both the Eleftherios Venizelos Chair and the Director of the Observatory is to promote the multidisciplinary study of contemporary Greek politics, economy and society. As the new Eleftherios Venizelos Chair, what are the aspects of contemporary Greece that you think research should be steered towards?

Building on the excellent leadership of my predecessor, Professor Kevin Featherstone, the Hellenic Observatory developed over the years a highly influential research agenda focusing in particular on public policy-making and the political economy of reforms in the country. This included the study of reform pathways, bottlenecks and resistances, the functioning of the Core Executive, the impact of the European Union on domestic policy, the political, diplomatic and economic role of Greece in its wider South-eastern European context, as well as – through my own research – the functioning, regulation and performance of the Greek labour market. While the country has been praised internationally for its reform record over the past few years, recent events – especially in relation to Storm Daniel in the region of Thessaly and the devastation it caused – have shown that there are still important steps to be taken towards the modernisation of the country’s public administration. In that sense, researching – and producing evidence-based policy advice – on issues of governance, public administration and structural reforms remains a priority.

At the same time, we see today – e.g., in the issues that emerged with the new ID cards – that the Greek society continues to be characterised by significant cleavages that go beyond the socio-economic and extend to the cultural and ideational. New movements (e.g., «the beach towel revolt») and new social demands for modernisation continue to co-exist with more traditionalist social norms (especially on religious, gender and national-identity matters) and more long-standing claims for redistribution, reflecting social divisions and tensions that can threaten the cohesion of the social fabric. My aspiration is that, in its study of contemporary Greece, the Hellenic Observatory will open up more to the analysis of these social and cultural cleavages, aiming at contributing towards a better understanding of the dimensions along which these cleavages operate: from aspects of socio-economic inequality and conditions of precarity, insecurity and exclusion in the labour market, to the role of media (both mainstream and social/decentralised) in managing information, forming beliefs and perhaps exacerbating ideational conflicts, to enduring socio-geographical divides (rural-urban and core-periphery dichotomies), and to inter-generational differences in income security, opportunities and wealth – to list but a few.

Of course, as an economist, my steer and own interests will be more in the direction of studying the Greek economy: problems of spatial cohesion and connectivity; investment deficits and problems of competitiveness; the ability of the labour market to create ‘good jobs’, with high pay and decent working conditions; the dynamism of micro-firms and internationalisation of SMEs; improvements in the tax system and in financial incentives; and of course, the ability of the Greek economy to follow – and perhaps lead – the ‘twin transition’ towards a green and digital future with social justice.

In all this, the focus will remain to a large extent on policy. But we also want to obtain a more ‘decentralised’ focus, looking more closely at agency: from businesses and social organisations to the role of leaders and socio-economic actors in mobilising development, modernisation and structural transformation, both in the economy and in society.

In recent years, the focus of the Observatory has expanded to cover both Greece and Cyprus, and to relate these to both the rest of the European Union and to Southeast Europe. In light of the recent Athens Declaration by 11 Balkan leaders, how do you see the future of the region in the EU and what role do you think Greece can play in that future?

Twenty years since the flagship Thessaloniki Summit, the so-called Western Balkans remain today in a relative limbo, trapped in a prolonged state of “pre-accession” and struggling with their own challenges of democratisation and economic modernisation. As is widely discussed in the literature, including by my colleague at the Hellenic Observatory Dr Spyros Economides, the prolonged pre-accession process has created a bad equilibrium of ‘token compliance’ (by the Balkan states) and seemingly ‘empty promises’ (by the EU). In a recent work (with Fatmir Besimi) I have studied the mechanics of compliance to EU accession conditionality and have shown analytically that full compliance cannot be achieved so long as there is uncertainty in the public concerning the distributional consequences of accession. There are two implications of this. First, that the rewards of accession have to become more visible, not only with regard to some long-term ‘end-game’ but also with regard to immediate material benefits for the populations in the region. Second, that incomplete compliance should not be demonised: full compliance should be a target, a ceiling, not a floor.

The events in Ukraine have showed the urgency and geopolitical significance of ‘finishing off’ with the prolonged ‘pre-accession’ process in the Balkans. In this sense, the European perspective of the region remains not only the top priority for policy but also the only credible option for the path of the countries in the region to democratic consolidation, global economic integration and international security. There is no doubt that Greece can play a central role in this path, not only due to its geographical position but also due to its historical and cultural ties with the region. However, chronic problems of cooperation have compounded with the consequences of the fiscal crisis in the country to undermine both the ability and the willingness of Greece to play this role. Greece is no longer the big investor that it once was in the Balkans; its political weight in the region has decreased; while other actors – from Turkey to the Gulf States and from China to Russia – have sought to increase their influence and presence in the region. Still, Greece remains today the main and most credible economic and geo-political partner for the countries in the region. The Prespa Agreement, despite occasional criticisms that have been applied to it, paves the way for more normalised relations with our immediate neighbours in the region; while the economic recovery post-2016 has created conditions for renewing the impetus for further economic integration and cooperation.

But delivering on this role requires – like in the case of economic development policies and domestic reform strategies – a firm plan with specific actions to be supported or directly pursued by coordinated policy measures. In the past, Greece implemented its own development programme in the region – the Greek Plan for Economic Reconstruction in the Balkans (ESOAV) – with an active diplomatic and foreign policy presence and a standing as one of the main investors in the region in sectors such as telecommunications, banking, distribution, health and others. Today Greece does not have the ability to implement a development programme in the Balkans (and, thanks to EU assistance, neither is there a similar need), neither can its economy support the volumes of outward foreign direct investment that Greece had directed to the Balkans in previous decades. In the absence of these, what Greece can do in – and for – the Balkans is to provide political and geo-political support to democratic consolidation, the fight against corruption and the management of external influences by non-western actors, as well as to economic modernisation, diversification along the lines of the green & digital transition and integration into the regional and global supply chains.

"Directing private investment towards productive activities includes re-balancing taxation on profits and on real estate, re-evaluating the contribution of the tourism industry, modernising the education system towards internationalising higher education and supporting more vocational qualifications in cutting-edge sectors and tasks."

As an economist, Labour Economics is among the areas you specialize in. What is the state of the labour market in Greece almost 15 years after the shock of the crisis?

The Greek labour market was severely affected by the crisis. Starting already from a weak equilibrium – remember, unemployment rates in Greece were amongst the highest in Europe even in the ‘good days’ before the crisis – the repeated negative demand shocks that came with the uneasy negotiations of the bailout agreements led not only to skyrocketing unemployment but also to a general deterioration in pay and working conditions, with significant rises in underemployment, occupational downgrading and skill mismatches. Although the situation has in many respects turned around in recent years, and especially post-covid, there are still important problems that remain. One of the main issues, in my view, is the quality of jobs: the Greek economy has been for decades, and especially following the fiscal crisis, in a low-wage – low-productivity equilibrium, with employers typically opening low quality jobs based on price/cost competition considerations. This creates pressures for outmigration to highly skilled individuals (the so-called brain drain) and significant skill mismatches for those that remain behind, reducing the so-called ‘returns to education’ and thus also the rates of investment in new skills and skills upgrading.

The recent generous increases in the minimum wage – starting with the increase of 2019 under the recommendation of the first Minimum Wage Committee, of which I was a member – have sought to push the economy towards a higher-wage equilibrium but, while they do not seem to have impacted significantly on employment, they are not sufficient in themselves to push the economy towards creating better – more decent and more productive – jobs. The latter requires a more concerted “big push” effort by policy, that will direct the economy towards more productive activities, incorporating innovation and investment in new technologies and skills. The framework for this is there – thanks to the pathbreaking policy shift of the EU towards the ‘twin’ (green and digital) transition. But achieving this requires two blocks of interventions that fall outside the traditional realm of labour market policy: on the one hand, an ambitious and targeted public investment programme that will seek to mobilise private investment; on the other hand, a significant overhaul of the tax system and of product market regulation, that will aim at steering private economic activity towards high value-added and technology-intensive activities.

In a recent study (with Sasa Randjelovic) we have shown empirically that public investment raises the productivity of private capital, creating incentives for more investment in the private sector. Directing this investment towards productive activities is the role of Industrial Policy and includes rebalancing taxation on profits (from distributed earnings to reinvestment) and on real estate, re-evaluating the contribution of the tourism industry (factoring-in its environmental impact, and its capacity to diversify towards higher-end activities, e.g. agritourism, ecotourism, etc.), modernising the education system towards internationalising higher education and supporting more vocational qualifications in cutting-edge sectors and tasks, and recalibrating the regulation in the labour market. It also involves rebalancing the economy geographically, by supporting the diversification and re-specialisation of the regional economies and enhancing their functional connectivity with the “core” (Athens) as well as with the international economy (through integration into the regional and global supply chains).

There are other problems too – ones that have to do with the supply of labour and how this is affected by widespread social norms concerning employment and family: especially with regard to female employment participation (owing to a very gendered division of labour in household production), the elasticity of labour supply by the youth (owing to very traditionalist family relations) and the mobility of labour both geographically (where mobility is exceptionally low by international standards) and by sector or occupation.  In this sense, the main problems of the Greek labour market today are outside the labour market: they concern social relations outside the economy, as well as the structure of the economy at large and its dynamism – both of which impede on the creation of good jobs: jobs that raise the welfare of those in employment and create a positive environment for future job creation through demand spillovers and production complementarities.    

"Greece has many things going for it, from natural energy resources and natural advantages concerning tourism, to latent comparative advantages relating to its highly educated workforce (especially in the diaspora) and pockets of cutting-edge expertise in STEM sectors. Its geography offers also geopolitical advantages which can also support the economy."

The structural reforms necessary the Greek economy to become more competitive have been discussed in the public sphere for quite some time. What do you believe are the prospects of economic growth in Greece?  Can EU’s cohesion policies play a role in that?

Greece has registered an arguably impressive recovery since exiting the Adjustment Programmes, with persistently declining unemployment, fast growth rates and significant upgrades in terms of competitiveness and exports. The country has also managed to weather well the various shocks and crises that have happened since, from the implications of Brexit to the COVID pandemic and now the war in Ukraine. We see significant improvements not only in the economy but also in parts of public administration and government. The recent upgrading of Greece’s credit status by the main credit rating agencies is a testimony to this. On the other hand, Greece has not been able to transform itself in sufficient extent, to modernise its economy and to improve sufficiently in its quality of government and institutions, as I mentioned also above. Various studies, including the 2020 report by the Pissarides Commission, have highlighted clearly the deficits of the economy in terms of competitiveness and especially the problems with regulation (over-regulation in some areas and under-regulation elsewhere), economic structure (low value-added specialisations, small firm sizes and small land ownership, fragmented economic space, both sectorally and geographically) and the – so called – directionality of growth (low rates of investment, investment directed mainly to unproductive or low-innovation activities such as real estate and hospitality, geographical over-concentration of financial capital, etc).

The current challenge of the ‘twin transition’ raises the challenge to even higher levels but at the same time creates opportunities for a new narrative on growth and on socio-economic development and modernisation – combined with new resources, including by the EU (as we have seen with the Resilience and Recovery Fund – RRF – and more recently with the emergency assistance offered by the EU after Storm Daniel). It is true that Greece has relied for decades now on the generous transfers to the country through the EU’s Cohesion Policy (and more recently the RRF). The support of the EU for the country’s development, modernisation and transition to a green & digital economy is of paramount importance. At the same time, the country has on the whole not been able to make the most of the money that have accrued into its economy from the EU. While further/continuing assistance will definitely help, the country needs to find not only a new growth strategy but also – and more importantly – the ability to implement (and, of course, design) said strategy effectively. In some past work (with collegue Andreas Antoniades), I had shown that the main problem of Greece – in that case, concerning structural reforms and policy change – is in what political scientist Peter Hall coined as the ‘accumulation of anomalies’ (understanding the problem) and the ‘experimentation with new ideas’ (experimenting with policy solutions based on evidence-based policy advice and deliberation).Whereas this research was focused specifically on the country’s “reform technology”, I am convinced that the same applies in the case of the country’s growth strategy.

Greece has many things going for it, from natural energy resources and natural advantages concerning tourism, to latent comparative advantages relating to its highly educated workforce (especially in the diaspora) and pockets of cutting-edge expertise in STEM sectors. Its geography offers also geopolitical advantages which can also support the economy. But for the country to transform into a modern, high-income and high welfare country, the presence of natural and latent advantages is not sufficient: the country needs a painstakingly thought-out strategy for growth. A strategy that will support the country’s growth acceleration and economic transformation, consistent with the objectives of the green & digital transition, by specifying in a targeted way the direction of growth (‘directionality’) and the path via which new specialisations will emerge in order to support the selected growth path. In that regard, there is still quite some way to go for Greece. As we say in the academic world, “further work is needed”… The Hellenic Observatory, consistent with LSE’ motto of ‘knowing the causes of things for the betterment of society’, will be here to help in this direction for many years to come.

*Interview to Ioulia Livaditi

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Labour Minister Effie Achtsioglou presented the labour market and social security reforms implemented in Greece in the last three years, during a seminar for journalists organized by the General Directorate of Finance of the European Commission in Brussels on 13/6/2018.

Unemployment

Minister Achtsioglou discussed the persistently high rate of unemployment in Greece, noting however that a significant drop (from 27 to 20%) has been achieved in the last three years. The minister pointed out that in the omnibus bill voted in the Greek parliament includes two very important tax incentives for job creation in Greece: employer contributions in social security -which have been increased by 50%- are tax-deductable for each new recruitment, and the same incentive is also applied wiht the aim to change the labor relations mix -for example, to incentivize full-time work instead of part-time or rotation work, or salaried positions instead of short-term contracts.

Minimum wage

On minimum wage in Greece, Achtsioglou stressed that it is very low in comparison with the other EU countries, due to a 22 % reduction applied in 2012, but also due to the abolition of collective bargaining. The minister affirmed that after Greece’s exit from the adjustment programme, the government will reinstate collective bargaining and will increase the minimum wage, albeit with cautious steps and when the time is right.

Pensions

Concerning the reduction of pensions by 1% of GDP as of January 2018, the minister underlined that it has been already legislated and the government is obligated to go through with it, noting that offset measures can be applied. Achtsioglou commented however that the reduction had been agreed to in the context of the second review, under IMF’s pressure. She stressed that the European Institutions and the Greek side did not consider it necessary, as Greek pensioners had suffered enough, the expenses for pensions are already at the European average rate and Greece’s pension system is now sustainable. As she said, after the end of the program on August, the government will review the budget margins for 2018, in order to find measures to relieve all those who will be affected by the pension reductions.

Read more via Greek News Agenda:

• Nasos Iliopoulos on undeclared work and labour relations in Greece

• Greece's growth plan for the post-memorandum era: A more poductive and fairer welfare state

 I.L.

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Annamaria Simonazzi is Professor of Economics at Sapienza University of Rome, Italy, where she has been the director of the Master in Economics and local coordinator of the European Phd in Socio-Economic and Statistical Studies. She presides the Scientific Committee of research institute Fondazione Giacomo Brodolini, is co-director of the journal Economia & Lavoro and member of the editorial board of inGenere.it. Her research interests range from macroeconomics, to social policy, gender and labour economics. Her recent publications include: “Economic relations between Germany and Southern Europe", The Cambridge Journal of Economics, 2013 (co-authored) and “Italy: Continuity and Change in Welfare State Retrenchment” in The European Social Model in Crisis – Is Europe losing its Soul? (Edward Elgar 2015).  

Rafael Muñoz de Bustillo Llorente is Professor of Applied Economics at the University of Salamanca. is Professor of Applied Economics at the University of Salamanca in Spain. His main fields of study and research are Labour Economics, Economics of the Welfare State, European Integration and Development Economics. From in 1999 to date, has participated in over twenty research programs, written chapters in collective volumes and published several articles in scientific journals in both Spanish and English. Some of his books that have been translated in English are: “Measuring more than Money: The Social Economics of Job Quality”, (co-authored, Edward Elgar 2011) and "Operating Hours and Working Times: A Survey of Capacity Utilization and Employment in European Union" (co-authored, 2007).

The two professors recently attended the European Conference on “Inequalities, Neoliberalism and European Integration: progressive responses”, organized by the Nicos Poulantzas Institute and transform! europe, that took place in Athens 23-25 November, as speakers in the panel “Inequalities, welfare state and middle classes in Southern Europe”. Simonazzi and de Bustillo spoke to Greek News Agenda* about how the crisis has affected the middle classes in Spain and Italy, if welfare states in Southern Europe share common traits, how the shrinking of the welfare state is connected to the rise of nationalism and what can be done to defend the european social model:

How has the crisis and subsequent austerity measures affected the middle classes in Spain and Italy? 

Annamaria Simonazzi: In Italy, economic stagnation had started much before the crisis; the labour market was severely segmented, with a very high rate of young people with atypical contracts, in precarious jobs or unemployed.  Thus, before the crisis, middle classes' anxieties were mainly related to their children’s bleak future. The crisis has spread unemployment problems to all age groups, and the middle classes were not spared. The possibility of bleak future for the children is now complemented with an equally bleak present for the grown-ups of the family. Unemployment and the associated decline in labour income is the main reason behind the inequality surges occurring in Italy during recent years, affecting especially the lower middle classes.  

Rafael Muñoz de Bustillo: The impact of the crisis on the middle class in Spain (defined as the population with an income equivalent 80 % to 200 % of the median income) has been double: on one hand there has been a reduction of the size of the middle class, as many have slid down the income ladder to be absorbed by the lower income classes. In relative terms we estimate this reduction at 5%.  On the other hand, as a class, after the crisis, the middle class is poorer, as there has been a 4.5 % reduction of the income they command (out of a total income that is already lower as result of the decrease of GDP, 5.8 % lower from 2008 to 2011).

The middle class has also been affected by the huge increase in unemployment related first to the crisis, and then to the austerity measures taken after May 2010 -when the countercyclical Keynesian policy applied until then by the social democratic government (PSOE) was changed to a policy of fiscal consolidation to address the debt crisis- resulting in unemployment reaching 26 % in 2013.

Furthermore, austerity measures had a negative effect on many public services such as health, education or pensions, services that are closely related to middle class aspirations such as a certain standard of health care, university education for the children etc.

Do classical typologies of welfare state regimes (e.g. Esping-Andersen's classification of welfare states as liberal, conservative and social democratic) also explain differences in income inequality among EU countries? Some authors have argued there exists a fourth type of welfare state: the Southern European, shared by Italy, Spain, Portugal and Greece. Would you like to comment on this? 

Annamaria Simonazzi: The Mediterranean welfare state has been mostly based on the family in order to complement a very unequal provision of services. There had been timid attempts in various countries (and in Italy) to increase the role of the state and extend the coverage of the social services newtork beyond pensions (e.g., long-term care, childcare, poverty assistance), but these have been mostly cancelled by the fiscal crisis.

Rafael Muñoz de Bustillo: Generally there is an inverse relation between the size of the welfare state (social expenditure as a percentage of Gross Domestic Outpout) and income inequality. Spain for example is one of the EU countries with higher income inequality as measured by the Gini Index, as result of the increase in inequality during the crisis.  But interestingly, the higher level of inequality is not the result of higher inequality at the market level, i.e. in terms of market income, but results from the small redistribution power of the meager welfare state existing in the country.

As for the existence of a fourth welfare state model, although I think that Mediterranean countries share some elements, like the lower level of social expenditure as a percentage of GDP, I don´t think they conform a “model”. For example, clientelism, supposed to be one of the elements of such model is completely absent in Spain, while in some areas, such as health (or pensions) the Spanish welfare system is perfectly comparable with the systems in place in the Scandinavian countries: universal, fairly efficient, etc. The only difference, again, is the lower percentage of GDP allocated to the services.

Middle classes are defined not only by their income, but also by their aspirations. What is the effect of the generalized sentiment of vulnerability and insecurity among the middle classes today? How is it connected to the rise of populism and nationalism? 

Annamaria Simonazzi: The generalized sentiment of vulnerability due to the state of the economy, has certainly contributed to a shift towards populism and a growing sentiment against immigration, though the female migrant carers represent the backbone of the elderly care system, and male immigrants sustain a large part of agriculture and construction. In Italy the anger is directed more towards the political class, expressed in the form of supporting "populist" parties or not voting at all.

Rafael Muñoz de Bustillo: The crisis has gravely affected incomes, but more than that it has affected expectations about the stability of the future, anything could happen, nothing can be taken for granted anymore (not even the unity of the country, as is evidenced by that Catalonian crisis). There is a growing concern regarding the possibility of middle class children to reach middle class status, and regarding the capacity of the State to honor its compromises in terms of pensions, healthcare, etc.

It seems that the so-called “European social model” is under threat everywhere in Europe. Can progressive policies be sustained under the current circumstances? Under what terms?

Annamaria Simonazzi: As far as I know, the Nordic welfare model is still resisting (although with some scars): it is based on a high rate of employment (both male and female) which is indispensable to pay for the public services through taxation, and industrial relations are aimed at easing the transition towards new technologies -what once was called the "high road" to growth with equality. Of course, countries with a lower level of development and sharing a common currency with stronger partners face much greater difficulties in pursuing a road of high employment. The process of fiscal consolidation and high levels of debt severely constrain their options. 

Rafael Muñoz de Bustillo: Certainly. They can be sustained as long as the correlation of political forces allows it. It is not a problem of economic sustainability of the model but a problem of having the political strength needed to allocate enough economic resources to make it sustainable in the future.  This can be done within an economic area such as the EU, but, again, only if there is a coalition of countries large enough to readdress the type of policies adopted in the past.

* Interview by Ioulia Livaditi

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The worker-managed factory Vio.Me. in Thessaloniki is probably the most successful self-management experiment in Greece and it has grown into a symbol and inspiration for self-management for workers internationally.

The factory, originally founded in 1982 as a subsidiary of the Philkeram-Johnson Industrial group -a successful Greek conglomerate that used to employ 350 people and export to 29 countries- manufactured different types of building materials. From 2000 to 2006, it was one of the 20 most profitable industries in Northern Greece, but in 2010 the company presented a negative balance sheet and started delaying the payroll of the workers. In May 2011, the company stopped payments altogether and shortly later filed for bankruptcy, resulting in the firing of its more than 70 workers. In October of the same year, the general meeting of the workers’ union decided with an overwhelming majority of 97% to take control of the factory.

As Theodoros Karyotis repoted on the story for website Worker’s Control: “Forty of its workers, organized horizontally in a primary workers’ union, occupiedthe factory, located in the outskirts of Thessaloniki, to prevent the employers from taking away the machinery before paying the workers the nearly €1.5 million owed in salaries and compensations. After one year of unfruitful contacts with the Ministry of Labor and the central trade unions, the workers of VIO.ME , announced in July 2012 their intention to self-manage production in the occupied factory, with the slogan: ‘If you can’t do it, we can.’ 

A constellation of grassroots initiatives, political groups, primary trade unions and individual activists, inspired and motivated by the workers’ initiative, came together to form a wide and active solidarity movement. There was also extensive international networking and a constant flow of sharing and solidarity with similar initiatives, especially the ones in Argentina.

The road ahead was not an easy one, however, on the 12th of February 2013, after three days of intense mobilization, including a benefit concert attended by 6.000 people, production restarted under workers’ control. The workers developed and produced a new range of environmentally-friendly cleaning products that was easy to finance, was produced using local and natural ingredients, and was distributed through the channels of social and solidarity economy, a natural ally of Vio.Me. since the very start.

In April 2014, after overcoming several legal and bureaucratic hurdles, the workers formed Social Cooperative Enterprise, based on the principles of collective decision-making through the workers’ assembly, collective ownership of the means of production, and non-profit operation, as any surpluses will return to the wider community. For many, the factory represents a new way forward for unemployed workers in Greece – seizing the means of production, running factories without bosses, producing only goods that are needed, and distributing them through solidarity networks.”

Apostolos Karakassis, the director of a 2015 documentary on the struggles of the Vio.Me. workers titled “Next Stop: Utopia” says: “Workers with no work experience outside the production line, driven by despair, decide to start a small revolution, just for a chance to win back their lives. They want to establish an island of utopia in a capitalist environment and of course they meet a thousand obstacles and conflicts at every level.

They are going against the law, the judicial authorities and the factory’s ex-owners, while they fight to gain some kind of legal status. There are conflicts within the group as well; practicing direct democracy can be very hard. But what proves to be the hardest, is the inner conflicts each individual has to face. These people in their fifties are forced to develop a new identity, one that will allow them to survive in dignity and withstand the sufferings of an ‘outrageous fortune’”

The ecological cleaning products and soaps that are produced in the factory are sold via an e-shop, a retail outlet that opened in 2016 in Athens and markets without intermediaries. According site Popaganda, since 2015, the rise in sales is 20-25% per year and sales abroad have risen by 70% in 2016. Spyros Sgouras, who runs the e-shop, told Popaganda that that the Vio.Me. model "shows how the social economy can work. People do not buy our products just because they are organic or vegan. They contain another message, the message of solidarity, self-organization, labor and social control of production. And there is great potential in that in Greece and Europe”.

Twenty-eight year old chemical engineer and the younger member of the coop Vangelis Bragoteris also speaking to Popaganda: "In any other business there is a boss and you do two things at most. Here you are learning and doing everything. Everyone passes through all the posts. There is no hierarchy "and there is alog the challenge of "making things from scratch, making new recipes". Out of the 23 members of the coop, only six are on payroll. The rest are still on work stoppage. "Those who are paid are getting a very low pay, 360 euros. But that's not the point. The people who started the project managed to escape the misery and depression of unemployment and became creative.”

In October 2016, the Second Euromediterranean "Workers' Economy" Meeting, a forum on the challenges faced by workers in their efforts to defend their means of subsistence through self-management, took place in VIO.ME with more than 200 international participants.

Recently, Vio.Me. has been proclaimed an example of "good practices" for Northern Greece as part of a project for the sustainable and solidarity economy implemented by Fair Trade Hellas with 28 other organizations in Europe. "In the years of the deep crisis, the Vio.Me. workers took production in their hands, assumed their social role and taught us how a business can have a positive impact on the environment and society through self-management in operation and decision-making, Kelly Garyfali, Program Manager of Fair Trade Hellas told newspaper Kathimerini. Fair Trade Hellas has produced a short film on the VioMe story:

Despite being socially consolidated and productively successful, the Vio.Me. coop is threatened by an auction and liquidation process. After 4 years of struggles, what the cooperatives of Vio.Me. want is for government legitimize the use of the space, the equipment and machinery of the old factory by the coop. The proposal of the cooperatives is that, based on the four million euros in outstanding debts of the previous bankrupt business, the state could confiscate the real estate and then to concede its use to the cooperative.

Read more: http://www.viome.org/

Based on the following sources:

• Workers' Control
• Kathimerini.gr
• Popaganda.gr
• "Next Stop Utopia" Documentary
• Andrés Lofiego

I.L.

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In a statement to Athens News Agency for May Day, Labour Minister Effie Achtsioglou underlined the government's determination to crack down on employers flouting labour law, targeting in particular the practice of undeclared or under-declared labour. "The problem is significant, but not impossible to overcome. In a recent inspection at a big bank by the Labour Inspectorate (SEPE), more than 100 violations relating to under-declared labour were ascertained and, for the first time, a fine amounting to 1,635,000 euro was imposed. Employer disregard for the law will not be tolerated," Achtsioglou underlined. "From the very first moment, [the government] pledged to restore collective bargaining in Greece. All major European trade unions and progressive political forces aligned themselves with this effort," Achtsioglou pointed out. "Equally important, however, is to methodically intervene in work spaces against exploitation and lawlessness. We aim to fight undeclared and under-declared labour with coordinated actions like the targeted joint raids on businesses that started on May 1st”.

These actions form part of a pilot project that was announced on April 27, all within the framework of the three-year roadmap, signed in October by Greece, the ILO and the social partners, with the aim to implement an integrated strategy for tackling undeclared work in Greece. The pilot project involves the coordination, for the first time, of four control mechanisms that will cooperate, both at the level of on-the-spot audits as well as at the level of data exchange and cross-checks: a) the Labour Inspectorate (SEPE), b) the Unified Social Security Agency (EFKA), C) the Financial Police and d) the Financial Crimes Investigation Corps (SDOE). The cooperation between these four control mechanisms will enhance the quality and depth of audits, allowing them to close in on businesses and sectors with high rates of under-declared work.

Nasos Iliopoulos, Special Secretary of the Greek Labour Inspectorate, in statements to radio station “Sto Kokkino” characterized this pilot project as innovative, and specified that it is not limited to controlling under-declared and undeclared work, but it will also tackle the issue of outstanding salaries. "We are not chasing employers to increase public revenues, but to protect the workers," Iliopoulos said. "It is important to recognize that in the recent case of the fine amounting to 1,635,000 imposed to a big bank, it is not only the size of the fine that matters, but also dismantling the perception that offenders are usually micro-entrepreneurs and that the 'big fish' are not subject to the law".

In recent interviews for daily newspaper Avgi (05.02.17) and Athens News Agency (24.04.17) Iliopoulos talked about the government’s efforts to strengthen the Labour Inspectorate and support workers’ rights. He pointed out that the biggest problem facing the labour market in Greece today is under-declared work, while he also stressed the importance of combating unregulated work along with restoring collective contracts and collective bargaining.

On Undeclared / Under-declared Labour in Greece

"The picture we have is that undeclared work for 2016 is close to 13%, with the caveat that this data comes from targeted controls, where the infringements are more likely to be detected. Although the percentage is the lowest in recent years, we are concerned about the shift from fully undeclared to under-declared work, which is when workers are insured for a fewer hours than those they actually work.

The bulk of under-declared work is detected in the catering industry -due to this sector´s important role in overall employment. Also, based on the data available to us, a high percentage of irregularity is detected in service jobs, clothes manufacturing and entertainment jobs."

On Strengthening the Labour Inspectorate

"During 2010-2014, we experienced an unprecedented deregulation of labour relations, which did not leave the Labour Inspectorate unaffected. Previous governments have tried to undermine the agency by closing regional divisions, reducing the number of employees and shrinking the structures supporting the work of inspectors. The attack on labour rights went along with the depreciation of any control mechanism. This is precisely why the ministry's leadership, alongside the fight for collective agreements, is taking steps to upgrade and support to the Inspectorate.

Already, he have with 50 newly recruited employees, trained to become inspectors. At the same time, as part of the new Ministry of Labour's organizational chart, SEPE will have more organizational positions and new structures to support it, like a legal department. Re-establishing a legal department will make a substantial contribution to the day-to-day work of inspectors and will cover an important gap created by the previous government. Furthermore, the operation of our new risk-assessment information system can dramatically upgrade the effectiveness of audits. Finally, we will promote immediate legislative changes to shield workers against labour law violations."

On Incentives for Workers and Disincentives for Employers

"Fines are imposed in order to make employers comply with labour law. Today we need a new architecture that will motivate employees to report violations to the Inspectorate, while at the same time imposing stricter penalties in the event of a relapse. Labour Minister Efi Achitsoglou’s proposal that the government's is not to spend a single euro of public money on businesses that violate labour law is part of an integrated incentive/disincentive strategy to ensure employer compliance.  At the same time, it is also a matter of moral order. Entrepreneurs who either deprive the social security system resource, or don’t adhere to the framework of industrial relations, should not have access to public money."

Collective contracts and collective bargaining

"The government is making a great effort to re-launch collective contracts and collective bargaining:  It has been proven that their existence limits labour law violation, and it is our perception that the role of the labour movement is irreplaceable in restoring legitimacy in the labor market.  

In recent years, the debate on social security was conducted in purely on budget terms. For previous governments, the social security issue problem was simply a matter of expenses. They "forgot" to see the negative effects that flexibility of labour relations, part-time work, as well as undeclared and under-declared work have on social security revenues.

It is precisely for this reason that combating labour violations and restoring collective bargaining are crucial variables in the effort to reconstruct social security after years of plunder. In this direction, the resources resulting from the fines of the Inspectorate are now directed at supporting social security."

Read more: “Supporting the transition from informal to formal economy and addressing undeclared work in Greece” Project

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George Argeitis, Associate Professor of Macroeconomic Theory and Policy at the University of Athens and the scientific director of the Labor Institute of GSEE (General Cofederation of Greek Workers) has recently published two articles in the Greek press (dailies ‘Avgi’ and ‘Ta Nea’) making a case on why re-establishing labour market institutions in Greece is vital for promoting growth  and strengthening democracy.

During the crisis and the successive economic adjustment programs applied in Greece, the impact of undermining and weakening labour market institutions has not been the subject of much public debate. Labour market institutions were the easy targets of an obsessive perception that the reduction of labour costs and protection are necessary and inevitable structural adjustments in order to improve the competitiveness and enhance the openness of the economy.

Basic institutions of the labor market, such as collective bargaining, the full-time contracts, unions’ participation in collective wage bargaining and the level of the minimum wage, were targeted so that wages could be adjusted to business needs. Even today - after recession and disinvestment historic proportions in Greek economy – the IMF continues to claim that individual contracts are a prerequisite in order to exit the crisis. The belief in the neoliberal principle that the labour market should be deregulated of self-regulated as much as possible lies behind the rigidity of creditors' claims.

However, the view that what improves the competitiveness of a company improves the competitiveness of the economy overall, is a dangerous generalization that  disregards the heterogeneous nature of the business, the structure of markets, institutional and productive models, the long-term growth model the national economy, and especially the living standard of the majority of society.

In the case of our country, the deregulation of the labour market caused significant adverse effects:  full dominance of individual agreements,  which in led to significant wage reductions, increased precarious forms of work and a dramatic increase in unemployment. The negative developments in the labour market are the main reasons for exacerbating poverty indicators, social exclusion and economic inequality. While the positive effects of deregulation on the economy are questionable, negative consequences can extend to the realms of culture and politics.

The deregulation of (collective bargaining and other) labour market institutions has undermined social dialogue in Greece, but it could also have an important impact on democracy and democratic institutions.  An often-heard argument is that the financial crisis and increasing unemployment are fuelling populism, xenophobia, racism towards immigrants and the rise of the extreme right. Although the correlation between recession and unemployment and the rise of populism and nationalism is positive, the relevant empirical findings show that it is not critical.

There is a growing literature of empirical findings suggesting that reducing the minimum wage, precarious jobs and long-term unemployment, coupled with reducing the duration of unemployment benefits and wage inequality (brought about by the abolition of sectoral agreements) are factors that have a very significant impact on the rise of populism and the extreme right. Labour market deregulation has therefore dangerous ideological and political consequences. Strengthening the institutions of labour protection, social dialogue and solidarity shields democracy and democratic institutions.

Strengthening labour market institutions is a good fit for Greece

There is a need at national and European level to develop an alternative perspective on the role wages and labour market institutions play in the economy. The labour market is the link between the financial sector and the real sector of the economy. According to this big-picture perspective, labour market institutions  (including centralized collective agreements, their extensibility and minimum wage)  are necessary, not only to regulate competing financial interests, but also to shape income distribution in ways that promote employment and growth.

The relative literature shows that the greater the dependence of growth on  domestic spending and borrowing, as in the case of Greece, the greater the importance of strengthening labour market institutions, as they contribute positively to growth in domestic expenditure and the systemic banking system’s solvency. Labour market institutions enhance revenue streams and therefore the real sector of the economy and create new jobs, while  also greatly supporting the ability of all sectors of the economy to meet their financial obligations.

Another perspective on growth and competitiveness

A realistic exit strategy from the economic and social crisis has therefore to include labour protection institutions. The decentralization and individualization of wage bargaining leads to pro-cyclical wages, which in turn causes both falling incomes and increases the wage gap, further fuelling economic inequality and recession.

Restoring and strengthening collective bargaining and the extension of collective labour agreements according to the principle of favorability, can act as a growth-stabilizing mechanism, as sustainable growth requires the reduction of labour market segmentation

Putting emphasis on the demand-side of the economy is not underestimating the supply side. On the contrary, it provides economic policy with another tool for improving competitiveness. The meaning of competitiveness is now different and it requires interventions in a wide array of factors, such as innovation, quality, industrial development and specialization of the economy, entrepreneurship.

Improving competitiveness and growth are critically dependent on sectoral policies, planning a balanced industrial strategy and a well developed infrastructure system. These are the substantial structural changes needed by the Greek economy in order to create a more efficient and competitive, but also sustainable and equitable growth model.

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Europe's future is inextricably tied to labour relations, and therefore with the issue of labour relations in Greece. The problem of employment is central today and the answers we give today in Greece will determine all social developments in Europe today. This was the main point of the speech of the Minister of Labour, Effie Achtsioglou, given in the conference “Restoring instead of deregulating labour relations in Greece" (Frankfurt, 16.03). The conference was organized by trade union IG Metall (Industriegewerkschaft Metall), the dominant metalworkers' union in Germany, making it the country's largest union as well as Europe's largest industrial union, and a major trend-setter in national bargaining.

According to Wolfgang Lemb, Managing Director of IG Metall, "the IG Metall message is Collective Labour Agreements for everyone. We need to change neoliberal policies. The restitution of labour law will improve the lives of workers in Greece. The position of the IG Metall is that the German government bears great responsibility for the negative developments in Europe."

Wolfgang Däubler, professor at the University of Bremen and a member of the Expert Group for the Review of Greek Labour Market Institutions stressed that “there are now voices calling for abolition of labour law […] political pressure should be exerted by German unions to the German government because the attack on labour in Greece is a European development that will hit our own door and we have to put pressure on the German political system."

As Minister of Labour Effie Achtsioglou herself emphasized in her speech, “Maybe the title of discussion today has to do with labour relations in Greece, but the real debate goes much deeper than that. In fact, today we are discussing the future of Europe. Turning points in history bring us face to face with crucial questions, the answers to which will determine future social developments. The issue of employment is now a question of such magnitude for Europe today.

Today we really need a new political and social plan for Europe. We need a new vision, one that can win the hearts and minds of the working people. Europe needs to show that it cares not just for the few, for profits for free market competition, but that it is big enough to give its people, the social majority, a life with dignity. […]

We do not need a Europe that unpicks the democratic achievements of the people and challenges the European social model. We do not need a Europe run by technocrats without broader social legitimacy. This Europe is a part of the problem; this Europe sustains right-wing rhetoric and nationalist tendencies. The world of work in Europe cannot forget the historical experience of the rise of nationalism and the extreme right. […]

We live in societies that accumulate huge amounts of wealth, while at the same time producing unprecedented inequalities. The explosion of social inequalities during the crisis was not a mistake of the political project of neoliberalism, nor does it constitute collateral damage. Instead, it was and is a very conscious choice. Neoliberalism’s answer to the crisis in Europe was the attack on public services, the restriction of social rights and the devaluation of labour.

For the dominant neoliberal political forces the aim was not just to reduce labor costs. It was to create of a generation of workers who will learn to live with less, not simply lower wages, but with fewer dreams, fewer rights, less dignity.

Experts Report & The importance of sectoral agreements

The memorandum signed by the Greek government and the lenders in the summer of 2015  predicted that in the issues of collective bargaining, collective layoffs and trade union law, Greece must be harmonized with European best practices. In this context, a committee of experts was created, its composition jointly determined by the Greek government and the institutions. This Expert Group published its report ontaining twelve recommendations, some reached unanimously, others with a clear majority.

Specifically on the issue of collective bargaining, the Expert Group unanimously supported the need to restore the extensibility of sectoral agreements, while a majority (6-2) supported the restoration of the principle of favorability. The report outlines a number of other proposals that have to do to restoring minimum wage as object of collective bargaining between social partners, restoring the principle of after-effect etc.

Overall, the Expert Group adopted the position of the Greek government:  that the reforms applied during 2010-2014 to the collective bargaining system did not decentralize it -as they were supposed to-  but instead led to its complete collapse. So today, for the vast majority of employees, working conditions are specified in individual contracts, while less than 10 sectoral agreements are currently in force in the country. All this in an economy where the vast majority of companies are very small enterprises (with up 10 employees) and the existence of sectoral agreements is particularly crucial for the protection of workers and healthy competition.

Why do some choose to ignore the Expert Group Report?

After the publication of the Expert Group’s Report, which had the official stamp of approval of both the Greek government and the institutions, one would expect that specific recommendations that enjoyed the consensus of the Expert Group would be, if not the final outcome, at least the base of dialogue in our negotiations with the lenders. Instead, the negotiations for the second review met the intransigence of the IMF and the often guilty silence of the European institutions. We knew all along that neoliberalism does not get along with democracy and social and labour rights. Today we are discovering that it does not get along either with proper procedures or with simple arithmetic.

The lack of arguments on the part of institutions is a constant pattern in the negotiations on labour issues. Along with the issue of collective bargaining, the issues of collective layoffs and trade union law are still pending. The IMF stance in all this is highly aggressive towards the working people. They are requesting a duplication of the threshold for massive layoffs, from 5% to 10%, the permission of employers’ lockout and a number of changes that will make it more difficult to strike and reduce the protection of trade union actions […]

The Greek labour market &  the future of Europe

Why should  a worker in Germany or elsewhere in Europe today be concerned about will happen to collective bargaining and industrial relations in Greece? […] I'll answer with a vivid example. During the negotiations, when once again, the representatives of the Greek government came back to the findings of the Expert Groups and the text of the Memorandum which refers to the need for Greece to align itself with best practices in Europe, the response from the IMF side was that, for them, the best practices in industrial relations in Europe at the moment are being applied in Greece.

It is obvious that on the issue of labour relations, for the IMF and the European neoliberal forces,  Greece is the new paradigm that must be generalized. […] In this sense, ending the deregulation of labour relations and restoring normality in Greece will be a victory for all European workers.

Today, then, we are not just talking about the Greek labour market. Today we are talking about the future of Europe. About if a European country should be an exception to the European social model. We are talking about whether workers have the right to participate in the redistribution of wealth they are producing or, if today’s Europe will continue to be a Europe for the few. If we choose the second way, we have no right to be surprised by the results. We however, are choosing to continue to struggle and believe we have the power to bring the democratic changes needed to build a Europe that can accommodate the dreams and needs of its people.”

Read more: Independent Experts Report supports Greek positions on Labour Relations; Alexis Tsipras on austerity, collective labour agreements and the European social acquis; Collective Labour Agreements: Regaining the lost ground; The government is 'waging a great struggle to complete the 2nd review,' Achtsioglou says

Main source [in Greek]: Η μάχη για τα εργασιακά αφορά το μέλλον της Ευρώπης

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Maria Karamessini, President and Governor of the Greek Public Employment Agency (OAED) and Professor in Labour Economics and Economics of the Welfare State at Panteion University has published an article  titled "Wages, labour rights and development: the focus of an alternative plan for European integration" in weekly newspaper Epohi (25.03):

"Sixty years after the signing of the Treaty of Rome, twenty five years after the signing of the treaty of Maastricht, which launched EU’s neoliberal integration, and ten years after the beginning of the recent global economic crisis, the EU is stuck in low growth and high unemployment rates. The EU is also going through a wholesale crisis of legitimacy in the eyes of European peoples who view European institutions as attacking their vested rights and hindering their ability to determine their life through social and political participation.

Moreover, in the eurozone, the refusal to jointly handle the public issue of over-indebtedness in households, companies, banks and memberstates, as well as the widening inequalities between the North and South -a result of the austerity and internal devaluation policies imposed on the periphery- have undermined the credibility of the mainstream plan for resolving the crisis, as it is expressed by the European institutions and the IMF.

The "social question" in neoliberal Europe

Besides widening the inequalities among member states, the global financial crisis also exacerbated already existing reactionary trends and social problems in all EU countries, due to the increasing precariousness and poverty as well as the further erosion of labour and social rights in the form of active institutional deregulation over the last few years -in Greece and in several other countries. The rising of Euroscepticism on the Left and the Right -as evidenced by recent elections in Europe and the referendum on Brexit- has, despite its negative ideological and political consequences, contributed to raising mass awareness on the issue facing young people today in Europe. The disenfranchised youth is  the new "social issue" of neoliberal Europe of the 21st century, and it goes hand in hand with the new "political issue", that is the decline of the real power of democratic institutions and the inability of the people to influence decisions concerning their lives and future.

Labour at the center of the "social issue"

Undoubtedly, scarce and precarious labour lies at the center of EU’s current social issue, and it is ingrained in the gradual dominance of neoliberalism across the continent. It is no coincidence that the Greek government is negotiating hard today with the country's creditors for the labour rights of we employees in Greece, and has exerted strong pressure for inclusion of said rights in the Rome Declaration of 25/03.

Along with establishing a "smaller government", redistributing income in favor of the capital and against wage labour, were the main objectives of the neoliberal project, in order to increasing profit rates and private investment. During the 1980s, in all 15 EU member-states, the share of wages in national income fell sharply to serve the above objective. But only with the Maastricht Treaty and the White Paper on Growth, Competitiveness and Employment, labour costs were associated for the first time with competitive performance of member-states and therefore with the evolution of employment.

Since then the European institutions have been recommending to member states that wage raises are lower than labour productivity. "Wage moderation" was also  linked to urging the member states to move away from the endogenous growth model - based on domestic demand and hence on wages and private consumption - to an extrovert growth model, is driven by exports of goods and services and requiring low labour costs so as not to hamper the competitiveness of domestically produced products.

There was nothing “natural” about this procedure; it was part of the neoliberal political project that sought to use the EMU and the single currency not only as a medium for accumulating and centralizing European capital in a fully integrated market, but also as a tool for disciplining workers and trade unions, pitting employees in international competition against eachoter and forcing less competitive economies to correct their external imbalances through cost reduction policies. This in the short term meant “wage correction” policies, reductions in social security contributions and/or promoting flexible forms of employment.

Analyzing neoliberal integration: an alternative development model

The adoption of the Maastricht Treaty and afterwards, of the Stability Pact gave rise to heterodox economists and leftist activists that criticized the doctrine of "outward oriented growth" and the EMU.  In 1990s they developed an alternative model for social integration in the EU, which was based on the promotion of public investments at national and EU level, the increase in real wages according to each country’s labour productivity and the introduction of a minimum of social and labour rights to prevent social dumping.

Each country should aim not to increase its exports at the expense of other countries, but to maintain a balanced foreign trade within a growing single European market through the combination of increased workers consumption and investment. In the vast majority of countries accumulation of capital depended mainly on domestic demand, so that any income redistribution at the expense of workers and in the interests of capital would slow down the employment and economic growth in individual countries as well as in the EU overall.

Today, a group of post-Keynesian economists (Stockhammer, Lavoie, Onaran etc.), are using extensively documented research to make similar criticisms. In fact this group supports that redistribution of income to profits away from wages in era of neoliberalism has resulted in two different but equally unstable development models: one was based on export growth, while the other was based on increased consumption via a continuous expansion of debt, with the disastrous consequences we know for all countries that, like Greece, had adopted it.

The above group proposed wage-led growth as an alternative development strategy for the EU and European countries.  This policy  based not only on the use of budget and industrial policy tools, but also on a wage policy at a  European level that would take into account an equitable sharing of gains from productivity rise in each country, as well as the need to overcome external imbalances among different European economies.

The group  also supports an institutional strengthening of the bargaining power of salaried employees atthe national and European level, by adopting the recommendations of European unions on the European Pillar of Social Rights: establishment of minimum wage in each country equal to 60% of the average wage, strengthening sectoral negotiations and the role of unions, etc.

Wages, labour rights and an alternative plan for European integration

The realization that the expansion of neoliberal policies and the generalization of outward-oriented development model in the EU and the eurozone have resulted in economic stagnation, unemployment and a race to the bottom to diminish labour rights, has created an awareness among sections of the Social Democrats that a limit must be put to the continuous erosion of social rights. Large sections of the Left have also become aware that maintaining and enhancing labour rights can be guaranteed in practice only through the potential for sustainable growth for the European economies in a globalized context. The Greek government certainly is not alone in this realization, but it is uncertain whether this will eventually lead to tilt the balance of negotiations for labour rights in Greece’s favor."

Read more:

• Social policy in times of austerity | Maria Karamessini on tackling unemployment in Greece
• EESC's Georges Dassis on refugee flows management & European Social Model values
• Independent Experts Report supports Greek positions on Labour Relations
  

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A two-day conference on "Inequalities and the world of work: What role for industrial relations and social dialogue?"  is taking place in Brussels (23-24.2.2017) to discuss key factors leading to rising inequalities in EU-Member States. The conference, organized by the International Labour Organization (ILO) and the European Commission (EC) is going to investigate the possible role of social dialogue and social partners, and more generally of industrial relations, in reducing inequalities in the world of work. 

Alternate Labour Minister, Rania Antonopoulos, speaking to Athens-Macedonian News Agency about her participation in the conference, stressed that “we live in the era of great inequalities: inequalities in income, access to education and employment, social security". Antonopoulos, who will participate today (24.02) with other EU labour ministers at a round table on the 'political perspective of industrial relations and inequalities’, added that "inequality has exceeded sustainable levels, already affecting economies and threatening the cohesion of societies. It has been proven that some inequalities are associated with the mechanisms governing the workplace - from the level of wages and the type of labour relations to the constant professional education.

As the new ILO report to be presented at the conference demonstrates, labour market policies and the industrial relations systems underpinning collective bargaining have a key influence on the level of inequalities observed in EU Member States.  The report examines overall trends in Europe with specific chapters on Belgium, France, Germany, Greece, Ireland, Italy, Slovenia, Spain, Sweden, the Baltic States, the Netherlands and the United Kingdom.

According to the report’s chapter on Greece (Imposed Labour Market Flexibility and Growing Wage and Employment Inequalities under Austerity in Greece), written by professors Maria Karamessini and Stefanos Giakoumatos, social dialogue has fallen victim to the ‘structural labour market reforms’ that have been implemented since 2010, with the intention of decentralizing the collective bargaining system in order to promote wage flexibility. The end result of all reforms of collective bargaining and the abolition of social dialogue were destabilization and erosion, the dramatic fall in the coverage rate of employees by collective agreements, a great reduction in wages and the expansion in the share of employees enduring in-work poverty. These reforms have also played a crucial role in amplifying wage inequalities from 2012 onwards.

The chapter on Greece concludes that, after nine years of recession and seven years of austerity, it has become evident that wage devaluation is not a viable way out of the Greek Great Depression and that sustainable growth requires a new institutional set up that promotes productivity growth and investment in product and services quality. A multi-level social dialogue framework is part and parcel of this institutional set up. Collective bargaining is a fundamental right in democratic societies and a prerequisite for decent work and social cohesion. At the same time, collective agreements with a high coverage or applicability create a level playing field for companies that can invest in skills and retain experienced employees by paying decent wages without being undercut by competitors who are not covered by a collective agreement. This means that collective agreements are a prerequisite for both sustainable and equitable growth.

On the overall EU level, the report shows that in several European countries, the erosion of collective bargaining has led to an increased number of low-paid jobs and rising inequality among the workforce. Conversely, countries with more centralized or highly coordinated collective bargaining systems such as Sweden or Belgium have been successful at preventing the rise of low-paid or employment insecurity and the growth of inequalities.

“Countries with low income inequality tend to have strong social dialogue institutions, leading to a reduction of the gender pay gap and better working conditions for employees in non-standard forms of employment,” explains Daniel Vaughan-Whitehead, ILO Senior Economist, who edited the volume.  The minimum wage can also contribute to limiting wage inequality, but only if it is combined with effective collective bargaining, the report finds. For example, in Belgium and Ireland but also France and the Netherlands, the combination of a floor-setting minimum wage and a strong social dialogue framework has limited fragmentation in terms of pay and working conditions.

“The erosion of social dialogue in some countries is worrying and calls for a strong policy agenda. If we want to preserve economic growth and social cohesion, we must strengthen collective bargaining to curb inequalities,” concludes Heinz Koller, ILO Assistant Director-General and Regional Director for Europe and Central Asia. 

Read more: Independent Experts Report supports Greek positions on Labour Relations

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Last month (20.10) the Greek Parliament adopted a new law that will create a supportive legal environment for the development of Social and Solidarity Economy. According to Alternate Labour minister Rania Antonopoulos, the law provides solutions to issues like “funding, tax, social welfare and access to public procurement” and “clarifies the relationship between social economy operators and  the public sector” with a view to establish this new type of economic activity and to combat unemployment.

The term Social and Solidarity Economy (SSE) refers to a broad range of organizations that are distinguished from conventional for-profit enterprises by two core features. First, they have explicit social (and often environmental) objectives. Second, they involve varying forms of co-operative, associative and solidarity relations. They include, for example, cooperatives, mutual associations, women’s self-help groups, social enterprise and fair trade organizations and networks.

In part, the seeds for the development of social economy in Greece had been sawn by the vibrant grassroots movement that spread throughout the crisis-ridden country from early 2012 onwards: the groups that appeared reconnected electricity, organized distribution of agricultural produce “without middlemen”, set-up solidarity healthcare clinics and pharmacies, tutoring programs, provided free legal support on housing and debt, organized hospitality structures for refugees etc. Harnessing the power of this solidarity movement to rebuild the Greek economy was major pledge made by the SYRIZA: in its electoral programme, SYRIZA had highlighted the importance of reviving the co-op movement as a form of social and economic activity for the future, and suggested drawing up a strategy by looking at the most suitable sectors for co-operative development.

Outline of the new law on social economy

The Greek Government presented this August a Bill to the Parliament on the “Social and Solidarity Economy and the development of its agencies”, in order to expand to other forms of enterprises the scope of the old 2011 Law on cooperatives, which no longer met current needs. According to alternate Labour minister Rania Antonopoulos in her recent (24.10) interview for Efimerida ton Syntakton’ daily, the new law (voted on 20.10), expands the legal definition of SSE operators, while at the same time securing the core concepts of the coop culture: solidarity and parity between the members, participatory democracy in decision-making, development of economic activities that don't focus on profit but are able to offer workers a living wage and provide services to local communities.

Furthermore, the minister notes that the law defines the procedure by which the government and the broader public sector will offer support to SSE entities, through open and transparent procedures, either by developing contracts, or by utilizing idle public property. Among the incentives and supporting measures to make sure that SEE operators are viable are tax deductions and exemptions.

The priorities of the new law were further outlined in the speech minister Antonopoulos gave during the International Conference on Social and Solidarity Economy, organized by the UN Inter-Agency Task Force on Social and Solidarity Economy (11/11, Rome). In the Conference, which was a part the UN’s Agenda for “Sustainable Development 2030” Minister Antonopoulos underlined that “the Greek government does not consider Social and Solidarity Economy to be another welfare policy measure addressing the most vulnerable. For the government, SSE presents a new model for work as well an alternative production and consumption model. Social and Solidarity Economy is an overall horizontal priority for us.”

This is why the government in this new law has put in place a National Strategy for SSE, which, as the minister pointed out, besides laying the groundwork for legal and institutional changes, establishes important supportive structures like the Regional Support Centers, which will provide free support and advice for those wishing to become active in SSE. Another supportive structure is the Social Economy Fund which, in the next three years, will allocate at least 157 million euros for the creation of new jobs and start-ups, as well as one-stop-shops supporting potential SSE practitioners. The Fund will become an active supporter of SSE ventures by making financial tools avaibable to those that cannot access them now through the bank system, such as grants and repayable grants, microlending-microcredits or guarantees.

According to the minister, the majority of comments and suggestions made via public consultation and during the discussion fora with stakeholders and political parties have been incorporated in the law, while the government also consulted with the International Labour Organization, exchanged views with the European confederation of industrial and service cooperatives (CICOPA), and several European Coops. “Greece is now at the forefront of the international effort to enable SSE. The new law, voted recently in Parliament with a wide majority is a concrete proof of our commitment to boost SSE” said minister Antonopoulos, adding that, “we believe that Social and Solidarity Economy bears all the necessary characteristics to become the vehicle for the creation of new forms of production and of enterprises that are not so much dependent on the market economy or on state policies”.

Background: UN and Europe views on SSE

The UN set up an SSE Task Force on Social and Solidarity Economy in September 2013, bringing together UN agencies and other inter-governmental organizations with a direct interest in SSE as well as umbrella associations of international social and solidarity economy networks. The Task Force believes that SSE holds considerable promise for addressing the economic, social and environmental objectives and integrated approaches inherent in the concept of sustainable development

According to the European Forum on Social and Solidarity Economy, organized by the European United Left / Nordic Confederation Group (GUE / NGL) the economic importance of the SSE is beyond any doubt, representing over 14 million jobs (6.5% of total employment in the EU) and having proved to be extraordinary resilient to the impacts of the crisis concerning unemployment. It is a booming sector, which generates qualitative benefits, which have the potential to improve the quality of democracy while proposing frames of production and reproduction more compatible with fairer and more sustainable societies.

The European Commission works closely with the European External Action Service to participate in international development forums to enhance the visibility of social and solidarity economy and make SSE part of the global political agenda. The Commission is supporting the prospect of more EU countries becoming members of the International Leading Group on SSE (ILGSSE).

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