“The decision to increase minimal salary by 9.4%, at 780 euros, is the golden ratio between two things: the need to support workers, especially the low-wage workers who have been hit by imported inflation, and the need not to affect the resilience of enterprises that are also affected by the international financial crisis and rising production costs. It is also the golden ratio between the various proposals submitted by employees and employers,” the Ministry of Labor and Social Affairs said in a statement, which provides further clarification through 12 questions and answers.

Among other things, the Ministry of Labor indicates that in any case, the task remains to further significant wage increases in Greece, “which can be supported primarily by the dynamic growth of the Greek economy.”

1. On what basis was the decision taken to raise the minimum wage by 9.4% to 780 euros?

The solution is a golden intersection between two things: the need to support workers, especially low-wage workers who have been hit by imported inflation, and the need not to affect the sustainability of businesses that have also been hit by the international economic crisis. and rising production costs.

It is also the golden ratio between the various offers presented by workers and employers. It would be easy for the government to go for a bigger increase, especially in the run-up to the elections, as the increase puts a burden on business rather than the state budget. But this would be irresponsible, as it would undermine the foundations on which economic growth and, ultimately, the reduction of unemployment and higher wages of workers are based.

Determining the minimum wage requires a reduction in unemployment from 17.5% in summer 2019 to 10.8% in January 2023, economic growth that is expected to continue this year, export growth and high inflation, but, with on the other hand, performance, competitiveness, and increased commercial costs have been taken into account, so that the solution is truly sustainable.

Thus, it was decided to increase the minimum wage to 780 euros per month, or 910 euros, given that 14 salaries are paid annually and, accordingly, the minimum daily wage to 34.84 euros.

2. However, some circles note that inflation has already offset this increase. Why didn’t you go for a bigger increase given the inflationary pressure on earnings?

Inflation is really high both in Greece and around the world. But it’s not certain that it’s higher than the minimum wage increase. According to relevant data, the overall price index is expected to rise by 15.1% in 2023 compared to 2019, and the cumulative increase in the minimum wage over the same period will be 20%. In particular, from 650 euros, which was the minimum wage in 2019, it now increases to 780 euros.

Well, the minimum wage for the four years 2019-2023 will obviously grow more than inflation. And the increase in the net minimum wage is even higher (21.8% vs. 15.1% inflation).

3. However, the government has promised that the increase in the minimum wage will double the growth rate, which was 8.3% in 2021 and 5.9% in 2022.

This obligation is not only observed in full, but also together with the above. Taking into account the recession in 2020, as well as the expected growth rate for 2023 (1.8%), it is concluded that GDP for the four years 2019-2023. will show a growth rate of 6.5% (from 190.5 to 202.77 billion euros). ). The increase in the minimum wage for the same period is 20%. That is, GDP growth more than three times!

4. What is the final net amount workers will receive from April 1, 2023?

The net amount after social insurance contributions and income tax of €780 is €667 (€548 in 2019). This amount, however, is multiplied by 14, as gifts and vacation pay are paid each year.

Thus, in terms of 12 months, the net minimum wage reaches 778 euros per month (from 639 euros in 2019). The annual net income of minimum wage earners is €9,336 (€7,667 in 2019).

The increase from 2019 is therefore 1669 euros per year, or alternatively three additional net salaries per year.

5. The new minimum wage exceeds the tax-free threshold. What will be the tax burden on those who pay it?

Even after accounting for the effect of taxation, minimum wage workers, as already noted, are in a much better position.

In particular, if in 2022 the annual net income was 8,597 euros, now it is 9,336 euros, that is, their net income after all taxes will be 739 euros higher. Any contrary opinion is completely unfounded.

6. How many workers are being paid the minimum wage and will their earnings be directly affected from April 1st? And what are the expected implications for the entire economy?

The number of minimum wage workers in 2022 decreased by 60,000 people (from 646,000 to 585,000). This was because the growth of the economy and the reduction in unemployment led to an increase in wages above the minimum wage in general, which is confirmed by both the ELSTAT surveys and P.S. ERGANI (ERGANI data show that the average monthly salary in 2022 increased by 12.4% compared to 2019, which exceeds the inflation that has taken place). We expect the same to happen with the upcoming increase in the minimum wage to further boost wages in our country.

7. What benefits are affected by the increase in the minimum wage and how are they formed from April 1?

The increase in the minimum wage implies an increase in unemployment benefits, which is 479 euros per month from April 1 (from 438 euros before and 399 euros in 2019). The cumulative increase in unemployment benefits from 2019 is 80 euros per month.

In addition, a number of allowances and allowances are adjusted based on the minimum wage or daily wage. These include, among others, unemployment benefits for the self-employed, new employment programs, special unemployment benefits, work suspension benefits, special seasonal benefits for workers in the tourism and food industries, construction workers, foresters. workers, etc., special maternity allowance, child care allowance, unpaid wages, due to the employer’s insolvency, affordability allowance, compensation for students in apprenticeship vocational schools of the State Employment Service (DYPA), compensation for internship programs, etc. a.

8. And three years?

The regime governing three years does not change. For eleven years, under three different governments, the same legislation was applied. This status, according to the law, will change when unemployment falls below 10%.

Thus, employees who have worked for at least three years as of February 14, 2012 will further benefit from the announced increase in the minimum wage and minimum daily wage. These employees will receive additional earnings that can reach up to 30% depending on the length of service. This means that the gross minimum wage for these workers can reach 1183 euros for twelve months, and the annual allowance in relation to 2019 ranges from 2002 to 2366 euros.

9. What positions were expressed by scientists and public figures in the context of the consultation?

All were in favor of an increase, but with significant differences in its amount.

Specifically:

• The Bank of Greece, IOBE and most of the employers’ representatives (SEB, ESEE, SETE, SBE) proposed a “reasonable increase” in the minimum wage within the expected inflation, emphasizing the need to maintain the competitiveness of the Greek economy.
• KEPE, while acknowledging that “an increase of more than 3-4% would lead to an increase in unit labor costs”, nonetheless concludes that a larger allowance could be given, in line with that recently given to pensioners, “because the rest of the countries we compete with are expected to raise the minimum wage substantially.”
• GSBEE proposes an increase of approximately 8% “as a measure to alleviate the poverty of low-wage workers whose income is spent on the groups of commodities whose prices are rising the most.”
• GSEE is proposing a 15.8% increase to raise the new minimum wage to 826 euros.

10. Is there a risk that raising the minimum wage will lead to loss of competitiveness, layoffs and rising unemployment?

As mentioned, financial data, the strengths of the companies, the needs of employees and the positions formulated in the context of the consultation were carefully weighed in making the decision.

The new minimum wage is balanced between the proposals of the bodies that took part in the consultation.

In any case, similar reservations made in 2022 have not been confirmed in practice. On the contrary, despite an increase not only in the minimum wage, but also in general wages, unemployment remained on a declining trajectory, while exports and tourism reached record levels, meaning that the country’s international competitiveness was unaffected.

11. What is the position of Greece among the EU countries in terms of the minimum wage after the decision to raise it?

The new minimum wage is the tenth highest among the 22 EU member states that have a statutory minimum wage. Previously, Greece was ranked 13th. A similar development can be seen in the ranking of the minimum wage in Greece in relation to purchasing power: while until yesterday Greece was ranked 18th out of 22 EU member states with a statutory minimum wage, with a new increase in the minimum wage rising to 13th place.

12. Do you think that the minimum wage, in the form in which it has been formed since April 1, is sufficient income for a worker?

Don’t forget that the minimum wage is the limit of the minimum wage, i.e. a safety threshold set by the government as the minimum wage for work. In addition, allowances and benefits already in place for the most vulnerable groups of the population (eg housing allowance, child allowance) and increased by the current government, as well as new subsidies/income support for households that have been established, must be taken into account. during a crisis period (prepaid cards for buying fuel and goods in supermarkets, increased heating fees, subsidies for electricity and natural gas consumption, etc.).

Indicative:

• A minimum wage worker with two children receives, in addition to his salary, 3,780 euros per year in housing allowance and child allowance.
• The market pass is set up for a family of one for 132 euros and for a couple with two children for 312 euros.
• In the energy sector, the heating allowance increased from an average of 184 euros to 242 euros, with an additional 290,000 beneficiaries receiving it due to the increase in the income criterion.
• In addition, monthly subsidies paid to electricity consumers absorb up to 90% of tariff increases, which have exceeded 8.2 billion euros since the beginning of the crisis.

In any case, however, the challenge remains for further significant wage increases in Greece, which can be primarily supported by the dynamic growth of the Greek economy.