Achieving greater flexibility in Greece’s labor sector, based on European “best practices” and experience, is apparently the “embankment” that the leftist Greek government will employ in order to prevent a looser framework to allow mass layoffs in the country.
Achieving greater flexibility in Greece’s labor sector, based on European “best practices” and experience, is apparently the “embankment” that the leftist Greek government will employ in order to prevent a looser framework to allow mass layoffs in the country.
Creditors, particularly the IMF, have consistently pressed Athens to liberalize the labor sector in the recession-battered country, in order to reduce employment costs and to boost the competitiveness of the Greek economy. One of the measures repeatedly cited by creditors is the abolition of a law that requires the relevant labor minister to sign off on mass layoffs, even by companies facing bankruptcy and in need of immediate restructuring.
Depending on the size of its workforce, a company in Greece must get the minister’s signature for mass layoffs, an extremely rare prospect given the “political capital” that a minister, who is usually an elected MP, will lose in the process.
The leftist Greek government’s position is even tougher in the wake of a ruling by the European Court of Justice (ECJ) last June.
The Court, in a non-binding ruling, said the Greek law that forces employers to receive approval by the labor ministry before proceeding with mass redundancies is incompatible with EU law. The case involved the Lafarge Aget-Heracles cement manufacturer merger and layoffs dating to 2013.
The issue of greater flexibility in the employment sector in order to deflect the mass layoff rule's elimination has already been included in a report provided to the labor minister by an experts’ committee. The report will reportedly comprise the basis for negotiations between Minister Giorgos Katrougalos and creditors’ representatives.
Labor sector reforms are part of negotiations for this month’s second review of the Greek program (third bailout).
On the table of negotiations, under the overall framework of “flexibility”, are reforms to allow intermittent work, such as certain days of the month; work-on-call status; dividing up one full-time employment position between two part-time employees and even the use of “loaned” workers for a specific period of time.
The “bottom line” for the increasingly embattled Tsipras government is to avoid loosening the law for mass layoffs, which would further dent its pro-labor credentials.