A new system of automatic annual calculation of increases in the minimum wage is set to be established the government from 2027 and after consultation with the social partners. The new way of calculating increases will be based on annual changes in inflation and productivity.

In particular, the conclusion of the Scientific Committee on the integration of the European Directive 2022/2041 for adequate minimum wages received from its president, Professor Patrina Paparrigopoulou, the Minister of Labor and Social Security, Niki Kerameos.

The Directive aims to improve the living and working conditions of workers in the European Union and establishes a framework for it adequacy of legal minimum wages and the promotion of collective bargaining.

As stated in a relevant announcement, on the one hand, the member states are required to define clear criteria and objective procedures for determining and updating the legal minimum wages, while they may use a mechanism for automatic adjustment of minimum wages on the other hand, the member states are invited to draw up an action plan to strengthen collective bargaining.

In the opinion issued by the Commission, suggests using a mathematical formula as a more objective way of calculating the minimum wage, following the example of the French system, but also of other European countries. In the proposed system, the determination and readjustment of the statutory minimum wage and daily wage is done automatically, based on a coefficient resulting from the sum:

  1. the annual percentage change in the consumer price index between 1 July of the previous year and 30 June of the current year for the lowest 20% of the household income distribution and
  2. of half the annual rate of change in the purchasing power of the general wage index over the same time period. That is, the Commission proposes that the automatic adjustment of the minimum wage should take into account both inflation and the increase in the productivity of the economy.

According to the announcement, this mechanism will preserve the purchasing power of low-income households and allow minimum wage earners to benefit from increased productivity and real wages in the economy.

The application of the proposed mathematical formula can to launch in 2027after the incorporation of the relevant directive into national law and the preparation by ELSTAT of the necessary calculation indicators.

It is pointed out that the minimum wage, which will be established through this system, cannot be reduced, thus ensuring the general level of protection of workers.

Its advantages include:

  • the predictability of the future path of the minimum wage, which helps to reduce the uncertainty of workers and employers and, consequently, supports the planning of workers on the one hand and the operation of businesses on the other, while encouraging investment,
  • the introduction of the directive’s criteria in a way that protects the formation of the minimum wage from deviating from the possibilities of the real economy, thus ensuring long-term economic sustainability,
  • protecting the purchasing power of the bottom 20% of the household income distribution;
  • the fairer distribution of wages for the entire Greek society and
  • the overall strengthening of the credibility of the country’s economic policy.

At the same time, it is proposed to create a Consultation Committee, which will consist mainly of representatives of the social partners, in order to formulate an opinion on the level of the legislated minimum wage and its updating, thus upgrading the role of the social partners in the process.

In addition, it is proposed to draw up a road map (“action plan”) to strengthen collective bargaining and increase the percentage of workers covered by collective bargaining, with the active participation of the social partners.

In the next period of time, the Minister of Labor and Social Security, Niki Kerameos, will take initiatives for consultation and extensive dialogue with the social partners on the basis of the conclusion.

The Minister of Labor and Social Security, Niki Kerameosstated:

“The incorporation of the Adequate Minimum Wage Directive is an additional important step towards further ensuring decent working conditions for all citizens. The Commission’s proposals will, in the immediate future, form the basis of the government’s dialogue with the social partners, in order to then introduce the final text to the Parliament for discussion and voting. I would like to express my warm thanks to the president of the Scientific Committee, Professor Patrina Paparrigopoulou and to all the members of the Committee for their valuable contribution to this important project».