Pay gap between private, state sectors
Labor flexibility and taxes have increased poverty among households and slashed disposable incomes
More than half of private sector employees in Greece are paid less than 800 euros per month, compared with just 11 percent in the public sector, while the real unemployment rate is more than 30 percent, the country’s biggest union claimed in its annual report published yesterday.
The Labor Institute of the General Confederation of Greek Labor (INE- GSEE) noted in its 2016 report on the Greek economy that crisis-induced inequalities among different groups of workers and the decimation of the labor market have had a negative impact on productivity. The increase in labor market flexibility last year translated into 51.6 percent of private sector salary workers receiving less than 800 euros per month at the same time as half of all civil servants were being paid more than 1,000 euros per month.
After processing the salary data in the private sector, INE-GSEE found that net pay was up to 499 euros per months for 15.2 percent of workers, between 500 and 699 euros for 23.6 percent, and 700 and 799 euros per month for 12.8 percent. Just over one in six (17.3 percent) received between 800 and 999 euros. Meanwhile, 38.5 percent of civil servants had net earnings of between 1,000 and 1,299 euros and 15.7 percent collected more than 1,300 euros per month.
The large decline in private sector salaries and the fact that the institute’s economists estimate that the unemployment rate is much higher than the official 23.1 percent are particularly ominous developments which could erode social cohesion and lead large parts of the population into poverty.
The report highlights the increase in the rate of households unable to cover some of their basic needs from 28.2 percent in 2010 to 53.4 percent in 2015. This is due to the major decline in disposable income and the drop in savings. A rise was also noted in the rate of households delaying loan and rent payments (from 10.2 percent in 2010 to 14.3 percent in 2015). Worse, households’ inability (or unwillingness) to pay utility bills soared from 18.8 percent in 2010 to 42 percent five years later.
The report stresses that all of the above findings make any further efforts toward labor market flexibility entirely ineffective.