International Relations

The ILO has just issued a very timely report, in light of continued pressure by international creditors for further deregulation of Greece’s labour market, on “Evaluating the effects of the structural labour market reforms on collective bargaining in Greece”:

 

 

 

This very thorough ILO report (153 pages) documents the collapse of collective bargaining in Greece after a major weakening of labour laws in 2011-2012 carried out at the behest of the EU-IMF creditors, formerly known as the Troika. The report estimates that the rate of bargaining coverage fell from about 70 per cent before the crisis, which began in 2008, to 10 per cent in 2015. The collapse of coverage occurred in large part as a result of legal changes that allowed employers to defect from sector-level agreements and eliminated extension mechanisms. The latter played an important role given the large number of SMEs lacking union representation in Greece.

 

Among the consequences of the collapse of collective bargaining were a significant fall in wages ahead of any (downward) price adjustment, resulting in a severe contraction of aggregate demand that contributed to deepening and prolonging Greece’s economic depression. The report also observes that the “disorganized decentralization” of collective bargaining brought about by the legislative changes led to “a narrowing bargaining agenda … focusing on short-term labour cost reductions and disregarding wider issues that could have assisted in the exit of the Greek economy from the crisis”.

 

The final section of the ILO report (pages 124-128) contains several recommendations that could help to reinvigorate collective bargaining in a manner consistent with the tradition of bargaining coordination in Greece but that would also ensure its contribution to an equitable and job-rich recovery.