Greece Minimum Wage Hikes Hint At End of Austerity

With the introduction of new minimum wage rates, employers in Greece should adjust to an economic environment designed to stimulate growth.

On 1st February 2019, Greek Prime Minister, Alexis Tsipras, introduced a substantial minimum wage increase for the country’s entire labour force - the first increase of its kind in Greece for almost a decade. Tsipras announced the wage rise in a late January cabinet meeting after reaching an agreement with EU lenders. The move has been framed as part of a “strategy of fair growth” and a way to address the “injustices” of austerity.

The minimum wage rise follows a better-than-expected economic performance from Greece in 2018 - and comes a decade after the country was hit particularly hard by the global financial crisis and the subsequent Eurozone crisis - prompting it to seek EU-funded bailouts.

New Minimum Wage Rates

The details of Greece’s minimum wage increase, effective 1 February 2019, are as follows:

  • Minimum monthly wage - €650.00 (from €586.08)
  • Minimum daily wage - €29.04 (from €26.18)

The new minimum wage represents an 11% rise over the previous rate but is still short of the €751 monthly wage in place in 2012 prior to the introduction of austerity measures. Those measures, intended to address Greece’s ongoing financial crisis, imposed a 22% drop in the minimum wage rate, and created a legacy of political and social turmoil.

Sub-Minimum Wage for Younger Workers

The wage cuts of 2012 were particularly adverse for employees under the age of 25, who saw their minimum wage rate fall further than older members of the workforce - to €510.

Under the 2018 minimum wage increase, however, this lower rate for employees under 25 has been abolished: those employees now earn the standard national minimum wage of €650 (an effective rise of 27.5%). Tsipras has criticised the “sub-minimum” wage rates, calling them “a dishonorable measure that did nothing to tackle unemployment”.

Greece’s unemployment benefits and maternity support benefits are also anticipated to rise in tandem with the minimum wage.

For more information about Greek tax and wage rates, visit activpayroll’s dedicated Greece Global Insight Guide.