INE-GSEE: The purchasing power of the minimum wage decreased by 18% in April

The total increase of the minimum wage by 9.7% in 2022 is estimated to reduce only partially the loss of purchasing power, which is caused by the wave of accuracy, according to the annual report of INE-GSEE for the Greek economy.

In April 2022 the loss of purchasing power of the minimum wage was equal to 18% compared to 14.7% in March. The average private sector wage had lost 9.9% of its purchasing power in April 2022, while the average part-time wage had lost 28%. The impact of accuracy on the living standards of citizens is particularly unequal.

More specifically, the main conclusions of the INE-GSEE study are as follows:

– The combination of the effects of the pandemic, the precision and the geopolitical developments caused by the Russian invasion of Ukraine creates new hotbeds of economic and social instability. The Greek economy, before it can return to the pre-pandemic situation, is facing a new destabilizing disorder focusing on the prices of energy, raw materials and basic foodstuffs. This disturbance directly affects the supply side and indirectly, through the distributive effects of inflation, the demand side increasing the risk of a significant slowdown in the economy.

-In 2021 Greece recovered from the shock of the pandemic, although the real GDP per capita was below the level of 2019 by about 1%. However, taking into account the cost of living, Greece had the second lowest GDP per capita in the EU. In addition, it was the only Member State in which this figure was lower than the corresponding level of 2007. This finding reveals the dramatic decline in living level of the majority of Greeks.

-In the second half of 2021, consumption marginally exceeded the level of the corresponding quarter of 2019. Its development in the near future will depend on the evolution of disposable income and mainly on the effect of accuracy on the purchasing power of households.

-Despite the fact that the profits of non-financial corporations increased compared to 2019, the strengthening of private investment was not of the same order. The magnitude of the change and their sectoral structure do not constitute a strong indication of macroeconomic and productive transformation of the economy.

– The recovery of tourism revenues in the third quarter of 2022 will determine the export performance of the economy, as exports of products were not particularly affected by the pandemic crisis. However, the increase in imports of products was remarkable, especially in the imports of intermediate products, which until January 2022 recorded a deficit greater than in 2010, highlighting the weak productive structure of the economy and its high import dependence.

-In the fourth quarter of 2021, Greece had the largest current account deficit in the EU. At the same time, in recent years, structural competitiveness indicators have been stagnant or deteriorating. The low structural competitiveness of the Greek economy is an indication of the need for immediate quantitative and qualitative strengthening and restructuring of the production system, in order to reduce the country’s import dependence and to strengthen its sufficiency and self-sufficiency in basic intermediate and final goods. New geopolitical and geoeconomic conditions require the development of an evolving industrial policy aimed at strengthening domestic value chains, sustainable production of healthy and safe food and diversification of production in conjunction with a stock management strategy. The benefit will be the creation of a more balanced, sustainable and resilient Greek economy.

– 2021 was marked by intense fiscal pressures added to those left behind by the first year of the pandemic crisis. Despite the recovery in economic activity, the General Government deficit amounted to 7.4% of GDP, the second highest among the Eurozone Member States. During the same period, the primary deficit stood at 4.9% of GDP, the fifth highest in the Eurozone.

– Despite the increase in primary government spending during the pandemic, the share of social benefits in them rose to 41.2% in 2021, recording a drop of 6.9 percentage points compared to 2019, which is the largest among Member States of the Eurozone.

– In 2021, Greece recorded the third highest percentage of interest payments of the General Government in its total revenues from direct taxes, indirect taxes and social contributions among the 19 member states of the Eurozone. This development helps maintain the State financial fragility index at relatively high levels compared to most Eurozone economies.

– The transition of the economy to a regime of high budget deficits in the two years 2020-2021 significantly burdened the already high public debt of the country. In particular, in 2021 the debt of the General Government amounted to 353.4 billion euros, increased by 12,256 million euros compared to 2020. At the same time, the solvency ratio fell in 2020 and 2021 to the financially fragile ultra-Ponzi scheme. the regime will remain in 2022, given the forecast for General Government balance deficit of -4.3% of GDP.

– The prospects for financial stabilization of the public sector in the near future presuppose prudent financial management. The financially vulnerable Greek economy, the experience of managing and the consequences of the debt crisis of the last decade, as well as the new geopolitical environment make it imperative to avoid creating conditions for a new fiscal adventure. – The external debt of the economy shows a steady growth, with Greece having in 2021 the third highest net external debt in the EU. At the same time, in 2021 Greece recorded the largest negative net international investment position in the EU (-175% of GDP), by far the second worst in Ireland.

– In 2021 the employment rate among people aged 15-64 increased compared to 2020 and stood at 57.2%, a rate much lower than all other economies in the Eurozone. In December 2021, the unemployment rate escalated to 12.8%. The high unemployment rate and the wave of accuracy are putting negative pressures on the labor market, as the indicators of economic misery are recording a worrying rise.

– The overall increase in the minimum wage by 9.7% in 2022 is estimated to reduce only partially the loss of purchasing power, which is caused by the wave of accuracy. In April 2022 the loss of purchasing power of the minimum wage was equal to 18% compared to 14.7% in March. The average private sector wage had lost 9.9% of its purchasing power in April 2022, while the average part-time wage had lost 28%. The impact of accuracy on the living standards of citizens is particularly unequal.

Respectively unequal is the remuneration of part-time employees compared to full-time employees, as well as women compared to men, if working hours are taken into account. Specifically, in March 2021, part-time workers averaged 76% of full-time work, but were paid only 38% of the latter, while women worked the same hours as men, but received 84% of their fee.

– In 2021, 16 national sectoral and co-professional employment contracts were signed, 9 local co-professional and 182 business contracts. The 34 collective labor agreements (sectoral and co-professional) in force potentially cover around 625,000 people, a number that corresponds to about 27% of all employees. The 182 new business collective bargaining agreements potentially cover 152,077 employees.

-The effects of the pandemic and the accuracy on the labor market and on workers are dramatic. The key to avoiding instability in the immediate future is to substantially boost disposable household income and increase sustainable employment. It is also very important to protect fundamental labor rights related to legal and maximum working time, safety and health at work, and to strengthen collective bargaining and employment contracts. Sustainable and decent work must be the central goal of economic and social policy.

-Finally, all the findings of the social sustainability indicators, such as the percentage of risk of poverty at work, the percentage of people at risk of poverty or social exclusion, the persons with severe deprivation of material goods and the income distribution index S80 / S20, show the need for a strong economic and social policy commitment to effective measures to support the labor market, workers’ incomes and vulnerable social groups. These interventions are necessary on the one hand for the strengthening of social justice in our country and on the other hand for the achievement of the goals of the UN Agenda 2030 for a sustainable and human-centered development.