Minimum wage: 46% of wage earners live in deprivation

The purchasing power of workers receiving the minimum wage in Greece is the seventh lowest among the EU member states, while 46% of the employees in our country who are paid the minimum wage and live in conditions of material deprivation. This percentage is the highest among the Member States of the European Union.

The increase of 2% is one of the lowest in Europe, while it is noteworthy that in the countries of Eastern Europe the increases range between 11% and 22%.

These data on the course of wages in our country are presented in a report by the Labor Institute of GSEE in order to support the proposal of the organization for immediate increase of the minimum wage to 751 euros and then increase it so that it becomes equal to 60% of the full-time median wage.

The data of the Institute show that the minimum wages in our country show a significant deviation from the wages of northwestern Europe. The gap of the purchasing power difference of the minimum wages of Greece with a distance of 5% from Portugal and 45% from Ireland.

In order to explain with numbers why the significant increase of the minimum wage is necessary, GSEE’s Labor Institute lists the following data:

Inflation explosion. In January 2022, the Consumer Price Index increased by 6.2% compared to January 2021. This increase is the largest since Greece entered the Eurozone to date and at the same time the highest in the last 25 years.

Purchasing power of the minimum wage. The purchasing power of the minimum wage workers in Greece is the seventh lowest among the EU Member States. rose to 10.4% in December. In January 2022, the planned increase in the minimum wage by 2% slightly reduced the loss of purchasing power, which eventually amounted to 12.1%. The increase in the minimum wage reduced the loss of purchasing power by only 0.2%, since without it the loss of purchasing power would be 12.3%. The gap between the northern, western and southern Member States is large and continues to grow. For example, in Member States where Economic Adjustment Programs have been implemented with significant minimum wage interventions, such as Portugal and Ireland, the gap in the purchasing power of the minimum wage relative to Greece has widened. In 2021 the purchasing power of the minimum wage in Greece was 1% lower than in Portugal and 43% lower than in Ireland. In January 2022 the difference amounted to 5% and 45% respectively.

Wage raises in 2022. In the case of Greece, the increase of 2% from 1 January 2022 was one of the lowest in the EU. It should also be emphasized that in the period 2020-2021 in Greece there was no increase in the minimum wage. Of particular interest is the case of Germany, in which the government intends to increase the minimum wage by 15% immediately, in order to exceed 60% of the median income, which, as we will analyze below, the European Commission proposes to make the minimum wage a decent living wage. At the same time, minimum wage increases in most Eastern European Member States range between 11% and 22%.

The deviation. The data highlight two facts: First, there is a trend of divergence in minimum wage developments between Greece and most of the northern and western EU Member States.

Secondly, the Balkan Member States and the Eastern European Member States are converging faster than the EU average. In this context, raising the minimum wage should be a key target of the government. This will strengthen economic and social stability and growth, improve the living conditions of a significant number of workers, and reduce the insecurity and precariousness of the labor market today.

Decent living wage. This European institution was created to put a threshold on the standard of living of workers and the labor costs to which companies must adapt their operations. However, in Greece the minimum wage is far from becoming an institutional tool for achieving sustainable growth without exclusions. According to a recent study, the percentage of employees in Greece who are paid the minimum wage and live in conditions of material deprivation is 46%, the highest among EU Member States. In addition, the difference with other Member States is extremely great. Indicatively it is mentioned that Romania is in second place in the ranking, the corresponding percentage is ten percentage points lower than Greece, while in Portugal it is thirty-five percentage points.