Double “cutter” on “unspoken” pay hikes in private sector this year

He faced one Double cutter are located “unspoken” (ss this term belongs to the Bank of Greece) wakes up Wages in Greece emerge according to the findings of some of the organizations that participated in the consultation on the minimum wage.

Such is the case with this “cutter” in salary increases Internal That is, it originates from the national economy External That means it comes from Europe.

As far as he was concerned Internal “Cutter”is no one else Import of foreign goods In Greece, post-pandemic private consumption has rebounded and never stopped – even after the memoirs – as the “steam engine” of the Greek economy.

The The external “cutter” is the value of the euro, which has come as a result of rising interest rates as a counterweight to uncontrolled inflation. More details:

1. An increase in imports increases the current account deficit and external “debt” of the private sector.

However, along with the increase in imports, the current account deficit, one of the two main reasons that led Greece to bankruptcy in 2010 (the other being the enormous deficit of the general government) seemed to threaten again).

Given the structure of the Greek economy (i.e. the large contribution of private consumption to GDP) an unjustified increase in wages would normally lead to an increase in imports, leading to a current account deficit. Or in other words, the external “debt” of the Greek private sector is reducing its growth potential, analysts at note.

According to the official information of, the most interesting result of the Institute of the Association of Greek Tourism Organizations (INSETE), the minimum wage, “An important obstacle to a large increase in the minimum wage in Greece is the very large increase in imports of goods and services and the resulting relatively large deficit in the external balance of goods and services”.

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Also, INSETE said, “Strategically, Greece, after adjusting its economy in the 2010-2018 period, should have a surplus in its balance of external goods and services. Instead, in 2023, it will return to a significant deficit of -6.0% of GDP due to an increase in imports.” had.”

2. A rise in interest rates makes the euro more expensive and Greek products (and) less competitive.

Along with this internal “cutter” to wage increases, there is an “external” one, which (along with restoring the current account deficit) is particularly emphasized by the decision of the Bank of Greece (BoG). Minimum wage as factor for reasonable increase.

This “cutter” from “outside” is nothing more than the appreciation of the euro, which – and – increases the prices of Greek goods regardless of the evolution of wages.

Characteristically, the Bank of Greece emphasizes that “The rapid increase in key interest rates in the euro area and the gradual reduction of the interest rate differential against the US have negatively affected the price competitiveness of the Greek economy in 2023.”.

In addition, the Bank emphasizes, “the unfavorable environment for international trade and the recent deterioration of Greece's relative position in structural competitiveness indicators make it even more important to preserve and protect its relative position in terms of international price and wage competitiveness.” Absolutely necessary. Government and social partners are responsible for institutionalization Calculated wage increases in 2024It does not affect previous gains in terms of hard-earned economies of scale and competitiveness”.

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