The impact of the economic crisis on the Greek labour market: an experts' view

Labor market deregulation has been the dominant approach towards the development of a single European labor market for more than twenty years. According to neoclassical economic theory deregulation can enhance labor mobility and boost competitiveness and growth as the labor market functions similarly to any other product market. In the last 9 years, Greece is the prototype example of the implementation of policies that favor employment and wage flexibility as well as the abolition of labor market rigidities in Europe. Since 2010, as part of the financial-assistance program provided by the EU and the IMF, the country underwent deep labor market reforms. The aim of this study is to understand the process of labor market deregulation in Greece during the implementation of these reforms through a expert survey. Based on 50 interviews of labor market experts from four different groups – government officials and labor lawyers, academics, labor union representatives, and employer association representatives - we assess the most significant changes that were introduced since 2010 in the Greek labor market. This approach occurs an innovation in the way the recent crisis in the Greek labor market is usually presented as it digs into the story behind the numbers. The experts highlight a general agreement that the abolition of the binding nature of collective agreements was the most significant change in the labor market. Besides the large wage decreases that this abolition caused, it also shifted decisively the power relationship at workplaces to the benefit of employers. Further important reforms that had considerable effects on the labor market were the downward adjustment of the national minimum wage that, in the absence of collective agreements, resulted in a spiral of wage decreases, the prolongation of probation period and the liberalization of regulation on temporary employment agencies. In contrast, the liberalization of collective dismissals had, according to the experts, a rather small effect as the Greek labor market was always dominated by small firms. Overall, the current expert opinion research identifies the reform trajectory of the Greek labor market adjustment and adds to industrial relations literature better insights into the important issue of European labor market reform providing a number of lessons learned from the aforementioned experiences in the Greek case