New income reduction in the private sector for 2014

Problems for workers in the private sector continue, as in 2014, they will see their incomes reduced again, in contrast with those who work in the public sector and public enterprises.

This results from the Bank of Greece figures for 2014 according to which the average gross earnings in the whole economy will reduce by 1.5%. The cumulative reduction reached 21.7% within 3 years. This means that labour costs in Greece fell more than predicted in the second memorandum, while the reduction of incomes will continue in 2014 at a slower pace than the last two years.

It is estimated that from the end of 2011 until today salary reductions through operational and individual contracts involve at least 28.7% of the business sector employees, reductions through sectoral and same field collective agreements relate to 27.5% and reductions through conversion to full-time contracts or partial job rotation 7.8%.

However, the BoG expects the average working time in the private sector, which declined from 2008, might begin to rise gradually in 2014, reflecting among other things, a slightly faster productivity growth, as the economy will begin to recover.

The report says the decline in prices due to the recession (deflation) has a positive side that mitigates the decline in real disposable income, but it is not desirable to continue with intensity for a long time, as it adds uncertainty in the economy and business expectations and worsens the dynamics of the state debt.

The assessment of BoG is that 2014 will be the first year of positive growth rates that will build on the rise in business investments and exports and will be noted despite the expected continued decline in consumption.