When Pandora Opened the Box: Collective Bargaining and Austerity Policies in Greece

Against the context of the 2008 global financial recession and longstanding structural problems in the Greek economy, a range of wide-ranging policy and regulatory changes in labour law and industrial relations were introduced. Driven by the loan agreements that were concluded between the Greek government, the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission acting on behalf of the Euro-zone Member States, the reforms were consistent with the dominant view that the lack of competitiveness of the Greek economy was due to labour market rigidities and the high degree of employment protection legislation. As a result, essential features of Greek labour law and industrial relations were radically amended with significant implications for the role of the state and the social partners in collective bargaining. With respect to the latter, these included the descontruction of the system via, among others, suspending the extension mechanisms of sectoral agreements and the operation of the favourability principle, allowing 'associations of persons' to conclude company-level agreements and changing the arbitration system. 

The objective of the paper is to provide a detailed survey of the changing landscape of industrial relations and to assess the implications for collective bargaining and wage determination in the manufacturing sector. In doing this, the research addressed first the ‘context’ aspect of the labour market reforms. Two key dimensions were investigated here: the labour market dynamics, as influenced by the worsening of the sovereign debt crisis, and the national politics and regulatory frameworks for the response to the crisis, as influenced by the approach of supranational organisations, e.g. the ‘Troika’ of creditors, and recent developments in the European economic governance, including the Fiscal Compact. The second theme involves a critical assessment of the industrial relations actors’ responses and the process and character of collective bargaining. The introduction of wide-ranging reforms in bargaining had the potential to lead to radical rather than incremental forms of innovation (Streeck and Thelen 2005): in the manufacturing sector, this could imply the destabilisation of long-established bargaining structures and weakening of employers' organisations and unions. The third theme focused on the impact of the changes on the content and outcomes of collective bargaining. The reforms in Greece involved a radical shift of the regulatory boundaries between statutory regulation, joint regulation by the social partners via bargaining and unilateral decision-making by management and as such had the potential to shift the terms of the trade-offs between the actors as well. 

The main features of the collective bargaining system in Greece pre-crisis included a high bargaining coverage, average coordination levels both vertically (i.e. across different levels) and horizontally (i.e. across different sectors and regions) and the prevalence of multi-employer bargaining. Against this context, one of the clearest findings of the research is an accelerated trend towards decentralisation in collective bargaining. Owing to the fact that the trend for decentralisation was led by the state through intervening in the legislative framework for collective bargaining and by employers’ associations, which defected from multi-employer bargaining arrangements, the process is clearly one of ‘disorganised decentralisation’. In this context, multi-employer bargaining arrangements at (inter-) sectoral level(s) have been increasingly replaced by single-employer bargaining and even individual negotiations as the dominant modes of determining wages and terms and conditions. But the process has also promoted unfair competition between employers on the basis of wage costs. In terms of the character of collective bargaining, there is evidence of significant differences between different levels. Most employers’ associations at national level adopted a cooperative/consensual approach in order to maintain their standing but also their existence. However, at sectoral and company level the character of bargaining was predominantly antagonistic and adversarial. 

In terms of formal outcomes, the most obvious finding is the drop in the overall volume of bargaining, as the parties find it difficult to agree in the absence of legal-institutional incentives that persuaded in the past the parties to reach an agreement. In cases where agreement have been reached, their content has been less prescriptive than those of the previous years. In terms of material outcomes, there has been a significant reduction of wage levels. By transferring the issue of wage determination outside the sphere of collective bargaining and by removing the extension mechanism at sectoral level, the reforms have measures in limiting the ‘domino’ effect of the collective bargaining system on wage levels, an objective set out by the Troika and seen as problematic by some of the social partners, mainly employers' associations representing large employers. In cases where enterprise-level collective agreements were used pre-crisis to improve upon higher-level collective agreements, they have served during the crisis as a means to maintain a floor on terms and conditions of employment, but only in cases where strong trade union coordination exists and relationships between management and employees are considered good. 

Overall, the austerity measures have affected  both the positions of the industrial relations actors within the industrial relations system and in particular the collective bargaining framework as well as their relationship with each other and the state. The strong state interventionism that permeated all new regulations affected the key parameters of collective autonomy and there was evidence to suggest that the scope for labour market deregulation increased substantially. More fundamentally, the reforms re-oriented the Greek industrial relations system and as a result now the state occupies an even more central role in the regulation of the employment relationship. The increase in the role of the state was accompanied by an increase in the scope for managerial prerogative at the level of the workplace. Against this context, the new government led by Syriza has announced a series of measures designed to reverse some of these trends but two questions remain: first, can and will they implement those, and if yes, how will the measures play out in a context of a collective bargaining system that is on the brink of collapse?

References: 

Streeck, W. and Thelen, K. (2005) Introduction, in K. Streeck and K. Thelen (eds) Beyond continuity, Oxford: Oxford University Press.