Greece moves forward: 15,000 lay-offs, minimum wage at €490/month, retroactive property levy

Posted by in Economy

Development is here to stay! Unemployment will be combated, jobless will get a bread loaf and a piece of cheese and the revenues-bringing tax called “emergency property levy” will continue as such and in some cases even retroactive.

On Sunday night, Greek government passed a multi-bill paving the way for civil servants layoffs and decreasing the minimum wage below the average for temporary workers at municipalities. These two measures are among others a precondition for the release of an 8.8-billion-euro bailout tranche by Greece’s international lenders.

As I do not plan to put down the whole measures, I will stick here to three measures that may directly effect us all: the layoffs, the minimum wage and the emergency property tax.

Civil servants layoffs

2,000 civil servants will be laid off until the end of May, another 2,000 until the end of 2013. A total of 11,000 will have to leave by end of 2014. Priority for the layoffs are civil servants found guilty for felony offenses, those working in state organizations to be merged or close down and those with contracts.

Minimum wage

Net monthly wage is determined to be up to 490 euro and 427 euro for those below 25 years old. It affects only those to be hired by municipalities in the context of “measures to combat unemployment” with temporary contracts up to 5 months. The program is funded by the European Union. Daily net wage is determined at 19.6 euro and 17.1 euro for young employers.

The government defended the last-minute amendment submitted by ‘socialist’ PASOK, via finance minister Yiannis Stournaras.

“The measure is thought for people without any income at all,” he proudly told the media, confirming prime minister Antonis Samaras who repeatedly declared as his main aim to combat unemployment. The measure will benefit 500,000 jobless, “they will be relieved,” Stournaras said.

Those to benefit from the minimum wage will be proud to submit their tax declaration with 2,450 euro annual income. That’s true! Better than nothing….

Emergency Property Tax

The emergency property tax will continue to be collected via the electricity bills also in 2013 and be reduced at 15% when compared to 2011 and 2012. A unified property tax is to be introduced in 2014. Exempted from paying could be those living below the poverty line of annual income 6,000 euro -somehow. That is exemptions will be only for the ‘main housing unit’.

If a pensioner with 7,000 euro annual income and one property will not be exempted. there is certainly financial space to pay property levy from 580-euro monthly income.

Similarly, if somebody with 10,000 annual income, one property to live in and one 25-sq-meter apartment for rent that remains empty, he will not be exempted.

As the emergency property tax is imposed to constructions with electricity supply, a new amendment was added: that properties under construction that normally use so-called “construction electricity” will be charged with the property levy even retroactive! The provision will be implemented between 1. May-31. December 2013.

State broadcaster NET TV reported that if somebody buys an apartment in November, he will have to pay the emergency property tax retroactive from May.

In other words, if one owns a villa but has cut the electricity supply does not pay the tax. But if one decides to buy a 70-square-meter apartment, he will have to hand out several hundred euro even for the months he was not property owner.

I’m not sure whether this measure will boost the real estate market…

110-page bill

The several measures of the bill were summarized in one single article to facilitate quick voting and avoid long debates. However political row was not avoided, when  PASOK added the last-minute amendment for the minimum wage. Main opposition party, left-wing SYRIZA sharply criticized the government, saying that the amendment lowers the minimum wage which is currently at € 580 and €510 gross per month.

“With this regulation, municipalities will not be obliged any other allowance or economic support.”

The bill passed with 168 Yes-vote from Nea Dimocratia, PASOK, Democratic Left and two independent lawmakers, former ND MPs who probably seek their way back to the ruling party. 123 MP’s voted No.

The Euro-working group is expected to approve the release of 2.8 billion euro today and another 6 billion euro middle May.

Criticizing the minimum wage

I really do not understand several people criticizing that with the new minimum wage “the unemployment will decrease, but the poverty will increase.” I also don’t understand those claiming that “the new temporary job openings at municipalities will pave the way for political favors and purchase of votes.” I hardly also understand those suspecting that if some municipality institutions like kindergartens will be privatized that the staff will receive not more than this amount.

It is obvious that I also do not understand those stressing that ” what it was the payment for stage (internships) -500 euro- a couple of years ago, it mutated to the average monthly wage, independently of working experience and skills.”

I really do not understand this criticism.

At the very end, almost half a million of the 1.3 million jobless will have something to eat, – probably pay half of their rent and their electricity bill – and the unemployment rates will officially go down -on the paper. After all, the unemployment rates will rise again with the layoffs of 15,000 civil servants.

I really do not understand the criticism. Greece is finally moving forward :)

PS Where did I read about the 30-year-old woman with university degree working at a call center for 300 euro per month? Hm… where was it?

So surreal as Borat…