GREECE: An Introduction to Employment

Economic Conditions in Greece 

Undoubtedly, the Russian invasion of Ukraine has been the principal event of 2022. The world was recovering from the pandemic when the invasion took place. At the time, supply chain disruptions and rising inflation were the main challenges, only to be dramatically worsened as a consequence of the war. The energy crisis flared up, which in turn further fuelled inflation, while new global trade routes were formed as many economies sanctioned Russia’s products and services.

Despite the energy crisis and associated inflationary pressures throughout the year, Greece has recorded solid growth in 2022. The Recovery and Resilience Fund (RRF) provided notable support to the economy and government measures cushioned the impact of energy prices on businesses’ input costs and households’ real disposable incomes.

Additionally, buoyant private consumption, significant investment activity, and the impetus provided by the rebound in tourism during the summer season contributed to the strong growth performance. The labour market improved markedly in 2022 amid sustained job creation. Even as people continued to return to the labour market following the pandemic, implying a rising labour force, the unemployment rate fell to 12.5% and is expected to fall further – below 10% within 2024.

Moreover, real GDP rose sizably in the final quarter of 2022 despite widespread price pressures implying a significant carry-over effect for 2023. So, economic activity appears to have maintained much of its 2022 growth momentum through the first half of 2023.

In fact, according to the projections of the Bank of Greece, economic activity is expected to grow by 2.2% in 2023 and the inflation rate is expected to decrease to 4.3% in 2023 from 9.3% during the previous year, and to decline further to 3.8% in 2024 and 2.3% in 2025, though food, non-energy industrial goods and services are expected to add to inflationary dynamics.

Falling inflation is expected to gradually ease the burden on households’ real income and benefit private consumption. The timely and effective implementation of the national recovery and resilience plan is projected to remain the main driver of investment growth, partly offsetting weakening corporate investment due to the tightening of financing conditions.

With the external environment slowly improving as of the second half of 2023, exports are set to pick up pace in 2024. Receipts from international tourism are forecast to increase in 2024.

Government support measures, reviving tourism and other exports, and improving consumer and investor confidence supported a rebound in demand, returning GDP to the levels seen before the pandemic.

Employment  

As of 1.4.2023, the legal minimum wage and the legal minimum wage for employees and workers throughout the country was determined in accordance with the provisions of M.D. No.31986/24.3.2023. Specifically, the minimum wage was set at EUR 780,00 for employees, while the minimum daily wage was set at EUR 34,84 for workers.

Moreover, over the past year, the pandemic-induced flexible working systems – ie, forms of remote working – have been solidified as an integral part of the working world in Greece through the implementation of either fully remote working systems or hybrid working models.

New working patterns have been established including offering remote working opportunities, which entail significant benefits for businesses and employees such as reduced costs, additional flexibility, enhanced productivity and a better overall work-life balance.

Moreover, the introduction of the digital nomad visa for foreigners who wish to work remotely from Greece has rendered the country an attractive destination for highly skilled employees, this being an important benefit not only for the employees themselves and the local entities, but also for the country’s economy.

Digital work cards 

Furthermore, Greece’s economy has also benefitted from the ongoing digital transformation of work. In fact, the introduction of the digital work card which has been a major reform from an employment perspective for the purpose of tacking undeclared work and its gradual implementation for all enterprises across the business spectrum aims to provide incentives and counterincentives for complying with labour and social security legislation provisions and has important advantages for employers, employees and even the State.

To be specific, as far as employees are concerned, their interests are safeguarded, considering that their actual working hours shall be recorded, hence employers shall be required to grant them their proper remuneration for the work provided. On the other hand, employers are protected from possibly unfair competition stemming from undeclared work and non-payment of the appropriate social security contributions, thus ensuring the viability of the social security system as well.

Pending legislation 

As for the latest developments regarding legislation which will have an effect on employment, the transposition into national law of Directive 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union is soon to be completed. A respective bill has already been drafted and will be enacted probably by the end of the third trimester of 2023.

The transposition of said Directive shall have a considerable impact on employment relationships and the labour market taking into account that, as per its provisions:

- employers’ obligation to provide information to their employees on essential aspects of the employment relationship is regulated in a more detailed way;

- the maximum duration of any probationary period is set at six months, rather than the one-year period currently applicable;

- parallel employment of employees will henceforth be regulated enabling workers to freely take up employment with other employers outside the work schedule; and 

- complementary measures for on-demand contracts shall be introduced as well as regulations for mandatory training to be provided by employers.

Additionally, as it has been announced, besides the transposition of the Directive, the respective law to be passed will include other measures for employment relationships such as:

- amendments in reference to the implementation of the digital work card aiming to reduce bureaucracy for businesses choosing to proceed with the implementation of the measure;

- high penalties for employers when the work of their employees has not been properly declared.

- option for work on the sixth day of the week for employees on a five-day working schedule and the respective remuneration to be granted for any such work.

Taking into consideration the continuous fall in the unemployment rate and that economic activity in Greece is expected to grow in 2023, the measures which have already been implemented in addition to the latest reforms to be introduced will support the resilience and the improvement of the labour market.