Minimum wage: It will be calculated using a model similar to pensions –

The government has made it clear that it wants the minimum wage to reach 950 euros in 2027. If this happens we will not only have a different minimum wage in terms of its amount but also in the way it will be calculated.

The competent committee set up by the Ministry of Labor to study a new way of determining the minimum wage is expected to soon deliver its findings to the Minister of Labor and Social Security, Niki Kerameos.

The digital tool and the minimum wage

Afterwards, this method of calculation, which will be based on a digital tool, will be incorporated into Greek legislation. But first, after the Ministry of Labor has read the conclusion and come to a conclusion, it will proceed to a dialogue with the social partners.

According to Ministry of Labor sources, the new algorithm, or better index, will take into account the economic conditions of each adjustment period. Sizes of the economy such as inflation, productivity growth, unemployment.

It is similar in a way we could say to the adjustment model that also exists for pensions today.

Negative index number

In the event that the price index will be negative due to bad economic developments, the minimum wage will not decrease but will remain constant. That is, the minimum wage will only follow an upward trend.

According to OT information, it appears that the algorithm proposed by the committee will be based on the change in the consumer price index but also on the change in the purchasing power of the general wage index.

At the same time, the Ministry of Labor is “running” for the digital tool, which will help determine the minimum wage. It is a project worth 1.3 million euros, which has been included in the projects of the Recovery Fund.

Full time employment

The contract for the work of the Ministry of Labor and Social Affairs concerns the design, development and implementation of a digital mechanism for the collection and analysis of data as well as the assurance of appropriate computer applications, in order to thoroughly extract the legal minimum wage and the legal minimum daily wage for full employment, for employees and craftsmen throughout the country.

The new digital tool will take into account elements of the labor market, the course of the economy so that the minimum wage can be determined automatically.

In this way, the minimum wage will now be independent from each political cycle of the respective government, as it will be based on the real data of the labor market and the economy.

Until now, the minimum wage is determined as follows: A written invitation is sent by the Coordinating Committee to specialized scientific and research institutions to write a report for the evaluation of the current statutory minimum wage.

The report is then drawn up and submitted by the committee and a memorandum is sent to the other representatives of the social partners.

The final suggestion

Afterwards, specialized scientific and research bodies draw up their reports to be included in the consultation conclusion, while the final recommendation on the minimum wage is made by the Minister of Labor to the Council of Ministers, who has the final say.

This whole process is therefore expected to change since technology and economic data will determine the amount of the minimum wage based on the strength of the economy.

The two directions for wages until 2027

Increase the minimum wage to 950 euros by 2027. This means an average increase of about 5%- a year in the minimum wage for the next 3 years.

From 2025, private sector workers receiving the minimum wage will see another increase of around 5% based on what the government has promised.

Average salary 1,500 euros

So far, increases in the minimum wage have generally dragged down wages to a lesser extent. However, Kostis Hatzidakis, during the presentation of the Medium Term, stated that the average salary in 2024 will close above 1,300 euros. In 2023 it was at 1,251 euros.

SOURCE: ot.gr