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Greece plans 11 percent minimum wage hike, unions, employers say not enough

ATHENS (Reuters) - Greek Prime Minister Alexis Tsipras announced on Monday plans to increase the standard minimum monthly wage by about 11 percent, the first such hike since the country’s debt crisis erupted almost a decade ago.

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The country emerged in August from its third international bailout since 2010 and the government, which faces a national election this year, has promised to reverse some of the unpopular reforms Greece implemented under bailout supervision.

“I’m calling on you, after a decade of wage cuts, to make another historic step,” Tsipras said, calling on his cabinet to approve the labour ministry’s proposal for an increase to 650 euros from 586 euros currently.

Tsipras, who was elected in 2015 pledging to end austerity but later signed up to Greece’s third bailout, also proposed the abolition of a youth minimum wage for those below 25.

Ministers applauded and a smiling Tsipras responded: “From your reaction I reckon that my proposal is ... approved”.

The plan must be approved by parliament in the coming days to take effect next month, as the government hopes.

Athens had told its European lenders that it would reinstate the process of increasing the minimum wage periodically after the end of the bailout.

Greece slashed the standard minimum monthly wage by 22 percent to 586 euros in 2012, when it was mired in recession.

Workers below 25 years suffered deeper wage cut as part of measures prescribed by international lenders to make the labour market more flexible and the economy more competitive.

Greece expects 2.5 percent economic growth this year.

“The minimum wage increase marks the beginning of a new era for Greek workers who carried the weight of the crisis on their shoulders,” Labour Minister Effie Acthsioglou told Reuters.

“This decision proves in practice what it means to have a leftist government at the country’s wheel.”

The government’s current term ends in October and Tsipras’ Syriza party is trailing the conservative New Democracy party by up to 12 points in opinion polls.

Labour unions said on Monday the suggested increase was far from offsetting the loss that workers suffered during the crisis. Employers also said that it should be combined with tax cuts and a reduction in social security contributions.

The International Monetary Fund urged Athens last week to introduce greater flexibility into the labour market to mitigate an expected negative impact from its new policies.

Reporting by Renee Maltezou; Editing by Gareth Jones