SURE: Short-term job support – Unemployment and wage cuts ahead

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The removal of the lockdown is proceeding at a faster pace than – from the original government plan – and the workers (of those companies whose operation was suspended due to a pandemic) are slowly returning to work with the future being erased from uncertain to nightmarish.

Safety net

It is noteworthy that even the European SURE program for the activation of which in June o Christos Staikouras appeared optimistic will provide only “short-term” support to the employment and income of employees.

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We also discussed the immediate activation of the European financial fund “SURE” in June, following today’s positive decision by the permanent representatives to the European Union.

This is an important safety net for the protection of jobs, from which Greece seeks to receive significant funds for the short-term support of employment and income of employees, “said Christos Staikouras after the end of today’s Eurogroup.

These statements of Mr Staikouras for the short-term support of employment alone come to support the image that is formed not only by the ominous forecasts for the recession that the Commission estimates up to 9.7% in Greece but the statistical recording of an explosive rise in unemployment in 2020.

So after SEV, which announced the largest increase in unemployment in the last decade, comes the Labor Institute (INE) of GSEE, estimating that unemployment will fluctuate at the level of 20%!

It is recalled that SEV expressed the above forecast, arguing that the jobs lost in March predicted the largest increase in unemployment in a decade, higher than in the period 2011-2013, despite the fact that the measures adopted by the government reduced – as estimated SEV- redundancies.

GSEE’s INE has developed three scenarios based on the course of the recession. The good with a 4% recession, the bad with a 7% recession and even worse with a 10% recession for 2020.

The good, the bad and the worst

The “good” scenario for 2020 starts from unemployment at 19.02%, in the “bad” scenario unemployment reaches 20.3%, while in the even worse scenario, it reaches 21.6%.

What matters is the fact that GSEE’s INE emphasizes that there is uncertainty as to whether the effects of the labour market crisis will be temporary or whether they will have permanent effects of fragmentation and exacerbation of inequalities at the expense of the most vulnerable groups.

The significance of this finding lies in the fact that the government insists that despite the depth of any recession this year, it considers the recovery of the economy for 2021 a given.

However, according to GSEE’s INE, the duration of the recession and the prospect of economic stagnation in a new phase of stagnation will determine the possible consequences:
a) in the volume of employment and in the increase of underemployment,
b) in wages and in the system of protection of employees from collective and sectoral employment contracts and
c) in the working conditions of the most vulnerable groups of low-skilled workers, those working in informal forms of employment, young people and women.

Scattered earnings and redundancies

Special reference is also made to the risk of redundancies and “cut” earnings.

In practice, this means that in practice the dilemma of unemployment or wage cuts will be raised or will be raised, although the experience of the first three memoranda over the past decade has shown that rising unemployment went hand in hand with declining wages and damaging workers. working conditions and their rights.

It is worth noting that employees working in companies that are open are not protected from the risk of dismissal, as is the case for just 45 days in the case of employees whose contract suspension is revoked.

SURE: Short-term job support - Unemployment and wage cuts ahead

German part-time subsidy model

However, the SURE program, which is based on the German part-time subsidy model, is essentially paving the way for wage cuts in the name of job retention.

And that is the price for employees who will be included in the subsidy scheme for their work from the funds of the Sure program.

The state will cover part of the wage and insurance costs of workers, who will not be fully employed but on a rotating basis.

By this logic, the employer saves 50% of the salary cost, while the employee retains his position, but receives lower wages.

However, the state funding program is expected to cover 30% -60% of the difference.

Exactly how this wage financing model will work has not been fully elucidated. Further clarification will be needed.

1000 becomes 800 and 800 becomes 640

According to the current data, a full-time employee who had a monthly salary of 1,000 euros, with the rotating work will receive 500 euros from the employer.
Of the remaining 500 euros, the state will cover 60%, ie 300 euros. Thus, the specific employee will receive a total of 800 euros, ie he will have a reduction of 200 euros in his monthly salary.

Another employee with a salary of 800 euros, who will be part of a part-time job, will receive 400 euros from the employer.
He will receive another 240 euros from the state, ie 60% of the remaining 400 euros, with the result that his total salary will be 640 euros and he will have a loss of 160 euros per month.

About 650 euros

The imposition of a ceiling of 650 euros on the amount of the state subsidy is also being considered in order to keep budgetary costs.

For example, an employee with a salary of 1,500 euros, by converting the position to part-time employment, will receive from the employer 50% of the salary corresponding to 750 euros.
Of the remaining 750 euros, the state will cover 30% -60%, ie 215-450 euros, so the salary of this employee is from 965 to 1,200 euros.

Bigger salary bigger scissors

Higher-paid workers will suffer even greater losses, as the government is considering setting a ceiling on state payroll subsidies if the state’s salary surplus exceeds 650 euros.

For example, an employee with a salary of 2,500 euros, who is on shift work, will receive 1,250 euros from his employer.

The subsidy from the state will not be 750 euros (60% of the remaining salary) but 650 euros, ie the employee will receive a total of 1,900 euros instead of 2,000 euros, losing 600 euros per month.

In other words, a relatively good salary for today’s data, such as that of 1500 euros, will be cut by 300 to more than 500 euros, which in practice means reductions that can reach up to 1/3 of the pre-corona period of full salary.

For higher salaries of 2000 euros and above, the reductions will be even higher, reaching and exceeding 600 euros.

The risk for insurance

Referring to the EU’s SURE program Efi Ahtsioglu called on the government to support “full-time work, 100% pay, no negative change in the employment relationship”.

The SYRIZA MP pointed out the danger that is created for the insurance as well as “if we have redundancies, an explosion of unemployment, undeclared and undeclared work, if we have wage reductions of 50% with the new shift work, we will have very large losses of revenue in the funds.

The point is to prevent these developments, to keep jobs and working relationships, and not to cut wages.”


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