Top Greek union stonewalls lower wage demands

(ATHENS) - Greece's leading union on Wednesday rejected calls to cut labour costs that are rumoured to be on the agenda of talks later this month with EU and IMF officials on a new debt rescue package.

At a meeting with Prime Minister Lucas Papademos, the private-sector GSEE union said it would hold employers to existing wage agreements after a prominent business lobby argued for change so as to improve competitiveness.

The prime minister "asked us to discuss issues relating to labour competitiveness, without excluding collective (wage) agreements," GSEE chairman Yiannis Panagopoulos told reporters.

"We are not prepared to retreat even a single step on safety salaries for poor workers ... we have signed an agreement, we call on (employers) to honour their signature," Panagopoulos said.

The minimum legal wage in Greece -- currently just over 750 euros ($975) per month -- is set by collective labour agreements signed by unions on behalf of workers.

Dimitris Daskalopoulos, head of the Hellenic Federation of Entreprises, earlier said in a statement that his organisation "will do whatever it can to avoid touching the minimum wage."

But Daskalopoulos added: "At this critical period, we are called on to see how the average cost of labour can be shaped to another point of balance to help employment and competitiveness."

Greece is caught in a recession set to continue for a fifth straight year, compounding the hardship caused by sweeping tax hikes and wage cuts imposed to redress excessive public deficits.

The EU, the International Monetary Fund and the European Central Bank, which first rescued Greece from bankruptcy in 2010, have already asked the government to revise wage agreements in the private sector.

Greek media have reported that the country's creditors will press for wage overhauls during negotiations on a second debt bailout at talks beginning on January 16.

The government has until now resisted such calls, fearing a huge impact on unemployment at a time when nearly 900,000 people are already jobless, according to official figures.

A report from the state statistical authority this week said over three million Greeks, or 27.7 percent of the population, were at risk of poverty or social exclusion in 2010, compared to an EU average of 23.4 percent.

"The unemployed are suffering, jobless benefits are at dangerously low levels," said Panagopoulos, who also called on the government to protect social insurance funds from losses in a planned write-down of sovereign bonds.

Under a eurozone agreement in October, Greek private creditors have been asked to accept a 50-percent write-down on the value of their bond holdings to make the crisis-hit country's crushing repayment schedule more sustainable.

Social security funds were believed to hold around 25 billion euros worth of Greek state bonds last year.

Leading fund IKA alone holds Greek state bonds worth 1.4 billion euros, its director said last month.

Eleftherotypia daily in December said the bond write-down would reduce the nominal value of total Greek pension fund holdings by 12 billion euros.

"Private creditor haircuts and bank recapitalisations are all well and good but we think it is inconceivable to have a haircut on social security fund reserves without a recapitalisation there too," Panagopoulos said.

"The prime minister said alternative ways would be sought to deal with fund recapitalisation," he added.