On December 6, 2024, Law 5163/2024 (the “Law”) entered into force, incorporating the provisions of Directive (EU) 2022/2041 of the European Parliament and of the Council of October 19, 2022, on adequate minimum wages (the “Directive”) into Greek law[1]. The Law establishes a new procedure for the determination of the minimum wage, effective from 2027, taking into account the Consumer Price Index for households in the lowest 20% of the income distribution and the purchasing power of the General Wage Index. For the interim period until 2027, a consultation procedure similar to the one previously applicable will be followed.
Previous legal framework of minimum wage in Greece (as in force since 2018 until 2024):
According to the previous framework (Law 4172/2013, Article 103 of Individual Labor Law Code), the minimum wage (“MW“) is determined annually through consultation between the top trade union organizations of employees and employers, the formulation of a relevant opinion by the Centre of Planning and Economic Research (“KEPE”), which is based on specific criteria, as well as the positions expressed during the negotiations of the Social Partners, and the final issuance of the relevant Decision by the Minister of Labor.
What does Law 5163/2024 bring into the Greek Legislation:
With regards to the following years (2025, 2026, 2027):
- For the years 2025, 2026, and 2027, the determination of MW will follow a procedure similar to the one applicable until now, but with a more concrete role of the Scientific Committee (which already supported the consultation under the previous regime) and the establishment of a formal, ten-member Consultation Committee.
- The Consultation Committee consists of ten representatives from the leading trade union organizations of employees and employers and is chaired by the president of the Organization for Mediation and Arbitration (“OMED”). It holds an enhanced role, with the responsibility of delivering a fully reasoned and substantiated opinion on a range of issues, including the level of MWand the selection and application of criteria for determining and updating the legislatedMW.
- In alignment with the Directive, within one year from the Law entering into force, the Ministry of Labor will issue an action plan to increase the percentage of employees covered by Collective Labor Agreements (Article 5).
- It should be noted that the Directive stipulates that Member States should strive to achieve a collective bargaining coverage of 80%, meaning that employees’ wages must be set by Collective Agreements. Currently, in Greece, collective agreements cover a significantly lower percentage of employees.
The “highlights” of the new system, effective from 2028:
Introduction of a new system of quasi-automatic adjustment of the statutory Minimum Wage
- The statutory MW shall be adjusted annually after consultation on the basis of a specific coefficient resulting from the following formula: Rate of change in the Minimum Wage = (Rate of change in the Consumer Price Index for households in the lowest 20% of the income distribution) + [(Rate of change in the purchasing power of the General Wage Index)/2].
- According to the Ministry of Labor, the above-mentioned formula for determining the MW is based on the French model and considers objective and transparent economic data, while other countries in the European Union, such as Belgium, Luxembourg, and the Netherlands, implement similar systems.
- In order to facilitate the quasi-automatic adjustment of the MW through the implementation of the above-mentioned formula, the following bodies are hereby established: a) a five-member Scientific Committee, comprised of five experts in economic matters, and b) the previously referenced ten-member Consultation Committee, consisting of representatives from the leading trade union organizations of employees and employers and chaired by the president of OMED. Both Committees are vested with the responsibility to issue a fully reasoned and substantiated opinion regarding the application of the adjustment coefficient for the MW.
In the event that the Scientific Committee approves the application of the coefficient for the adjustment of the salary, its opinion, along with the opinion of the Consultation Committee, is forwarded to the Ministers of Labor and National Economy for the issuance of the relevant Joint Ministerial Decision.
In the event that the Scientific Committee recommends an exceptional deviation from the application of the adjustment coefficient, a different consultation procedure shall be followed, which includes the preparation of a relevant report by designated bodies (e.g., ELSTAT, Bank of Greece), to be submitted to the Consultation Committee for its opinion.
- It is explicitly provided that in case the coefficient results in a decrease in the MW, no adjustment will be made. However, in cases of exceptional circumstances and significant economic recession, the mechanism may deviate from the automatic formula. In these cases, the MW will be determined through consultation, but a reduction in the MW through the adjustment system remains prohibited.
Strengthening of collective bargaining: extension of the participation of social partners through the total process.
The new system foresees as first step of the procedure the submission of report of the Scientific Committee by August 31st, with the process being completed by the end of the year, so that the new MW will be applied from January 1st of each year.
In summary, οne may observe that the most significant change brought by the new MW setting system is the quasi-automatic adjustment based on the coefficient. This is a change, which, according to the Ministry of Labor’s statements, aims at addressing the need for minimum wages that reflect the cost of living and the actual purchasing power of employees.
Finally, the adoption of the aforementioned adjustment formula, instead of the determination through collective negotiations (as applicable before 2012), is considered by the Ministry as more effective on the grounds that social partners do not represent all employees, and therefore bilateral negotiations are not representative of society as a whole (e.g. the unemployed and the younger generations).
[1] On January 14, 2025, Advocate General Nicholas Emiliou of the CJEU opined that the Directive, challenged by Denmark, is incompatible with EU law and should be annulled. However, this non-binding opinion does not change the Directive’s current legal status, and Member States must still transpose it into national law by the prescribed deadlines. Even if the CJEU annuls the Directive, it does not automatically invalidate the national laws of member states – like Greece – that have already incorporated it.
