Labor Market Reforms Delay Greece’s Bailout Program Review

Tuesday, March 21st, 2017
Last Update: 14:35

The talks on the bailout program review between Greece and international creditors will continue in Brussels as the Greek side refuses to back down on the thorny issue of labor market reforms.

Upon insistence of the International Monetary Fund, the Greek government has to proceed with deregulation of the labor market. However, Greece’s leftist administration is reluctant to accept the IMF terms arguing that its labor laws are based on EU acquis.

More specifically, and as expressed by Labor Minister Efi Achtsioglou, the Greek side insists on bringing back collective bargaining for market sectors, opposes lockout, proposes lower percentages of mass layoffs and favors restoring union powers.

However, the IMF argues that since Greece is on a bailout program, some EU labor laws are not necessary if the country wants to come out of the crisis and see its economy recover. The Fund also says that labor market reforms is a precondition for its participation in the bailout program.

Greece is hoping to resolve the labor issue on a political level. Finance Minister Euclid Tsakalotos, Deputy Finance Minister Giorgos Chouliarakis and the labor minister will stay in Brussels to continue negotiations as Greece’s lenders refuse to return to Athens unless the Greek government implements required reforms.

The stalling of negotiations indicates that it is unlikely the program review will be completed soon. Eurogroup President Jeroen Dijsselbloem said after Monday’s meeting that talks will “intensify” in Brussels over the coming weeks but said that it is unlikely that an agreement would be reached by the next meeting of euro zone finance ministers on April 7.

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