economy

Among the most important government announcements is the minimum wage, which had already increased on May 1 by 7.5% to 713 euros gross, i.e. 660 euros net.

Thus, the competent Minister of Labor, Kostis Hatzidakis, is expected to inform the Prime Minister by Friday, so that then, at next week's cabinet meeting, the final proposal can be approved and the intended ministerial decision signed.

As for the scenarios, the most prevalent seems to be that of an increase of around 7.5%, the upper limit that the KEPE also sets in its final proposal - recommendation. If this is qualified, the new minimum wage will approach 767 euros.

According to KEPE, small businesses prove to be more sensitive to changes in the minimum wage, since a 1% increase will increase average wages in small businesses by 0.53%, while in large businesses by 0.36%. In other words, the pressure from a minimum wage increase is significantly greater on small businesses. In fact, there are significant sectoral differences regarding the effect of the minimum wage on the average salary.

In particular, in small firms in six industries the elasticity of averages to minimum wages is estimated to be higher than 0.5. Among these industries are also the populous industries related to tourism and trade, as well as the manufacturing industry. As regards enterprises employing more than 10 workers, the elasticity of average to minimum wage is generally lower than the corresponding small enterprises. The accommodation and catering sector continues to be relatively more sensitive to changes in the minimum wage, KEPE notes, with an elasticity of 0.43, followed by real estate management (0.40), health, trade and manufacturing, with elasticity at 0.33.

Another index that is expected to prove decisive in the final decision, the Kaitz index, i.e. the ratio of minimum to average salary. According to experts, the closer the minimum wage is to the average, the higher the value of the index, demonstrating greater correlation. In 2022 the Kaitz index for all businesses with more than ten employees is estimated at 0.51 (2021: 0.48) and ranges from 0.28 for the energy sector to 0.67 for administrative and support services. Industries related to tourism register a high Kaitz index (0.65) mainly due to low wages in catering, followed by health (0.61), other services (0.58), public administration (0.58 ), construction (0.56) and trade (0.56). The slight increase in the Kaitz index in 2022 is due to the fact that the average wage for large firms increased less than the minimum wage. In particular, the average salary at large firms increased by an average of about 3% between October 2021 and October 2022.

In enterprises with less than 10 employees, for all branches the Kaitz index is clearly higher than the corresponding one for large enterprises, showing that a significant portion of workers there are paid wages very close to the minimum. In particular, the index was 0.72 in 2021 and in 2022 it increased to 0.74, while it ranges from 0.55 for public administration to 0.83 for education. Education (0.83), arts (0.81), health (0.81), lodging and dining (0.78), and commerce (0.78) consistently record among the highest Kaitz indices and so from the lowest wages.