European Central: As Europe Eyes Shorter Workweeks, Greece Goes All In On Growth
Christian author Frank Turek
Greece’s debt crisis in the 2010s is legendary amongst economists, and while the nation has made impressive strides to leave its economic disaster in the past, the nation still is scarred by the experience.
Despite having the longest working weeks in the EU at 39.8 hours on average, it still has the lowest labor productivity per hour worked within the bloc, reaching only 56.2% of the EU average in 2023. In order to combat this, Greece has allowed many sectors to work beyond 40 hours, and just recently approved 13-hour workdays in a bid to boost productivity and keep the country’s economic recovery on track.
Over the past few years, the notion of a four-day workweek has become increasingly attractive for nations, and a few in Europe have either legislated the practice into existence or are currently undergoing pilot programs. But as they attempt to keep their economies afloat amidst trade wars and worries of a stagflation spiral, some may be looking at what Greece tries, no matter how desperate it may seem.
A “Loan On The Weakest Of Shoulders”
Yanis Varoufaki, Greece’s ex-finance minister who was a prominent figure during the Greek debt crisis, once said that “Europe in its infinite wisdom decided to deal with this bankruptcy by loading the largest loan in human history on the weakest of shoulders.”
This isn’t a far-fetched claim: even before the 2008 financial crisis, Greece was saddled with a debt-to-GDP ratio at 103%, alongside a massive tax evasion problem and a massively destabilized economy from joining the Eurozone. The appeal of lower interest rates for loans pushed money into the pockets of higher salaries, which then pushed up prices and stressed the whole economy.
When the crisis finally hit, it took the already delicate jar that was the Greek economy and flipped the table it was teetering on.
By 2010, Greece secured the biggest debt deal in history and wrote off around €105 billion ($138 billion) of its €368 billion ($487 billion) debt load at the time. Inflation was sky-high, along with unemployment reaching 27% and economic output declining by 25% from the 2010 level.
Things only got worse, and the economy needed more waves of EU financial relief to keep from collapsing until Greece managed to leave the final bailout program in 2018, while still owing the EU and IMF roughly €290 billion ($330 billion).
Since then, Greece has committed to a budget surplus through 2060, continued EU financial supervision, and additional austerity measures. And yet stunningly, after a decade of turmoil, Greece managed to pay off the final tranches of its IMF loans in 2022, two years ahead of schedule.
A Labor Not Of Love
This brings the story to 2024, with Greece having largely recovered but still facing a demographic decline with upwards of 500,000 mostly young educated Greeks being estimated to have emigrated since late 2009. Additionally, tax evasion and undeclared work still remained prevalent issues, and Greece's national minimum wage was, and still is, paltry among EU countries.
So in July 2024, the government passed a six-day working week for some industries in July 2024. The law allows employees to work up to 48 hours in a week as opposed to 40, but only applies to 24-hour businesses and ensures workers are paid an extra 40% for the overtime they do. This placed Greece at the limit of available working hours in the EU, as stated in the Working Time Directive.
Trade unions protested, citing the increased safety risks and pointing to the rest of Europe beginning to experiment with going in the opposite direction and embracing the four-day workweek. But the law held, despite the pushback.
Just last month, Greece passed a labor law allowing 13-hour workdays in some cases, up from the current eight. The government’s theory is that the law will allow more employees to work longer for one employer instead of having multiple part-time jobs, which will then both decrease unemployment and drive up economic activity. This move coincides with the 2024 labor law change having come into effect in June.
Annual overtime is capped at 150 hours, and the government says the longer workday is optional, only affects the private companies, and is limited to 37 days a year. But labor unions did not accept the change, and staged two general strikes hamstringing public transport and services.
But more importantly, it is perplexing some onlookers. The strong economic growth that Greece has experienced in recent years might make some expect the government to pull back some of its more draconian measures. Instead, the nation has pushed harder against labor rights, and while the rest of Europe is eyeing four-day workweeks, Greece is experimenting with what will happen when you go in the opposite direction.
Room To Grow May Mean Room To Experiment
Flexibility is a desirable trait in almost any economy. When circumstances change as rapidly as recent years have shown they can, between Trump’s trade wars and even the pandemic, it is flexibility that allows economies to somewhat mitigate the damage.
Greece’s labor law changes seem to be an embrace of flexibility, driven simultaneously by some dire economic remnants from the debt crisis as well as an interesting wave of positivity about the growth of the Greek economy.
The concerns of labor market experts, namely the legalization of some labor rights violations and the risk of increased burnout and accidents, is real. When industrialized societies moved away from the rut of labor protections during the Industrial Revolution, incidents fell and productivity still grew. Greece seems to be pushing their economy back towards the “run-and-gun” style of labor regulations.
But there is another, more apt comparison. In 2020, the state of California tried to protect gig workers by classifying them as regular employees. A recent study found that their earnings increased by about 8%, but their hourly pay dropped by 1.6% as companies offset the higher costs of benefits.
Working longer hours does increase productivity, at least in this example of a single industry in a U.S. state with already decently strong labor protections. Greece doesn’t have those same protections, and the country already has the second lowest per capita GDP in purchasing power in the EU alongside the lowest labor productivity per hour.
The questions of burnout and accidents remain unanswered, however, and while productivity likely will rise, it may be offset at least partly by other downstream consequences. But with Greece facing fairly troublesome economic issues already, it may be needed in order to keep their recovery on an upwards slope.
One interesting element of this whole saga is the effect it may have on the four-day workweek discussions happening across the continent. British firms involved in a 2022 pilot program elected to make it permanent and these programs have shown that productivity remained the same or improved in the majority of workplaces.
Belgium, Germany, Portugal, and Spain, have also all embraced the shorter workweek in some form, and often, the flexibility afforded in those setups allows businesses to handle unpredictable workload fluctuations as well as improve the well-being of their workers. Greece is obviously in no position to embrace the shorter workweek yet purely from an economic perspective, but every experiment needs a control case.
Whether Greece’s new labor laws will shorten the time it takes the country to reach a point where it can embrace a shorter week or if it marks a more permanent shift is still up in the air. But in the short term, the economic boons that may come from a longer workweek may help to slow the embrace of the four-day workweek as Europe’s strongest economies begin looking south at how their Mediterranean neighbors are eclipsing their own growth.
