Greek Prime Minister Alexis Tsipras announced on Monday plans to increase the standard minimum monthly wage by about 11 percent, the first such hike since the country’s debt crisis erupted almost a decade ago.
Greece emerged in August from its third international bailout since 2010 and the government, which faces a national election this year, has promised to reverse some of the unpopular reforms it implemented under bailout supervision.
“I’m calling on you, after a decade of wage cuts, to make another historic step,” Tsipras said, calling on his cabinet to approve the labour ministry’s proposal for an increase to 650 euros (564 pounds) from 586 euros (509 pounds) currently.
Tsipras, who signed up to Greece’s third bailout in 2015, also proposed the abolition of the youth minimum wage, which is for those below 25.
Ministers applauded and a smiling Tsipras responded: “From your reaction I reckon that my proposal is … approved”.
The plan must be approved by parliament in the coming days to take effect next month, as the government hopes.
Athens had told its European lenders that it would reinstate the process of increasing the minimum wage periodically after the end of the bailout.
The suggested increase was agreed following consultations among the government, employers and labour unions.
Greece slashed the standard minimum monthly wage by 22 percent to 586 euros in 2012, when it was mired in recession.
Workers below 25 years suffered deeper wage cut as part of measures prescribed by international lenders to make the labour market more flexible and the economy more competitive.
Greece expects 2.5 percent economic growth this year. It also sees unemployment falling to 18.2 percent in 2019 from 19.6 percent last year.
The Tsipras government’s current term ends in October and his Syriza party is trailing the conservative New Democracy party by up to 12 points in opinion polls.
The International Monetary Fund urged Athens last week to introduce greater flexibility into the labour market to mitigate any negative impact from its new policies.