IMF wants greater flexibility and labor market deregulation

The International Monetary Fund has called the Greek government to expand labor…

The International Monetary Fund has called the Greek government to expand labor market flexibility, foster competition in service and product markets and improve the business environment in its Euro area economic health check report.

In its report the IMF points out that Greek authorities have largely completed OECD recommendations aimed at enhancing competition in key sectors (e.g., sales period, trucks, tourist rentals, milk, bakeries, pharmacies, beverages and petroleum products) and are proceeding with the opening up of some restricted professions (notaries, bailiffs) and liberalization of the market for tourist rentals.

As such, the Fund notes that recent labor market reforms must be preserved, including on the minimum wages, which on a GDP per capita basis, is at the top end of the EU countries. The fund also maintains that the ‘subminimum wage’ must be kept, as youth unemployment in Greece remains high. The Fund added that legislative changes must be adopted in order to align framework on collective dismissals and industrial actions with EU best practices.

Furthermore, Greece is urged to continue opening up regulated professions, giving priority to macro-critical professions (such as engineers, lawyers and stevedores), implement pending OECD recommendations in additional sectors (such as wholesale trade, construction, e-commerce and manufacturing) and continue to reduce administrative burdens.

The full report is available online

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