The minimum wage in Greece should be abolished completely not simply reduced.
But why does Greece have a minimum wage at all?
The minimum wage was originally implemented in Greece as a political tool to gain popularity amongst low skilled workers, ironically, the people who were supposed to benefit from the minimum wage are the people who have been most harmed by it.
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Pumping gas at a petrol station did not suddenly become a more valuable job just because the government said so.
A job that was paying 4 euros an hour did not suddenly become worth 6 euros an hour to the business because the government said so.
Ultimately the Greek government created an environment where there were too many taxes and too may rules and regulations. This government interference limited the amount of jobs that businesses could create.
An environment of too few jobs and too many people puts downward pressure on wages.
The rules and regulations are imposed by government, it is the government that has forced wages down not private business owners.
So the minimum wage in Greece needs to be abolished but at the same time taxes, rules and regulations need to be cut.
Greece has an unemployment rate of almost 25%. This is a massive drain on the governments already nonexistent finances.
Tax cuts will massively reduce the number of people claiming benefits. The money lost through tax collection will more than be made up from the reduction in social security payments.
And do not forget, Papademos, the Prime Minister of Greece has said that his plan is to reduce the wealth of Greeks. To make Greeks poorer.
Increasing taxes and regulations is an excellent way to reduce wages. Something the government has done over the past 3 years.
Reducing the minimum wage is the next logical step in the longer term plan.
When unemployment is that high what can the minimum wage acheive.
Some people in the UK noticed wages came down to meet the minimum wage in some instances. In the movies sometimes a young ambitiouse person offers to do a job without the pay as a trial. Is that legal with the minimumwage. If someone can survive on the minimum wage in london does that mean it is prohibatively high for buisiness in North Wales. Its complicated. I think it was introduced to provide a big step between unemployment benefit and employment. Did not work there. Adam Smith said that “all wage controls work against the employee” . I think the minimum wage can also be seen as a part of a Low wage policy as it allows free movement of labour across the EU to keep wages down without forcing it so low that people are very low paid and seek welfare assistance payments.
I think Adam Smith did not go far enough. He should have added “and businesses”