However, as found in the same study, for some products the price deviations in Greece from the EU average are multiple.
For example, the price of ground coffee in Greece is 50% higher than the eurozone average, margarine by 60%, carbonated water by 129%, napkins by 100%, long-life milk by 56%, . On the other hand, according to the data listed in the study, our country appears cheaper compared to the EU by 8% in fresh milk, by 24% in olive oil, and by 13% in shampoos.
Where are the big differences in prices due to?
The study partially attributes these large differences in prices to the structure of the Greek market, but also to the preferences of Greek consumers. As calculated, in terms of products that are more expensive, e.g. carbonated soft drinks, instant coffee, toilet paper and cereals, prices would be 28%-33% lower if producers’ and retailers’ purchases, but also consumer preferences, were in line with the respective Eurozone averages
Nevertheless, the study (prepared by the executives of the Bank of Greece, Alex. Karakitsios, Theodora Kosmas, Dimitris Malliaropoulos, Giorgos Papadopoulos, and Pavlos Petroulas) also finds that the price differences between Greece and other countries have decreased significantly since 2011 The study estimates that there is scope for further improvement with interventions that increase competition between suppliers, bring regarding changes in the market structure of retailers and – in the long term – aim to lead to increased consumer literacy through education.
Also, according to the study, for a large part of unprocessed food items and services, which are as important to consumers as branded standard supermarket products and are mostly domestically produced, Greece is among the countries with the lowest prices .
The study concludes that simulating the Greek market structure and consumer behavior in Greece with the corresponding levels in the Eurozone would lead to significant price reductions. Specifically, for the group of products with the highest sales in the sample, the price reduction in Greece would reach an average of 17 percentage points, while for the group of products where Greece is one of the most expensive countries, the price reduction would reach an average of the 30 percentage points.
As in the period 2011-2023 the price differences between Greece and the other countries in the sample decreased by a total of 9 percentage points, it is concluded that there is room for further improvement with interventions that increase competition between suppliers, bring regarding changes in the market structure of retailers and – in the long term – aim to strengthen consumer literacy.
Regarding the supplier market, increased competition would lead to lower prices in almost all of the products in the study, as, for each product category, the market-leading supplier holds a larger share in Greece than in the Eurozone. Also, further reductions in the prices of branded products would be achieved by the greater penetration of private label products.
How prices might be reduced
Finally, with regard to the supermarket market, it is estimated that price reductions might come from the increase of local competition for the consumer on the one hand, and from the creation of buying groups for suppliers on the other, so that they are compensated the oligopolistic practices of multinationals and to achieve better wholesale prices.
This study shows that in addition to branded standardized supermarket products, there are a variety of other items that are equally important to consumers, such as unprocessed food items and services that are mostly domestically produced. For a large part of products of this kind, Greece is among the countries with the lowest prices. Therefore, small local producers may not follow the same pricing strategies as in the case of many branded products produced by large multinationals.
Salary increases of 5% are shown by the Ministry of Finance for the next few years
The Bank of Greece foresees wage increases of 5% at average levels for the coming years. The revelation comes through its latest report on Monetary Policy and is based on the fact that businesses and employers in general will be forced to raise the wages of workers on the one hand to keep them in their jobs and on the other hand to attract specialties and qualifications that are in short supply and affect the competitiveness and profitability of the companies themselves.
The wage increases will not come by order of the state, but strictly at the demand of the market itself and the conditions created by the so-called “tightness of the labor market” by the Bank of Greece, i.e. the lack of workers not only for the positions of high specialization, but also for those of medium and even low specialization.
Forecast
As characteristically stated in the report of the Bank of Greece in the chapter with the forecasts for the Greek economy (pp. 90-91), “nominal wages per employee will increase at rates of around 5% per year, mainly as result of the intensifying tightness in the labor market, but also based on the recent collective labor agreements in various branches of the private sector”. Already in the first quarter of 2024, 87 new operational collective agreements were signed, of which 31 provide for wage increases.
The prediction of the Ministry of Finance leads with mathematical precision the average salary perhaps even above the levels of 1,500 euros which is the government’s goal for 2027, while it is certain that the minimum wage will also be formed above 950 euros, around 960 with 970 euros in the spring of 2027.
Upwards
For this year, it is forecast that average earnings will increase slightly more than in 2023. In particular, wage increases per employee are expected to increase in 2024 by 5.7% once morest an average increase of 5.5% in 2023, while total wages for Dependent work, i.e. for all employees, is estimated by the Bank of Greece to increase in nominal terms by 7.6% in 2024 from 6% that increased in 2023.
The rise in salaries in 2024 is affected both by the increase in the salaries of civil servants and by the end of the suspension of seniority allowances (three years) of private sector employees. Already in the State, the costs for employee fees increased at an average annual rate of 6.2% in the four months of January-April 2024, while extra increases due to the restoration of seniority benefits that had been frozen following 2012 are estimated to have this year around 100,000 employees and by 2027 they will reach 500,000.
Salaries “key” to repatriation of young people
Analysis of data from the Ergani system shows that between 2016 and 2023 there were increases in low-paid jobs, while there were decreases in higher-paid jobs. Indicatively, in small businesses (with up to 10 employees) real wages for highly paid workers had a real decrease of around 10%, when wages of €750 recorded a real increase of 9.2% to €819.
The Bank of Greece reports that this contradiction makes it difficult for young people who left abroad to return, with 25% of them considering better wages as the main reason for leaving. The CoE criticizes the government, saying that it does not appear that the appropriate wage conditions have been established to attract them back to Greece, stressing that attracting more qualified personnel is more difficult, since the wages for the corresponding jobs have finally decreased significantly in real terms because of inflation!
The answer to the repatriation of young people who left for better wages abroad can therefore only be the biggest increases starting at 5% that the Bank of Greece’s report predicts for the coming years.
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