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European CommissionThe Second Economic Adjustment Programme for Greece. Fourth Reviewterm unemployed people who find themselves priced out of the labour market as the decline in theirskills due to inactivity is not matched by a reduction in allowances. The authorities agreed in halvingthe allowances for white-collar workers over the age of 25 that have been unemployed for more thanone year. This approach is designed to tackle the specific issue of long-term unemployment – currentlyalmost 1 million persons in Greece – and leaves the allowances in place for the employed and for thoseunemployed on a transitory basis.90. The authorities are enhancing the framework for collective dismissals. The government hasintroduced administrative changes to the current framework in order to reduce uncertainty on theconditions and the process which apply in cases of requests by companies in distress. In particular, theprevious framework gave important discretion to the Minister of Labour or the Prefect, when the partiesto a collective dismissal do not agree on the dismissal plans. The changes remove that involvement fordecisions and strengthen the objectivity of the evaluation process, facilitating the decisions on collectivedismissals based on the fulfilment of clear appropriate conditions. An assessment of whether the revisedsystem replicates best practices in an effective, credible and durable way will be undertaken bySeptember 2014, and, in case of doubt changes would be made to the legislation.91. Legislation on temporary work and temporary work agencies is being reformed. Revisions to theframework for employment through temporary work agencies have been agreed to broaden the types ofwork, positions and contracts for which hiring through temporary work agencies is possible and reducerestrictions on hiring via agencies e.g. following redundancies for economic reasons. This is expected toimprove the flexibility for businesses to adjust to the upswing in economic activity and changes in theirhiring needs. The principle of equal treatment between direct employees of the user firm and workershired under agencies remains in place as before, thereby ensuring a level playing field. There were alsosome discussions with the authorities on fixed-term contracts that concluded that the currentframework, previously revised in 2010, is broadly sufficient, since it strikes a good balance betweenflexibility needs and prevention of abuse of fixed-term contracts.92. The authorities agreed to assess the framework for industrial relations, industrial action andtrade union operations, with a view to safeguard the right to work, promote constructive relationsamong parties, and avoid undue disruption of the operations of firms, thus creating a strongerframework conducive to more jobs and investment in Greece. The first step is a review of the existingframework in Greece against best practices, by June 2014. That is expected to include an overview ofthe settings in other countries based on solid and up-to-date information, and of the relevantinternational labour law (including ILO labour conventions) which applies to Greece. Second, buildingon the review, any changes deemed necessary would be discussed with Greek social partners, andadopted by October 2014.93. At the same time, a significant reduction of social contribution rates is taking place (see section3.1.2). Contribution rates in the main social security fund (IKA) will be reduced by 3.9 percentagepoints as of July 2014. The reduction will be mainly in employer-paid contributions with a 1 percentagepoint reduction in employee-paid contributions: the former will directly reduce labour costs, the secondwill increase net wages and encourage labour supply. The impact of these changes will be assessed bymid-2015 and a possible further cut by 1 p.p. in a budgetary-neutral way will also be discussed at thattime. The Greek authorities also agreed to prepare a comprehensive plan to streamline socialcontribution rates, structures and pension portability. Together with other reforms in the area ofpensions as described in section 3.2.8, these ambitious steps have inter alia the potential of increasingincentives for labour market participation and helping mobility across sectors and occupations.94. The upgrading and expansion of vocational education and apprenticeships is crucial for fosteringsustainable employment and make efficient use of human capital. An outline roadmap has alreadybeen adopted and the legal framework revised, but collaboration between the Government departmentsconcerned (Ministry of Labour, Ministry of Education, and OAED) has so far been insufficient andsubstantial additional work is needed for implementation. In order to sustainably increase the level ofskills and the employability of entrants to the labour market, to facilitate mobility of workers and toattract new investment, the Government, supported by technical assistance, must adopt in April a moredetailed implementation plan for the modernisation and expansion of vocational education and training,including the increase in the provision of apprenticeships. The plan has to include proposals to establisha quality framework, a monitoring mechanism to develop local partnerships, detailed proposals toensure progressively closer employer engagement and private-sector funding in VET, clear estimates ofthe budgetary costs and proposals to identify future skills needs and to match vocational education andtraining with the needs of the labour market.48