The impact of the debt crisis on the salaries of Teaching and Research Staff in national higher education institutions in Greece: a case series study and literature review

Abstract

The Teaching and Research Staff (TRS) of Greek universities consists of lecturers, assistant professors, associate professors and full professors (or simply professors). In addition to their special role as public officials, they constitute a group of employees with specific intellectual qualifications, special skills and a scientific background. Therefore, they are not part of the national single salary and ranking system for public servants; instead, they are paid through a specific and specialized salary table.

In recent years, due to the financial crisis, their salaries were reduced, while at the same time, there was an increase in taxes and contributions. These changes had a serious negative impact on their salaries. That situation led to the following questions: Which fiscal policies were employed by public management during crisis? What were the measures of the government policy aimed at ameliorating the consequences of the financial crisis? And how much was the reduction in the salaries of the TRS of Greek universities?

We conducted a comprehensive search of both the literature and primary sources to answer these questions by presenting a thorough analysis of the current payroll status and changes over the years for the TRS at the University of Western Macedonia during the economic crisis.

Keywords:

• Economic crisis
• memorandum
• austerity
• Teaching and Research Staff
• University of Western Macedonia
• Technological Educational Institution
• government policy
• public management

REVIEWING EDITOR:

• Cristina Elena Popa Tache, Law, Andrei Şaguna University, Bucharest, Romania

SUBJECTS:

• European (EC) Law; Socio-Legal Studies; Government; International Political Economy; Education - Social Sciences

1. Introduction

From the beginning of the financial crisis in 2009 until now, Greece has been in a state economic dependency. Many unpleasant legislative reforms were implemented during the crisis. Some of these reforms aimed at increasing the efficiency of the public sector and reducing public expenditure (Karastathis, 2018).

One of the most important elements of a country’s economy is the sustainability of public finances, which should not be significantly affected by unforeseen situations. The balance of payments can be improved by changes in fiscal policy. The primary stage of tackling unforeseen and difficult situations is the alignment of the national fiscal policy with that of the European Union (Pollitt, 2010).

The implementation of European fiscal policy depended on the policies of public management to face the economic crisis. These policies included external administrative supervision responsible for implementing the measures taken. The measures were in the form of memorandums of understanding created in collaboration with institutions such as the European Commission, the European Central Bank and the International Monetary Fund.

The financial crisis in recent years has highlighted the importance of human resources in the public administration. Public servants were the ones who achieved the successful implementation of fiscal and structural reforms (Pollitt, 2010). Due to the debt crisis, the expenditures of Greece were at the heart of the debate (Rapanos, 2009). For this reason, the fiscal adjustments in recent years focused on the salaries of public servants, the reduction of labor costs, and the increase in taxation of incomes and products (Kiefer et al., 2014).

During the crisis, higher education in Greece faced serious problems. The merger of higher technological educational institutions with university institutions was a reform of great significance. Specifically, in accordance with Law 4610/2019, Government Gazette 70/07-05-2019 issue A, the University of Western Macedonia merged with the Higher Technological Educational Institution of Western Macedonia. This merger included the educational staff of both institutions as well. According to articles 17–18 of Law 4610/2019, the educational staff of the Higher Technological Institution of Western Macedonia merged into the respective ranks of the teaching and research staff (TRS) of the University of Western Macedonia. As a result, the educational staff of the Technological Institution became part of the academic status of TRS according to the positions they already held. They maintained the same payroll until the merger was complete and the new organizational chart was redesigned.

According to article 130 of Government Gazette 74/19-5-2017 issue A, the main salary of the first salary scale of a university professor is 2.122€ per month. The basic salaries per month of the other ranks of the TRS of the universities are calculated as a percentage of the professor’s salary, as follows: lecturers 70%, assistant professors: 75% and associate professors: 85%. The main monthly salaries of the rest ranks of the TRS of technological educational institutions are formed with a percentage of the professor’s salary, as follows: lecturers / professors of applied sciences: 58%, assistant professors: 68%, associate professors: 77%, professors: 90% until their full integration.

Apart from the basic salary, family allowance, performance expenses, and, special teaching and research allowance bonus for the members of the faculty of universities are given. These allowances, expenses, and bonuses are added in the composition of the final gross remuneration. According to article 131 of Law 4472/2017, Official Gazette 74/19-05-2017, issue A’ the amount of the special teaching and research allowance for a professor is 500€, for an associate professor 450€, for an assistant professor 400€ and for a lecturer 250€ per month.

The TRS of higher educational institutions consists of professors, who are distinguished into first-level professors (a.k.a. professors), associate professors, assistant professors and serving lecturers (Greece: Conditions of service for academic staff working in higher education).

Our study aimed to review the financial measures taken during the fiscal crisis in Greece by public management that impacted the payroll of TRS. Additionaly, we aimed to analyze their effect on the payroll of TRS of Greek universities by presenting specific cases as examples, marking the first study to present real-world cases.

2. A brief summary of the 2009–18 Greek economic crisis and its effect on Greek higher education

In 2006, the first signs of the economic crisis became evident in the real estate market in the United States. Citizens were unable to pay their mortgages for their recently acquired overpriced properties, leading to the creation of a housing bubble (Holt, 2009). The collapse of that bubble resulted in foreclosures, collapse of housing prices, and mortgage negligence, causing a tremendous domino effect on the banking system and the overall U.S. economy. Soon enough, the crisis propagated to other sections of economic activity and other countries as well, with inflation rates, unemployment rates, and poverty rates skyrocketing worldwide (Gopinath, 2020).

In 2008, nobody thought that the global financial crisis could impact Greece; The Greek gross domestic product (GDP) growth rate was increased by 3.27% the previous year, and Greek economy was marked as a reliable and stable European economy. At first, stagnation of the national GDP was noted, undermining the ability of the Greek government to fulfill its responsibilities to foreign creditors. Chronic issues plaguing the Greek economy, such as government debt, heavy military expenditure, trade deficits, corruption of politicians and public officials, tax evasion, and low public sector productivity, were finally uncovered. Consequently, foreign credit rating agencies lowered the sovereign credit rating of Greece to a level that prevented the Greek government from receiving credits from foreign funds to cover the annual deficit (Varoufakis et al., 2011). In February 2009, the first package of austerity measures arrived, with two more austerity packages being introduced in 2012 and 2013. After a long period of economic crisis and political turmoil, in 2018, the Greek government declared that the country was no more captive to bailout programs (Greece exits final bailout successfully, 2018).

The Greek economic crisis has also brought to the surface the chronic conditions of the Greek higher education, which had been further expanded thought the years. One of the most important issues included the overpopulation of students that was not in accordance with the needs of the Greek economy and had led to the creation of costly and unnecessary universities, university branches, and departments thought the country (Ministry of Education, Religious Affairs and Sports, 2013; Higher Education in Greece Impacts of the Crisis and Challenges, 2017). The austerity measures led to merger of different university departments and even the abolition of specific branches and departments. More importantly, the entire structure of higher education was modified with the merger of university sector with the technological sector (Law 4610/2019).

3. Effects of economic policies on other sectors of public services and comparison with other affected countries

The austerity measures also affected other crucial subsectors of the public sector, such as the national healthcare system, the national defense forces, and strategic government-owned corporations such as the public power corporation (i.e. PPC or DEI). In all the aforementioned sectors, salary decreases were implemented, along with a reduction in the number of newly employed public servants compared to the number of retired public servants, leading to a decrease in the public servant work force over the years. In more detail, the military budget for the purchase of military equipment was severely curtailed, the merger of public hospitals and abolition of large healthcare units were effectuated, and privatization of important government-owned corporations was executed (Law 4093/2012) (Law 4052/2012) (Simou & Koutsogeorgou, 2014; Ifanti et al., 2013).

Similar effects on the public sector were implemented in other countries affected by the global economic crisis. Curtailment of the budget of the national educational system, including decreases in the salaries of the educational personnel and teachers, although on a lesser scale compared to Greece, was also enforced in Romania, Ireland, Portugal, Cyprus, Spain and Croatia. Other countries like Denmark and Hungary enforced a decrease in the budget of their national educational systems without modifying the salaries of the academic personnel and teachers (Filippidis et al., 2015; Civera et al., 2021). Diffuse public sector reforms and payroll decreases were also implemented in Italy and the Baltic region democracies (Di Mascio & Natalini, 2014; Kattel et al., 2013).

4. Methodology

For the achievement of the study’s objective, the research focused on primary sources found in the Official Government Gazette of the Hellenic Republic, Decisions of Court of the State of the Hellenic Republic, the European Commission Reports, published peer-reviewed studies, textbooks, and economic magazines and journals. Additionally, material was sourced from diploma theses of master’s degree programs, doctoral dissertations, and theses. The case series were presented after researching raw data on the payroll status of the separate ranks of the TRS of the University of Western Macedonia; primary finance data were provided by the Payroll Department of the University of Western Macedonia. We also searched databases, including Google Scholar, Scopus and IDEAS/RePEc for relevant articles. Our research included articles written in Greek, English, and German. Initially, articles were searched on title and abstract. Eligible articles underwent full-text evaluation, and those meeting our selection criteria were finally included in our review.

5. Case series: Analysis of the effects of austerity measures implemented during the financial crisis on the incomes of Teaching and Research Staff (TRS) members at the University of Western Macedonia

The TRS of the University of Western Macedonia consisted of four categories. These categories were the following: A) lecturers, B) assistant professors, C) associate professors, and D) professors, who constitute the final level of TRS members. In the research, the payroll calculation sheet of each employee category was deployed, which was provided by the payroll department of the University of Western Macedonia. This payroll calculation sheet included data illustrating the evolution of the monthly salaries of faculty members at various levels and years of service.

Particularly:

1. The example case at the rank of lecturer consisted of a married individual with two children with 14 years of service who belonged to the staff of the former Technological Educational Institution of Western Macedonia, which merged with the University of Western Macedonia according to the Law 4610/2019, Official Gazette 70/07 May 2019, Issue A’.

According to the data in Figure 1, while processing the salary statement of the employee in a period of nine years, in the gross earnings were observed gradual percentage fluctuations. To be more specific, from 2010 to 2019, there was an increase of 0.82% in the salary. The insurance contribution was increased by 41.9% and the taxes by 294%. As a result, the net earnings of the employee from 2010 to the end of 2019 were decreased by 14.7%.

Figure 1. Time evolution of monthly earnings, contributions, and taxes from 2010 to 2019 for a TRS member at the rank of lecturer (based on data from the Payroll Department of the University of Western Macedonia).

1. The example case at the rank of assistant professor involved a married individual with one child, with 30 years of service and who belonged to the staff of the former Higher Technological Educational Institution of Western Macedonia, which merged with the University of Western Macedonia in accordance with theLaw 4610/2019, Official Gazette 70/07-05-2019, Issue A’.

According to the data in Figure 2, after the process of employee’s salary statements within a period of nine years, gradual percentage fluctuations were observed in the gross earnings. From 2010 to 2019, a decrease of 2.5% was onserved in the salary. The insurance contribution was increased by 38.6% and the taxes by 15.6%. As a result, the employee’s net earnings decreased by 14.5% from 2010 to the end of 2019.

Figure 2. Time evolution of monthly earnings, contributions, and taxes from 2010 to 2019 for a TRS member at the rank of assistant professor (based on data from the Payroll Department of the University of Western Macedonia).

1. The example case at the rank of associate professor consisted of a married individual without children, with ten years of work experience who belonged to the staff of the former Technological Educational Institution of Western Macedonia, which merged with the University of Western Macedonia in accordance with theLaw 4610/2019, Official Gazette 70/07-05-2019, Issue A’.

In accordance with the data in Figure 3, after the process of employee’s salary statements within a period of nine years, gradual percentage fluctuations were observed in the gross earnings. From the year 2010 to 2019, a decrease of 5.1% was observed in the salary. The insurance contribution was increased by 53.6% and the taxes by 68%. As a result, the empolyee’s net earnings were decreased by 10.2% from 2010 to the end of 2019.

Figure 3. Time evolution of monthly earnings, contributions, and taxes from 2010 to 2019 for a TRS member at the rank of Associate Professor (based on data from the Payroll Department of the University of Western Macedonia).

1. The example case at the rank of professor involved a married individual without children, with 39 years of work experience who belonged to the staff of the former Higher Technological Educational Institution of Western Macedonia, which merged with the University of Western Macedonia in accordance with the Law 4610/2019, Official Gazette 70/07-05-2019, Issue A’.

According to the data in Figure 4, after the process of employee’s salary statements within a period of nine years, in the gross earnings were observed gradual percentage fluctuations. From the 2010 to 2019, a decrease was observed of 11.5% in the salary. The insurance contribution was increased by 36.7% and the taxes by 12.3%. As a result, employee’s net earnings were decreased by 23.1% from 2010 to the end of 2019.

Figure 4. Time evolution of monthly earnings, contributions, and taxes from 2010 to 2019 for a TRS member at the rank of professor (based on data from the Payroll Department of the University of Western Macedonia).

6. Review of economic measures

The research focused on the period from 2010 to 2019 because all the reforms of the public management were implemented at that time period in the form of memorandum policies. It is evident that during this specific period, the economic crisis led to continuous legislative regulations and changes. The aim of these reforms was the rationalization of expenses and financial savings. According the figures above, the fluctuations on their salaries of TRS members are obvious and severe. The various Laws that resulted in these changes are mentioned above

Particularly:

• In 2010 the Law 3205/2003, Gazette 297/A/2003 was voted, which related to the "Salary arrangements for public officials and employees".

• The same year with the article 1, paragraphs 2 and 3 of the Law 3833/2010, Gazette 40/A/15-03-2010, all the allowances, compensations and salaries of the officials and employees of the Public Law Legal Entities were decreased by 12%. Also, special holiday allowances were reduced by 30%.

• With the article 3 of the Law 3845/2010, Gazette A’ 65/06-05-2010, the allowances and salaries were reduced by 8%. The christmas holiday allowance was set at 500€, the easter allowance at 250€ and the leave allowance at 150€. These allowances were paid only if the monthly salaries of the employees did not exceed the amount of 3.000€ per month.

• With the Law 4002/2011, Gazette A’ 180/22-08-2011, the special research allowance for post-doctoral studies of the article 36, Law 3205/2003, was reduced by 20%.

• With the Law 4024/2011, Gazette 226 A’ 27-10-2011 the salaries were reduced even more, due to the decrease of the tax-free limit from 12,000 to 5,000€. Also, in accordance with the Article 38 paragraph 2 of the Law 3986/2011, a special solidarity levy was imposed.

• On 01/08/2012, the Law 4093/12, Gazette 222/A/12-12-2012 was voted, and the decision of the Deputy Minister of Finance No. 2/83408/0022/14.11.2012 for the reduction of salaries was set in effect. From 01/01/2013, holidays and leave allowances were abolished. More changes in the basic salaries of the basic grades of public servants were enforced, which caused reductions in the calculation factors that determined the basic salaries of the other grades, as well as, the amount of allowances and benefits for each public servant. With the second Memorandum, the Law 4046/2012, Gazette A’ 28/14-02-2008, referred that till the end of 2012, the special public payrolls should be reformed because they constituted the 1/3 of the public wage expenditures (The Council of State, Decision 4741/2014).

• In 2015, according to the article 26, paragraph 2 of the Law 4354/15, Gazette 176/A/16-12-2015 "Management of non-performing loans, salary arrangements and other urgent provisions of the fiscal and structural reform agreement" the evolution of the public servants’ salaries was suspended until 31 December 2017. This resulted from the implementation of the memorandum, aiming to achieve fiscal goals and structural reforms (Kourniotis et al., 2016).

• In 2017, in accordance with the Law 4472/2017, Gazette 74/A’, Chapter C’, which related to the payroll of the TRS members, their salaries were reduced, as it was referred in the articles 129 till 131, and also in article 155.

• From 01/01/2018, with the implementation of the Circular with Online Posting Number: 695OH-ΖΘΜ/09-02-2018 "Lifting of the suspension of salary progression", of the paragraph 2, article 26, Law 4354/2015, the salary suspension was lifted for the public servants who were related to the article 7 of the Law 4354/2015 and reactivated the salary progression according to the same Law, article 11. Additionally, the excess time calculated during the initial classification without the period from 1/1/2016 till 31/12/2017 was taken into account.

• In accordance with the Law 4575/2018, Official Government Gazette 192/A/14-11-2018, article 12, a lump sum payment was given to the TRS members that belonged to the University and Technological Institutions, as well as, to the other staff, for as long as they were on duty from 1 January 2015 till 31 December 2016. Specifically, this amount represented the difference between the monthly salaries, that the members were about to receive according to the provisions of the salaries, which were in force on 31 July 2012, and the monthly salaries that they actually received in accordance with the provisions of the Law 4093/2012. The provisions that were currently in force did not affect the salaries of the TRS. These salaries were taken into account before the implementation of the provisions of the article 155, Law 4472/2017. The referred sum of money was calculated from 1 January 2015 till 31 December 2016.

As a consequence, the enactment of diverse national payroll policies had a notably adverse effect on the salary status of the members of the TRS in Greek universities

7. Discussion

It has become obvious, that in recent years, various changes have occurred in the public sector due to the fiscal crisis. These changes aimed at the reduction of expenditure and also at gaining rapid profits while improving public efficiency. These measures had a tremendous negative effect on public servants’ salaries (The council of State, decision 4741/2014).

The Greek economy was severely damaged by the European debt crisis (Spinthiropoulos et al., 2021). Regarding the public management, common and stereotypical strategies for the fiscal crisis were implemented, such as cuts in the form of "salami-slicing approach" of the administration and its services (Kiefer et al., 2014). According to various studies, economic crises often lead to reforms in the public sector.

In a 2010 review, Pollitt et al. argued that, in many cases, corresponding reforms were not the result of the economic crisis. However, in cases where reforms are implemented due to an ongoing fiscal crisis, they most often involve, ‘‘blind’’ and ‘‘horizontal’’ public sector cuts instead of substantive reforms to the system. It is apparent that something similar happened in the Greek economy (Pollitt, 2010).

In the field of employment, the new public management aimed not only at implementing changes through cuts but also at fostering innovation. This included the introduction of a new payment method through the system of the national single payment authority. One of its goals was to facilitate financial planning for every income policy. This initiative was incorporated into the first memorandum, aligning with the macroeconomic objectives of reducing expenses and enhancing transparency (Spanou, 2018).

The current study presents government policy measures taken to mitigate the impact of the Greek economic crisis that began in 2008–2009. The measures of the Greek government were related to the introduction of important reforms in the institutions specified in the agreement (The council of State, decision. 4741/2014).

The reforms of the Greek government were reflected in various national laws, as mentioned above, that led to income changes of a specific category of public servants who belonged to the special payrolls, such as the members of TRS. It is important to note that, in order to minimize the negative impact, the government retroactively provided partial reimbursment to the universities’ TRS for the cuts during the work years 2015–2016, as specified in the legislative regulation Law 4575/2018, Article twelve.

Furthermore, as per the Official Government Gazette B’4232/30-09-2020, the participation of TRS members in programs of the Special Account for Research Funds of Higher Educational Institutions is characterized as additional income, enhancing their salary. Moreover, this option is not available in the payrolls of the broader public sector, placing them in a subordinate position.

The year 2012, marked by Law 4093, was defined as a turning point for the salaries of Teaching Research Staff. The fiscal condition of the state led to the reshaping of the payroll for public servants, irrespective of rank, through the introduction of new strict regulations.

The legislation concerning TRS members was amended, considering their increased academic qualifications and the specific nature of their vocation. The management of these employees differed from that of other public servants. Their salaries were determined by a "special payroll", which was more favorable than the unified payroll of public servants, and it included special allowances to compensate for their unique duties.

The relevant salary reductions were applied across all special payrolls without considering the specific details of each payroll, in line with the aforementioned public interest objective (Council of State 2705/2014). The aim of the austerity measures was to reduce public expenditure and enhance the overall balance of the national economy. Every public servant, without exception, including those in special payrolls such as the TRS members, healthcare employees and military personnel, experienced salary decreases. The enforcement of austerity measures and the reduction of public expenditure is a traditional option imposed in such cases, although its efficacy is heavily criticized

As a result of these changes, there was a 0.82% increase in the gross earnings at the lecturer level in 2019, while there was a 14.7% reduction in the net earnings. Additionally, it was observed that gross earnings at the assistant professor level decreased by 2.5%, whereas net earnings were decreased by 14.5%. At the level of associate professor, the gross earnings were increased by 5.1%, while the net earning were decreased by 10.2%. For professors, gross earnings were reduced by 11.5%, and net earnings saw a reduction of 23.1%. When comparing different categories of TRS members, it appears that the highest academic level with the most advanced qualifications, experienced a greater reduction in income than the lower levels. Moreover, at the levels of the lecturers, assistant professors, and associate professors, there was an increase in gross earnings, but deductions and increased taxation imposed on them, ultimately reduced their net earnings.

The negative impact of austerity measures on the salaries of the TRS members in Greek Universities could also adversely affect their work productivity, job satisfaction, and overall work conditions. The economic crisis has similarly affected the quality of life for various categories of public servants in Greece, including labour inspectors, teachers, and healthcare workers (Anyfantis et al., 2021; Anastasiou, 2020; Anastasiou & Anagnostou, 2020; Galanakis et al., 2020; Skefales et al., 2014; Rachiotis et al., 2014). This crisis has also had negative repercussions on other categories of higher education staff, such as medical researchers (Sifaki-Pistolla et al., 2018). Similar phenomena have been observed in other countries with comparable social and economic backgrounds such as Italy (Mancini et al., 2022). In future research, it is essential to investigate the impact of the crisis and its associated austerity measures on the quality of life and work-related outcomes of the TRS members in Greek universities. Researchers should also propose strategies to mitigate possible negative effects by leveraging international experience (Kangas-Dick & O’Shaughnessy, 2020). Additionally, future studies should examine and analyze the austerity measures that affected the salaries of teachers in primary and secondary education in Greece.

8. Conclusion

Undoubtedly, the global financial crisis of recent years affected the Greek economy. The impact was absorbed through various reforms imposed by institutions including European Central Bank, International Monetary Fund, European Commission, and executed through successive economic adjustment programs implemented in the period 2010–18 (Spanou et al., 2018).

The implementation of reforms within the context of fiscal austerity policies led to a significant reduction in wages, a situation that persists to this day. In comparison with the unified public payroll, the management of public servants in special payrolls differed. Those in special payrolls received a small reimbursement for wage reductions implemented by the strict fiscal policy, while public servants in the unified payroll did not. Moreover, the ability to engage in the Special Account for Research Funds mitigated the cuts in their main payroll. In summary, we found that all ranks of TRS experienced significant decreases on their salaries, which were only partially compensated for in the later years of the crisis. Currently, Greek TRS members continue to receive significantly lower salaries compared to the pre-crisis era, a result of the austerity measures.

These negative economic implications may have compelled TRS members to resign and pursue academic careers in foreign countries as part of the general ‘‘brain drain’’ phenomenon that has led many highly qualified Greek professionals to seek better working and living environments; Future research should investigate the participation of TRS members in the Greek ‘‘brain drain’’ phenomenon and also examine the impact that salary reductions may have had on their quality of life, jod satisfaction, productivity, and their ability to conduct research. Moreover, future research should explore the effects of austerity measures on public servants in other sectors of the Greek public sector and also the role of trade unions in managing the effects of the Greek economic crisis on the workforce of the public sector.

Acknowledgements

We would like to express our gratitude to the University of Western Macedonia for providing data regarding the payroll of the university ΤRS and for financing the publication fee for this study.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Efthymia Tsiatsiou

Efthymia Tsiatsiou is a Special Laboratory and Teaching Staff in the Department of Management Science and Technology of the University of Western Macedonia, Kozani, Greece.

Anastasia Chaitidou

Anastasia Chaitidou is a Primary School Teacher, MSc in Educational Sciences and Communication Sciences.

Konstantinos Spinthiropoulos

Konstantinos Spinthiropoulos is an Associate Professor in the field of Management, Development and Sustainability of International Businesses and Organizations at the Department of Management Science and Technology of the University of Western Macedonia, Kozani, Greece.