Bank of Greece Governor Warns Against Sharp Wage Hikes

Bank of Greece (BoG) Governor Yannis Stournaras has warned that a sudden and steep wage summation could enactment the state astatine hazard of bankruptcy. Speaking successful a vigor interview, helium underlined that immoderate wage rises indispensable beryllium backed by productivity gains, stressing: that “there is nary wealth tree.” The cardinal banker emphasised the value of Greece adhering to the European Commission’s fiscal rules, which headdress state spending but presently supply greater flexibility than they did successful the past fewer years.

The erstwhile concern curate and existent politician of BoG expressed optimism astir the trajectory of the Greek banking system, pointing to the emergence of a “fifth pillar” alongside the country’s 4 systemic banks. Cooperative banks, helium said, person besides strengthened competition, with the Karditsa cooperative slope singled retired arsenic a success story for its support of section communities aft earthy disasters.

Despite aboriginal challenges, this 5th pillar has already begun attracting deposits and marketplace share. Looking ahead, Stournaras noted that caller overseas players are entering the Greek market. After Italy’s UniCredit, which acquired a 26% stake successful Alpha Bank, the UK-based fintech Revolut is expected to grow into Greece. He urged Greek banks to little involvement rates, predicting that Revolut would win portion of the home market.

Inflation pressures and inequality

While maturation indicators are positive, Stournaras acknowledged persistent difficulties for galore households. Inflation in Greece remains higher than the eurozone mean and its projected to deed of 3.1% for 2025, while gradually falling to 2.6% successful 2026 and 2.4% successful 2027. The cardinal banker stressed the request for targeted authorities support for the astir vulnerable of its citizens.

Stournaras besides talked up Greece’s advancement successful reducing public debt over the past fewer years. According to the BoG politician the debt-to-GDP ratio is shrinking by ten percent points annually—an accomplishment helium described arsenic the country’s astir important success successful caller years.

He cautioned, however, that repeating past mistakes—such arsenic distributing one-off handouts—could reverse advancement and instrumentality Greece to conditions akin to the 2010 indebtedness crisis. Instead, helium advocated for reforms and redistribution done income tax argumentation alternatively than cuts to value-added tax.

Productivity and wages

The politician underlined that sustainable wage maturation indispensable travel improvements successful productivity. “If we summation wages by 30% tomorrow, we will spell bankrupt,” helium said, explaining that productivity comes from reforms and investment. Greece, helium added, has seen a 60% emergence successful investment, with the vast bulk directed into productive sectors.

Addressing the contented of the minimum wage, Stournaras noted that successful each countries it is shaped by state intervention, but clarified that governments bash not find mean wages, which are driven by marketplace and productivity dynamics.