Greece is making significant progress in reducing non-salary costs, nearing the European and OECD averages with a one percentage point reduction in social security contributions starting in 2025. International organizations have long warned about high non-salary costs deterring investments and impacting worker income.
With a further half-point reduction in 2027, the total burden on employers and employees will have decreased by 5.9 percentage points since 2019, bringing Greece closer to the OECD and European average tax wedge of social security at 34.5%. This move is lauded by employer organizations and economists for its potential to boost employment incentives, increase net income, stimulate investment, and enhance economic competitiveness.
Research indicates that every two percentage point reduction in contributions can lead to a 1.5% increase in workforce participation, potentially bringing in 100,000 new workers. Bank of Greece Governor Yannis Stournaras emphasizes the necessity of reducing contributions to support business competitiveness and job preservation amidst a 4.4% wage bill increase projected for 2024.