BUSINESS

Live long to prosper from social security contributions

THANOS TSIROS

TAGS: Finance

Social security contributions are starting to make little financial sense, given that no long-term investment of 100,000 euros would be considered even vaguely attractive if it took 32-34 years to get amortized.

As things stand now, Greek workers would need to live to be 101 to get back the amount of contributions they paid over their working life.

People working for 25-30 years (some 10-15 years above the minimum pensionable period) will have to wait for up to 34 years after retirement at the age of 67 to get their investment back in monthly pensions, an unlikely prospect given that life expectancy in Greece is at 80-82 years.

The labor market has, as a result, resorted to the following: Soaring part-time employment with consent of employees; shrinking declared salaries to the minimum level allowed; and a reduction of the net profits of freelance professionals to the level of 586 euros per month, for the minimum monthly contribution of 158 euros.

The law introduced by former labor minister Giorgos Katrougalos basically punishes long-term employment and rewards minimum work effort in the name of the “welfare state,” offering employers and employees a huge incentive to stay off the books.

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