ECONOMY

Contributions cut to make more sense

Contributions cut to make more sense

High non-salary costs in Greece work against any significant increase in the minimum wage, which all social partners agree has remained low.

Therefore a small increase in the minimum wage, by 2% come May 1, would lead to a 5% rise in net takings if combined with a reduction of employees’ social security contributions by 2.5 percentage points.

In its final proposal on the second minimum wage increase this year, starting in early May, the Foundation for Economic and Industrial Research (IOBE) says that in order to achieve speedier and more sustainable economic growth, it would be better to utilize any fiscal space available for the reduction of non-salary costs, especially concerning the taxation of labor and the social security contributions, with permanent measures.

IOBE estimates that this would make a difference to household incomes, improving the purchasing power of those on low incomes and offering incentives for declared employment.

In its report in the context of the consultation process, IOBE highlighted that Greece has the fifth highest sum of social security contributions by employers and employees in the European Union.