Fresh contributions reduction

Social security costs could be slashed by further 0.6 percentage points, official indicates

Fresh contributions reduction

The government is planning a further reduction on social security contributions by at least 0.6 percentage points within 2023. Speaking to Kathimerini, Deputy Minister of Labor and Social Affairs Panos Tsakloglou also left open the possibility of an even greater reduction, if the fiscal conditions allow it.

According to the deputy minister, the government’s commitment to reduce the so-called “tax wedge” would have already been completed – with a reduction on the burden to both employers and employees by a total of 5 percentage points – were it not for the recent crises of the pandemic and the energy hikes.

Even so, the government official leaves open the possibility of a further reduction of contributions to salaried employment within 2023, by the margin left until the target from the already implemented reduction by 4.4 percentage points. “The reduction of contributions is a policy which, based on studies, works particularly encouragingly in the creation of employment,” he argues.

As for the reactions to the decision to increase contributions to professionals by 9.6% as of January, Tsakloglou clarifies that in a redistributive social security system like the Greek one, if the increase in pensions is not combined with an increase in contributions, then the share of government funding and consequently the social security deficit will be excessively inflated.

The deputy minister of labor clarifies that if all the already ratified interventions are implemented, then within the next four years no new structural interventions in the insurance system will be required.

Tsakloglou also addresses speculation regarding the retroactive refund of the cuts imposed during the bailout period on supplementary pensions and holiday handouts and benefits. He clarifies on the one hand that the necessary fiscal space does not exist and, on the other, that specific sectors, such as pensions, should not be supported at the expense of others, such as for example education, healthcare and social security.

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