Contribution cut is put off
Gov’t finds it difficult to implement reduction of social security deductions from 2024
The further reduction of social security contributions is evolving into a difficult equation for the government, with the promise for further relief of non-salary costs being pushed to 2025.
The government’s intention to proceed with another reduction remains a given, with competent Labor Minister Adonis Georgiadis clarifying that the reduction of contributions by one percentage point has already been launched, in order to be implemented in at least two phases, in 2025 and 2027.
Addressing the 3rd Thessaloniki Metropolitan Summit, an Economist conference, Georgiadis initially referred to the intention to reduce contributions from early 2024, but then clarified that the special conditions in the domestic economy due to natural disasters and the available fiscal space will not allow the reduction to take place next year.
“The planning calls for this to be done in two stages, by half a percentage point in 2025 and another half in 2027,” he said. “Over the past four years we have reduced social security contributions by 4.4 percentage points, which made a significant contribution to the increase in employment by almost 300,000 people, but also to the reduction of the unemployment rate from 16.9% in July 2019 to 10.8% in July 2023,” Georgiadis noted.
In its pre-election program, ruling New Democracy provided for a reduction of an additional percentage point, with the aim of helping not only to ease the pressure on businesses, but also to increase the disposable income of employees, as the reductions will be shared both by employers’ contributions, currently amounting to 13.33% for main pensions, as well as those of employees, which amount to 6.67%.
Employers and employees also pay 3% each for supplementary social security, employers pay 4.55% for healthcare and employees pay 2.55%. Employers further pay 1.41% for combating unemployment and other labor purposes, to which employees contribute 1.65%.
In total, private sector contributions amount to 36.16%; if there is a reduction of one percentage point they will drop to 35.16%.
