OECD’s contribution leaders
Greeks pay far too much toward social security, while their salaries continue to lag
The Organization for Economic Cooperation and Development on Wednesday presented the paradox of the Greek social security system, and generally the distorted way of the country’s development in the last few decades, in its report on pensions (Pensions at a Glance 2023).
Greek workers and employers pay exorbitant contributions, 30% higher than the OECD average, the state continues to spend – despite the constant cuts of previous years – a significantly high percentage of 15.7% of gross domestic product on pensions, the low-paid pensioners receive benefits higher than average wages, and workers are paid 70% of the average salaries in the rest of the countries under consideration.
In fact, in a constantly changing environment, with the demographic problem once again at a global level, at the forefront of problems (after the shock of the financial crisis and its consequences, as recorded in the previous study), the OECD states explicitly that the retirement age limits will increase in all countries; just like Greece, they have linked the age of exiting the labor market with life expectancy.
Therefore, in Greece, the age of 62, which is the lower limit, alongside of course 40 years of insurance, will increase to 66. In fact, social security experts estimate that even the age of 67, which applies as a general limit for all the rest, will rise, by 2070, to 71 years.
According to the report, Greece ranks third in the chart of countries with the highest contributions for pensions (main and supplementary), as employers and employees pay 26% of their salary, compared to 18.2% that applies on average in the OECD countries. Only the Czech Republic with 28% and France with 27.8% are above Greece, in which, in fact, a new phase of tax reduction began in 2020.
As a result of this, but also of the particularly low salaries, the replacement rate of pensions, for people who were insured at 22 and retire after 40 years, is in Greece at 80.8% of salaries, while the average of OECD countries is 50.4%.
