Why Greek people do not save
Savings in Greece have collapsed since 2002, especially private savings – i.e. by households and businesses – Eurobank argues in a special study on “Savings in Greece – Why We Don’t Save,” which was presented on Monday, with a deterioration of the savings rate observed in the five-year period 2018-2022.
Therefore households with two adults and children show negative savings (by -2,159 euros), while the average annual savings for the entire population amounts to €1,076.
The average annual savings of pensioners amount to €2,248, of workers in general to €410, of employees to €542 and of the self-employed to €63. The self-employed have the lowest and almost zero savings rate relative to their disposable income, while retirees are the category with the highest savings rate. Rates vary significantly by income scale and are negative for four out of 10 households in the sample.
The reasons for the low level of savings in the last 20 years are not only the decrease in disposable income; they are also linked to structural features of the Greek economy such as parents’ handouts, which are much more widespread in Greece than in other countries and have negative consequences on savings, as the younger generations are not motivated to save.
The very high rate of self-employment in the Greek economy is also negatively associated with saving to the extent that tax evasion is more extensive among the self-employed.
The main reason is also the huge burden on households, especially after 2010, with housing costs compared to other eurozone countries which make saving extremely difficult. After the financial crisis of the 2010s, the percentage of overburdened households remained almost unchanged in the rest of the countries, close to 9%, while in Greece it jumped to 37%.
The reasons also include the high income replacement rate provided by the pension system in Greece in the past, which has changed in recent years and is expected to positively affect household savings.
