Lighter social security load next year
The government has decided to further lighten the burden of social security contributions on both employers and employees by 1 percentage point of salaries, but has not yet decided exactly how.
Contributions will be cut by half a percentage point in 2025 and another half in 2027. The first cut would be the overall share of salaries spent on contributions from 36.16% currently to 35.66%.
Government officials are thinking of having the first cut benefit exclusively the employers, reducing their contributions to 21.79% of the labor cost from the current 21.79%. Still, that would leave Greece with one of the highest so-called “tax wedges” in the EU, which measures the way the tax burden on total labor cost discourages employment.
The logic behind this plan is that expected wage increases in the private sector would increase the burden on employers and therefore hurt hirings.
There is also debate among government officials whether it would be fiscally prudent to move up the next round of social security contribution cuts from 2027.
After the contribution cuts, they will have been cut by a total of 5.4 percentage points under the New Democracy government.
