Greece has announced drastic measures, including tax breaks and other financial incentives, to address a population decline that is on course to make it the oldest nation in Europe.
The prime minister said the €1.6bn (£1.4bn) relief package had been dictated by one of the biggest challenges facing the Mediterranean nation : a demographic crisis of unprecedented scale.
“We know that the cost of living is one thing if you don’t have a child and another if you have two or three children,” Kyriakos Mitsotakis said on Sunday after announcing the policies. “So, as a state we should find a way to reward our citizens who make the choice [of having children].”
The measures, which range from a 2 percentage point reduction for all tax brackets to a zero rate for low-income families with four children, will be rolled out in 2026, said Mitsotakis. He called the package the boldest tax reform enforced in Greece in more than 50 years.
The policies build on other initiatives by the centre-right government to tackle the issue.
With fertility rates in Greece among the lowest in Europe – at 1.4 children a woman, the reproduction rate is well below the replacement level of 2.1 – Mitsotakis has called the problem a “national threat”.
The Greek population is on course to fall from the current 10.2 million to well under 8 million by 2050, when 36% will be above the age of 65, according to Eurostat.
Acknowledging the decline had assumed existential proportions, finance minister Kyriakos Pierrakakis said fertility rates had halved since the start of the country’s economic crisis 15 years ago.
“Our taxation reform will give great emphasis to this problem … as head of the economic team, I’d say our top priority is the demographic issue,” he said.
Greece’s near decade-long crisis has been widely blamed for the alarming drop. This is partly because younger people were among those hardest hit by austerity measures required in return for international rescue funds that kept bankruptcy at bay and debt-stricken Athens in the EU.
More than 500,000 Greeks left the country in search of work during the crisis, an exodus of mostly young and talented citizens the government is trying to reverse.
The latest measures, which include dropping tax obligations for those living in rural settlements with fewer than 1,500 residents, will be funded with money from the fiscal surplus as the economy has recovered.
Officials say falling fertility rates are putting the pension and health systems, as well as labour markets and national security, at unprecedented risk at a time of geopolitical uncertainty.
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Sounding the alarm, the British medical journal, the Lancet, said demographic change of such radical proportions posed an inherent threat to the country’s health system, along with socioeconomic pressures and the unpredictability of the climate crisis. “Greece faces a complex array of public health challenges driven by demographic change,” it said in a study released last week. “The Greek case offers valuable lessons for other countries confronting similar pressures.”
In 2020 – a year after first winning office – the Mitsotakis government unveiled a baby bonus to encourage childbirth. The subsidy has since risen from €1,700 for a first child to €3,500 for a fourth in addition to a monthly stipend of up to €140 per child.
But as the cost of living also soars in a country with some of the lowest wages in the EU, the policies appear to have had little effect. Greece’s education ministry announced this month that it had closed more than 700 schools nationwide citing a lack of pupils.
With his government’s popularity dented by corruption claims and cost of living concerns, Mitsotakis vowed to increase pensions and affordable housing by constructing properties on abandoned military facilities.
A real estate tax in remote areas will also be scrapped to encourage young people to move to the countryside, where prices are often a far cry from those in cities. Unaffordable housing is such that younger Greeks frequently complain they are forced to live with their parents into their 30s – another reason raised for the lack of interest in having children.
