Greece is rolling out a significant €1.6 billion relief package, featuring tax breaks and financial incentives, to address its alarming population decline. The government aims to reverse the trend of low fertility rates and an aging population, which threatens to make Greece the oldest nation in Europe.
Key Takeaways
- Greece introduces a €1.6 billion package to tackle population decline.
- Measures include tax reductions and financial incentives for families.
- The initiative aims to boost Greece’s low fertility rate of 1.4 children per woman.
- The country faces a projected population drop to under 8 million by 2050.
A Nation Facing an Existential Threat
Prime Minister Kyriakos Mitsotakis described the demographic crisis as one of the most significant challenges facing the Mediterranean nation. He emphasized the state’s role in supporting citizens who choose to have children, noting the disparity in the cost of living for families with multiple children.
"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," Mitsotakis stated. "So, as a state we should find a way to reward our citizens who make the choice [of having children]."
Comprehensive Relief Measures
The newly announced policies, set to be implemented in 2026, represent what Mitsotakis called the boldest tax reform in Greece in over half a century. Key measures include a 2 percentage point reduction across all tax brackets and a zero tax rate for low-income families with four children. Additionally, tax obligations will be waived for residents in rural settlements with fewer than 1,500 inhabitants, a move intended to encourage people to move to the countryside.
These initiatives build upon previous efforts by the center-right government. Despite earlier measures like a "baby bonus" that has seen subsidies increase for subsequent children, these policies have had limited impact amidst soaring living costs and low wages. The education ministry recently announced the closure of over 700 schools due to a lack of pupils.
Economic and Social Ramifications
Greece’s fertility rate, currently at 1.4 children per woman, is well below the replacement level of 2.1. Projections indicate the population could fall from 10.2 million to under 8 million by 2050, with 36% of the population expected to be over 65. This demographic shift poses significant risks to the pension and health systems, labor markets, and national security, particularly during a period of geopolitical uncertainty.
The country’s decade-long economic crisis is widely cited as a major contributor to the declining birth rates, as austerity measures disproportionately affected younger generations, leading to an exodus of over 500,000 Greeks seeking work abroad. The government is now focused on reversing this brain drain and encouraging citizens to return.
Addressing Housing and Future Prospects
In addition to tax reforms, the government plans to increase pensions and affordable housing by developing properties on abandoned military sites. The high cost of housing in urban areas is a significant deterrent for young Greeks, many of whom remain living with their parents into their thirties, further impacting decisions about starting families. The scrapping of real estate taxes in remote areas is intended to make rural living more attractive.
International bodies, including The Lancet, have highlighted the complex public health challenges Greece faces due to its demographic changes, suggesting the Greek experience offers valuable lessons for other nations grappling with similar issues.
