Germany appears to be following Greece’s example in taxing working retirees. According to a Financial Times report, Chancellor Friedrich Merz’s government is preparing legislation that would provide German workers who choose to continue working after retirement age with a tax-free allowance of €2,000 on their monthly income. The German government’s goal, according to the FT, is to address the skilled labor shortage in Europe’s largest economy by increasing tax incentives for staying in the workforce. The measure, which is one of Merz’s campaign promises, is estimated to cost €890 million and is expected to take effect from early January.
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Working retirees: Over 250,000 registered in Greece
The FT notes that Germany is not the first country to implement such initiatives, pointing out that in Greece the number of registered working retirees has increased from 35,000 in 2023 to more than 250,000 now. It should be noted that previously, working retirees automatically lost 30% of their pension (the Katrougkalos law even provided for a 60% deduction). Thanks to reforms implemented two years ago, they now receive their full pension with only 10% of their salary withheld as a contributory resource for the social security fund EFKA. Moreover, through their work they can increase their pension by extending their insurance record. This approach has legitimized a significant part of the labor market, as the deductions previously imposed led the vast majority of working retirees into undeclared employment without any other benefit.
Do it (again) like Greece
This is not the first “similarity” between the German government’s program and the reforms implemented in Greece over the past six years. The Merz government has placed great emphasis on state digitalization, establishing a new, separate ministry. The coalition agreement in Berlin also includes, among other things, electronic recording of working hours, reminiscent of Greece’s digital work card, and tax exemption for overtime premiums, something already implemented in our country.
