Speaking about the “largest tax reduction implemented since the restoration of democracy, with a very coherent logic in relation to the challenge we face ahead,” Finance Minister Kyriakos Pierrakakis addressed the conference “Demographics and Greece 2040: Family, economy, modern lifestyle” organized today by “Eleftheros Typos.” The core of our policy is removing obstacles for families and young people, the minister noted, among other things.
Kyriakos Pierrakakis on demographics: “For the first time post-war, the population has declined”
“Ladies and gentlemen, good day.
Given what the Prime Minister mentioned earlier, I take the baton to emphasize some of those points he stressed, while also seeking to place them in a broader historical context for both our country and Europe.
Starting with the obvious observation that demographics constitute an existential challenge for our country. The truth is there are problems, issues, challenges that we struggle to perceive in space and time as they emerge before us, precisely due to their evolution mechanism. Whether it’s the climate crisis, the debt crisis and how debt accumulates over time with its consequences catching up later, or demographics – these problems and challenges unfold, but their impacts are felt in the field.
One need only examine demographic projection studies to realize that Greece is already facing this challenge. For the first time post-war, the population has declined. In Europe more broadly, I would say we face this challenge.
As the Prime Minister said earlier, and previous speakers mentioned, no European country has population replacement – we don’t have the replacement rate, we’re not at 2-2.1 children per couple. All countries are below this number. The best demographics might belong to countries like France, possibly Romania and Bulgaria in some years, certainly not us. But all are below 2 anyway.
This alone reflects that Europe broadly could be described not simply as an Old Continent, but an Aging Continent. This is a broader challenge, not only because population decline itself is problematic, but because the impacts touch all policy aspects – economic policy, education, healthcare system challenges and pressures, or pensions. States must respond to these challenges and impacts. What we seek to do is precisely demonstrate this dimension, this degree of response.
I recall demographic studies from my time at diaNEOsis projecting population scenarios suggesting we’ll reach 8.5 million people by 2050. This alone reflects that the problem lies ahead.
Already, correlating this with economic studies – looking at the 20th century, countries with very high growth rates were those with increases in economically active population. Greece has decreases in both economically active and total population. So this is a very significant challenge.
Measures to address the demographic crisis
The Prime Minister mentioned earlier our complete economic choices regarding demographics, and I think you noticed that for the first time at the Thessaloniki International Fair, a coherent strategy with unified philosophy having demographics at its core was developed. It included all aspects discussed earlier:
– Zero tax in lower brackets for large families with four or more children. I should note that in other brackets, there’s a philosophy where the rate drops two units per child. So there’s proportionality for families with five, six, seven children. Simultaneously, because demographics isn’t solely about births – that’s dominant but not everything. It’s a set of things, parameters.
– You saw we announced ENFIA property tax elimination over two years in settlements under 1,500 residents, because the regional dimension is also dominant in the demographic equation.
– Similarly, we’re zeroing tax for new workers entering the job market in the lower bracket and reducing it for young people under 30. All this had and has very coherent logic. People still haven’t seen it implemented in practice, so they’ve understood the measure but will experience it from January.
This week we’re implementing measures announced as the economic team, as government, on Easter Tuesday: Supporting pensioners with 250 euros, returning one month’s rent to 80% of tenants. The measures announced at the Thessaloniki Fair, essentially constituting a tax reform for demographics and the middle class, will be implemented from early January.
Employees will see them as salary increases and in their bills. Self-employed will see them later, in tax settlements. It’s the largest tax reduction in post-democracy Greece with very coherent logic regarding our challenge.
Now, I’ll answer something I think is obvious to everyone. Does this tax reform solve the demographic problem? Absolutely not. No one could claim such a thing. But I think it would be completely paradoxical not to have a tax system that recognizes this problem, this challenge, especially when experiencing it in practice. A tax reform in Greece needed to be made – this was the Prime Minister’s decision, the economic team’s recommendation – that recognizes this existential challenge we face. This begins implementation – we’re presenting it now – the complete measures, the total logic of this tax reform in other European countries too. We find it receives very positive comments precisely because everyone experiences roughly the same problem at different scales. So we’ll see it implemented
We believe it’s a measure that will work and we believe this logic we’ll start metabolizing from January is logic we’ll continue. Precisely because the problem’s magnitude, the challenge’s scale, is very large.
Having said this, naturally one measure isn’t enough, one tax reform isn’t enough. Many things need doing. It’s important that a ministry was created with this targeting. It’s important that comprehensive policy exists.
The Parliament Speaker mentioned earlier that consensus must be sought, a special parliamentary committee must exist, to reactivate it. We’ve already implemented many of these measures. Nursery measures, necessary educational changes. Even when building school facilities, the country’s entire social welfare system – all these are puzzle pieces requiring state investment. Whether housing issues with programs like “My Home 1,” “My Home 2,” or measures like “Neighborhood Nannies,” or comprehensive family support and logic with better institutions aligning Greece with the broader European work-life balance framework. Like measures we’ve already incorporated into Greek institutional framework for years.
Many things happen simultaneously toward this direction to see improvement. Beyond that, however, there’s empirical observation – what does one observe? Countries with economic profiles and economic challenges like post-war Greece having high fertility networks. And very developed countries with very good economies having very low fertility networks. Because it’s also logic of culture, lifestyle, perception of how the family institution should function relative to each family’s self-expectations.
What must we do as a State, us and other European states? Basically, remove all obstacles we can. That is, facilitate young couples to easily decide to have another child. That’s why we focus on all these parameters. From making the tax system more flexible and family-friendly, making taxation more friendly to young people entering the job market, to having free nurseries with full coverage throughout Greece – and I’d say throughout Europe generally. All this is on track to happen and improves yearly.
Beyond that, however, we fully understand we must do many other things to improve this equation. I mentioned earlier the problem is pan-European. We certainly need positive economic momentum, precisely because – seeing what’s ahead – we have two economic challenges. One frequently written about is the Recovery Fund’s end, which will challenge all Europe. Greece has 2.4% growth rate in the 2026 Budget forecast. The added value of the tax reform announced by the Prime Minister at the Thessaloniki Fair is 0.6% of that 2.4%.
On the Recovery Fund and investments
Another part concerns the Recovery Fund, as mentioned. Greek investments have increased recently. We took them somewhere to 11% in investment-to-GDP terms in 2019. The ’26 budget forecasts 17.7% – we’re doing well. We remain below the European average. So one challenge will be titled “After the Recovery Fund, what?” The second challenge relates to population decline and the demographic challenge we see ahead regarding growth rate projections for coming years. Us and other European countries. I add a third challenge of international uncertainty. Challenges intensify. I say this in a context where, for example, in Berlin where I was yesterday and the day before, Greece is treated as a country with strong success characteristics in both economic and reform policy with growth rates well above the European average.
So there’s a sense we’re doing well internationally. Of course we can do better. Of course we fully know there are bets not yet won that must be won and fellow citizens who need more support. Precisely because challenges for them and their families are large. But beyond that, no one can remove the success characterization from recent years’ trajectory, which is basically a success of the Greek people overall, after a decade of economic crises that we now see other European states experiencing and called to answer. Because, as the Prime Minister said, in our case there’s fiscal space for additional policies. In other European countries currently, there are difficulties passing budgets through parliaments. Precisely because these budgets have strong austerity character. I’d tell you in much lighter versions, they experience dilemmas like those we experienced in very harsh versions during the difficult crisis decade.
However, despite all this, challenges are ahead and the only way to answer them is a very specific idea of what Greece we want, how our country’s economic development model should continue transforming to counterbalance negative global economic winds and internal challenges. One part involves broader European strategy removing obstacles between EU member states – what Europe “codedly” calls the Draghi Report.
Basically, however, the fundamental challenge is productivity. As we create committees, institutions, strategies for the demographic issue part of our country, our country’s demographic challenge. Correspondingly, as we increase our exports as an economy, increase our investments as an economy, produce surpluses, de-escalate our debt and yes, unemployment is at its lowest point since 2008.
Simultaneously we must understand that productivity is at the demographic equation’s core and there it’s mandatory to implement strategies that increase it. Both regarding the entire economy and each targeted enterprise. This is for me and us the fundamental added value we can have as an economic team in coming years. This is the other major parallel question we must answer along with purely demographic challenges, given that indeed the problem is ahead.
I think from the complete strategies, policies, choices you’ve seen made by this government in recent years: first, we know how to pose the right questions. Second, we know how to continuously improve ourselves where needed and required. Third, we know very well what we must do to continue converging with the European average. Because ultimately in 2019 at income level in PPP (Purchasing Power Parity) terms, we were at 62% of the European average income and today we’re at 70%.
We’ve improved ourselves, but we’re still not where we want and can be, and I assure you we can.
Thank you very much“.
