As we approach 2025, changes in the minimum wage and salary increases for public and private sector employees in Greece are taking shape. The Greek government has announced plans for an increase of up to 5% in salaries, with an emphasis on supporting workers amid ongoing economic challenges. Here’s a breakdown of the key developments.
Government Plan: Salary Increases Up to 5% in 2025
The Greek government aims to implement salary increases of 4.5%-5% for public sector workers and raise the minimum wage in the private sector. This increase is part of the upcoming announcements by Prime Minister Kyriakos Mitsotakis and is a response to the pressures faced by employees due to rising living costs. Additionally, changes to the institutional framework are expected to strengthen collective bargaining at a sectoral level.
Public Sector Salary Increases in 2025
Public sector salaries are set to see a 4.5%-5% increase in 2025. The entry-level wages across various categories will be adjusted as follows:
- Category YE: From €850 to €892.5
- Category DE: From €928 to €974
- Category TE: From €1,107 to €1,162
- Category PE: From €1,162 to €1,220
These changes reflect the government’s effort to alleviate the impact of inflation and cost of living increases.
Minimum Wage in the Private Sector: Gradual Increase to €950 by 2027
For private-sector workers, the minimum wage is expected to rise by approximately 4.5% in 2025, reaching around €867.35. The government has committed to a target of €950 by 2027, with a focus on increasing purchasing power, improving overall gross earnings, and boosting productivity. The minimum wage will be determined based on four key factors: purchasing power, general gross earnings, growth rate, and labor productivity.
Taxation Impact on the Minimum Wage
Despite the positive outlook on wage increases, a rise in income tax withholding might affect the net benefits. For instance, the planned increase for the minimum wage from €830 to €870 in 2025 will subject workers to a 22% tax rate, significantly higher than the previous rates of 0% or 9%. This change means that the net increase will be less than the gross wage rise, with workers seeing a net increase of €23 instead of the full €40.
Average Salary Projections: Towards €1,500 by 2027
The government’s medium-term goal includes a gradual increase of the average salary to €1,500 by 2027, requiring annual increments of around 5%. To meet this target, measures are being explored to enhance collective bargaining agreements and increase coverage from the current 25%-30% to closer to the European Union’s goal of 80%.
An Ongoing Struggle Against Inflation
While the proposed 4.3%-5% wage increase offers some respite, it may not fully counter the rising cost of living. Experts suggest that a significant driver of wage growth will be the strengthening of collective agreements and the shortage of skilled labor, pushing companies to offer more competitive salaries.
Future Developments: Legislative Reforms and Collective Agreements
The Ministry of Labor is studying potential reforms to collective bargaining, aiming to increase the percentage of workers covered by these agreements. These initiatives, along with the integration of the European directive on “decent minimum wages” into Greek law by November, will play a crucial role in shaping wage policies in the coming years.