Greece spends €1 billion a 12 months on pro-child insurance policies

It has one of the lowest fertilities in the region—at par with other countries peeved by the same issue, like China and Japan—which the Greek prime minister has called a “ticking time bomb.”

Birth rates in the country have consistently declined year after year, with 2022 marking a near-century lowest.

The government is now taking action to avert a possible demographic decline as the economy ages and the need for labor grows. 

Last week, Greece announced a suite of measures to help lift its birth rate through additional childcare benefits and tax breaks for parents. 

The European country spends €1 billion a year on promoting childbirth, Reuters reported, and already offers incentives such as maternity benefits and allowances on baby items. The new measures are part of the government’s plans to raise birth rates. 

But efforts to encourage people to have more children will be in vain without economic boosts that go hand-in-hand with it, as Greece is the European Union’s second poorest country. So the country also announced a rise in pensions and minimum wage from next year.

A combination of social and economic factors explains Greece’s predicament. About two decades ago, an economic tailspin plunged the country into deep debt and austerity, dwarfing Greeks’ employment prospects and leading to their emigration for better opportunities abroad. While Greece has seen its population ebb and flow through wars, it lost its most skilled talent during the financial crisis. These have created far-reaching effects, including the country’s labor shortage and the ongoing demographic decline.

The Greek economy is in a better place today, having grown 2% in 2023; however, is still significantly smaller than in 2007. Challenges like high unemployment and inflation continue to impact the decision to start and grow families. An aging population could further pressure its economy, which already has a high debt burden.

It can be hard to break out of a trend intrinsically tied to people’s way of life.

But at least Greece shares its headaches with other countries such as Italy. Russia is facing a demographic decline, too, albeit for different reasons triggered by its Ukraine invasion. 

Hungary is facing a similar conundrum. It’s offering loans of €30,000 as well as subsidies to people in the hope that they will consider growing their families. 

Ultimately, reversing the social fabric in countries doesn’t happen in isolation—it’ll need economic and financial policies to be in lockstep.