Can tax breaks create a baby boom? Athens hopes so
Declining birthrates and an exodus of young people have resulted in a hollowing out of Greek family life. Now the government is stepping in to encourage people to have children.
“We saw that everything was going to close, so we thought we had to do something,” says Konstantinos Dousikos, a softly spoken Orthodox priest whose parish is the mountain village of Fourna, in the central Greek region of Evrytania. With a median age of 57, Evrytania is officially the oldest region in the EU and Fourna is typical of the demographic crisis that is facing its towns and villages. With the kindergarten facing closure, the 52-year-old priest joined forces with a young schoolteacher to take radical action: offering families from across the country locally raised financial support to relocate. A year on, following the arrival of six new families, Fourna’s youngsters now number 18 and signs of life are trickling back to its steep, fir tree-lined streets. “It truly warms your heart to see children coming for mass on Sunday and running around and laughing in the square. We had missed that,” says Dousikos.
Fourna is not alone in its struggle – Greece is rapidly becoming one of Europe’s oldest countries amid a sharp drop in births and rising life expectancy. More than 700 of the country’s schools have closed this year because of dwindling pupil numbers. Many of these are in rural areas, where the sound of pensioners’ worry beads in otherwise silent cafés is far more common than that of children playing in the streets. After stern warnings by analysts of the implications for the nation, the centre-right government led by Kyriakos Mitsotakis is making an all-out push to encourage people to start families. After years of ad-hoc measures, the Greek prime minister brought out the big guns in September. Warning of the “demographic threat” faced by both Greece and Europe, Mitsotakis announced €1.6bn in tax breaks for young families.
From 2026, low-income families with four children will pay no income tax, while property tax will be abolished for villages of fewer than 1,500 residents. These measures build on a €2,400 “baby bonus” for a first child that rises to €3,500 for a fourth – and form part of a sweeping 10-year plan aimed at reviving family life across the country. Despite the evident ambition, experts warn that the task is Herculean. “Births in Greece have collapsed since the 1980s,” the head of the Laboratory for Demographic and Social Analysis at the University of Thessaly, Ifigeneia Kokkali, tells Monocle. This decline is reflected in the overall population, which is expected to drop from 10.4 million to 8.8 million by 2050, according to the Organisation for Economic Co-operation and Development (OECD) which has predicted that more than a third of Greece’s population will be over 65 by 2060.
“The demographic trend won’t change overnight,” says Domna Michailidou, the Greek minister for social cohesion and family, from her office in central Athens. In addition to the financial incentives, Michailidou, 37, who had her first child in April, cites a “holistic set of measures” aimed at boosting parenthood and family life. These include more childcare centres, a “neighbourhood babysitters” scheme offering up to €500 a month to local nannies and cheap housing loans for young Greeks.
Numbers behind the shifts in Greece’s demographics
At 1.3, the country’s fertility rate is among the lowest in the EU
Fewer than half as many Greek children are being born as in the 1950s
The population of Greek women of childbearing age fell by 450,000 between 2008 and 2022
Young Greeks leave their parents’ homes later than almost anywhere else in Europe – at an average age of 30.7, compared with the EU average of 26.2
Between 2010 and 2022, more than a million working-age people left Greece; of these, 60 per cent were aged between 25 and 44
But for many, the costs still outweigh the benefits. In a survey last year by independent think tank Dianeosis, six in 10 Greeks aged 25 to 39 said that financial difficulties were their biggest obstacle to starting a family. Housing costs are particularly steep in a country where wages are the third-lowest in the EU, after Bulgaria and Hungary. “I don’t even consider the bonus and state benefits,” says Vasiliki Fokou, a 32-year-old doctor who is working three jobs while waiting for a residency spot in child psychiatry. She cites the cost of living as her cohort’s biggest impediment to parenthood. Despite recent rises in the country’s minimum wage, Greeks pay some of the highest food and energy prices in the EU. “[The new incentives] are a help,” says Fokou. “But they wouldn’t convince me to have a child. It’s a big expense – clothes, nappies, schooling – and life is just so expensive.”
Analysts agree that cash alone won’t fix the problem. “Bonuses are a drop in the ocean,” says Aris Alexopoulos, the head of the OECD’s population dynamics centre, which is based in Crete. Alexopoulos says that lessons should be learnt from countries such as South Korea, which had one of the world’s lowest fertility rates but has recently reversed the trend. After years of failed cash incentives, Seoul instigated a policy overhaul that improved parents’ work-life balance and funded childcare costs and housing. Greece’s 10-year plan is on the right track, Alexopoulos says, but implementation – traditionally a weak spot in the country – will be crucial, requiring a transformation of the economic model and social support system. “It’s not just a birth crisis, it’s about the labour market too,” he adds. “We don’t have young people to work.” He advocates a shift towards the “silver economy”: tapping the skills of workers aged 50 and over to keep treasury coffers in good health.
While Greek policymakers brace for the financial needs of an ageing population, young adults are struggling with the realities of raising children. For many young Greeks, having a child is simply not a priority in the same way it was for their parents. Giorgos Matsoukas, a 44-year-old manager at a vehicle inspection centre, says that he never really thought about having children and then being child-free became a way of life. “I want to be able to do whatever I want and not sacrifice my lifestyle,” he says. “When I look at my friends who have families, it seems like a lot of hassle.”
As young Greeks postpone or even forego having children, the effects are most visible in rural villages such as Fourna, where ageing populations and youth migration have left formerly flourishing communities in decline. Fourna’s population withered after a wood-processing plant closed in the 1980s and it has lost two-thirds of its population since the 2021 census. Dousikos remembers when trucks loaded with felled trees rumbled from the forest to the plant and there were 26 children in his class at school. But his Facebook posts calling for new residents have triggered hundreds of enquiries. “We have a waiting list of 80 families and another 10 to 15 villages who want our advice,” says 31-year-old Panagiota Diamanti, Fourna’s sole schoolteacher.
The six new families who have moved to Fourna in the past year seem content, though they face new challenges. Christiana Papalevizopoulou and her family were forced to leave their home near Athens after their landlord decided to sell it. The 40-year-old moved with her husband and four children to Fourna in March and got married there in September – the village’s first wedding in 10 years. Papalevizopoulou has been touched by the generosity of locals, who bring her family fresh produce such as eggs and chestnuts. But life in the village is not entirely idyllic. Her husband is applying for a taxi licence but with no doctor in the area and the nearest hospital an hour away, healthcare worries persist.
Projects such as Fourna’s, that have strong local backing, are rare. The government is rolling out its own initiatives to encourage young families to move to rural Greece, though many details are still in the works. One scheme offers €10,000 for relocation to remote regions such as Evros, on the border with Turkey, where populations have thinned out massively in the past few decades. The aim is to extend that programme to more regions. “We want young couples to feel that the state does not leave them on their own but provides them with the tools to build their lives and families in the place they choose to settle,” says Michailidou.
Local support matters but Greece’s demographic crunch looms as an even bigger threat to the national economy. Without serious intervention, the country’s GDP could shrink by 15 per cent by 2050, according to the OECD. Lawmakers have already tried to shore up the labour force, passing controversial rules that allow six-day weeks and 13-hour workdays. But the measures may backfire: a recent survey found that seven in 10 young Greeks view long hours as a major deterrent to starting a family. Money and work pressures aren’t the only hurdles. “My generation has basically accepted that we’re not going to get a pension,” says 29-year-old Ioanna Marouga, who works in an escape room and lives with her parents. “Renting a place of your own is basically impossible – it’s crazily expensive.”
A widely discussed study this year by Kokkali made headlines for its blunt diagnosis: Greece won’t see more children unless living standards and working conditions improve. “The framework of life in Greece today seems to either push young people to emigrate or remain childless,” it noted. Addressing Greece’s demographic decline requires radical reform of deep-rooted social and economic problems. The new raft of incentives signals the government’s ambition, but longer-term planning and more-radical solutions must be on the table, otherwise the Greece of today might not be here in a generation’s time. For this ancient country, it’s an existential issue.
