Greece is making less use of both its young and its elderly population than other developed economies, despite facing the strongest pressures in terms of demographic aging.

Only one in 10 retirees continues to work, in a labor market that also records almost 20% youth unemployment. Similarly, women’s participation in the labor force is also high, at 11% compared to 6.5% in the eurozone.

With the exception of manual labor sectors, which require a level of fitness that older workers cannot provide, half of OECD countries offer incentives to extend the retirement age in a range of occupations that support growth rates. But Greece – along with Belgium, Luxembourg and Turkey – is among the economies where bonuses for voluntary extension of retirement from the labor market “are low or nonexistent,” according to the OECD.

Just one in 10 retirees combines a work relationship with their pensionable earnings in Greece, which is among the 10 countries where those working beyond the statutory retirement age continue to pay pension contributions; this practice is interpreted as a de facto tax on the work of retirees. 

Greece and Spain apply a supplementary contribution of 10% and 9% on earnings, respectively, which does not in itself lead to a higher pension. In contrast, countries such as the Czech Republic have strengthened the incentive by exempting working pensioners from the obligation to pay pension contributions, while maintaining the corresponding employer contribution unchanged. The low level of wages in Greece potentially acts as another disincentive that leads to low rewards and, by extension, limited employment of its pensioners, at least compared to international data.

The limited involvement of pensioners in the labor market, despite the increase in life expectancy and despite all the increasing labor shortages due to population decline, is recorded in an economy that at the same time does not utilize almost 20% of its young people. In particular, unemployment among young people under 25 in Greece stands at 18.8% compared to 14.4% in the eurozone. Unemployment among women is 10.9% compared to just 6.5% in the eurozone.

These human resources in Greece remain practically untapped amid the country’s unfavorable demographic projections.