Greece is facing growing debate over the potential reinstatement of the 13th and 14th monthly salaries for public sector employees, a practice that was suspended during the financial crisis. The move is estimated to cost approximately €3 billion annually, including employer contributions, raising serious concerns about its impact on the country’s fiscal stability. The issue is set to be reviewed in June by Greece’s Council of State, the nation’s supreme administrative court, with its ruling expected to significantly influence future economic policies.
The restoration of these additional payments could put substantial pressure on Greece’s state budget, particularly the net expenditure index, which is directly linked to the country’s commitments under the European Union’s new Stability Pact. Without offsetting measures, this development could push Greece into an excessive deficit procedure, forcing the government to implement further fiscal adjustments to stay within EU requirements.
To finance the additional spending, officials are exploring possible compensatory measures. These include sharp increases in the ENFIA property tax, which would heavily impact homeowners, or a hike in the standard VAT rate by at least two percentage points. Both options risk fueling inflation and disproportionately burdening lower-income households.
Adding to the complexity is the existing wage disparity between Greece’s public and private sectors. Currently, entry-level salaries for public employees stand at €850 per month, exceeding the private sector minimum wage of €830. Plans to raise the private sector minimum wage to €950 by 2027, along with proportional increases for public employees, could further strain government finances. Initial estimates suggest the adjustments may result in an additional €100 gross increase to base public sector salaries.
The possibility of reinstating the 13th and 14th salaries underscores a delicate balancing act for Greece’s government as it seeks to address public sector demands while maintaining fiscal discipline. The Council of State’s decision will be critical in determining the next steps. If the court rules in favor of reinstatement, the government will face significant pressure to overhaul its public sector wage policy to ensure economic sustainability and adherence to EU fiscal rules.
