Greece’s labor market is facing a deepening paradox: wages are rising, non-wage costs remain high, overall labor costs are climbing sharply — yet productivity is stagnant. This imbalance is inflating the cost of labor per unit of output, posing a major threat to competitiveness in a fragile international environment.
Labor Costs Surge Above Eurozone Average
According to Eurostat, Greece’s labor costs rose 10.1% year-on-year in the second quarter of 2025, compared with just 3.6% in the Eurozone overall. The sharpest wage increases across the EU were seen in Bulgaria (+13.4%) and Hungary (+11%). Romania (+10.4%) and Estonia (+10.3%) also recorded double-digit growth. In contrast, the smallest increases were in France (+1.4%), Denmark (+1.5%), and Malta (+1.9%).
Productivity Stagnation
Despite the rising costs, Greece’s National Productivity Council reported only marginal productivity gains: up 0.3% per hour worked and about 1% per employee. This means labor costs are rising far faster than productivity. In practical terms, every unit of goods or services produced in Greece costs more to make, without any corresponding increase in value.
Business Pressures
For companies, the equation is difficult. They need staff and must offer higher wages, but social security contributions and taxes push non-wage costs higher, discouraging hiring. Without matching productivity growth, businesses are left with two choices: raise prices or curb investment. Both options carry risks—reduced competitiveness in the first case, and limited modernization and growth in the second.
Workers’ Reality
For employees, wage hikes have not translated into a better standard of living. The government aims to lift the minimum wage to €950 by 2027, but inflation, housing costs, and taxes erode much of the increase. Many workers feel salary improvements are insufficient to cover basic needs.
European Comparisons
In Germany, wage increases are supported by strong productivity growth, driven by investment in technology and training. In Spain, the experiment with shorter workweeks is being carefully monitored for efficiency gains. Greece, by contrast, remains a country of long working hours but weak productivity. The gap with the EU average persists: while EU-wide productivity per hour grew 0.4% in 2024, Greece’s growth was nearly flat.
Source: OT
