Wage Growth in Greece Lags Inflation Despite Economic Expansion

Average wages in Greece rose far less than expected in 2025, according to the annual ERGANI employment report, undershooting projections by the Bank of Greece and leaving workers with diminished purchasing power.

The central bank’s June 2025 Monetary Policy Report forecast wage growth of 5.5% for the year, later revised to 4.5% in December. However, ERGANI data show the average monthly wage increased only to 1,362 euros in 2025 from 1,342 euros in 2024 — a rise of just 1.5%. With inflation running at 2.9%, real incomes declined.

The report’s headline figure of a 4.56% rise in gross monthly earnings reflects total payroll growth rather than true wage increases. Total earnings rose largely because employment expanded by about 80,000 workers year-on-year. Dividing total payroll by the number of employees yields a more accurate average wage increase of just 1.53%.

The result also falls well short of the Bank of Greece’s estimate of a 1,403 euros average wage for 2025, making the government’s goal of reaching a 1,500 euros average salary by 2027 increasingly difficult. Notably, wage earners saw little benefit from Greece’s roughly 2% economic growth, as incomes failed even to keep pace with inflation.

Household consumption increased in 2025, but largely due to higher prices rather than improved incomes, with savings falling by 3.1% as households dipped into reserves while real disposable income declined.

Pensioners face similar pressure: pensions will rise by 2.4% from January 2026, again below inflation. The indexation formula — combining half inflation and half growth — has consistently produced sub-inflation increases in recent years, when price rises exceeded economic expansion.

Meanwhile, unemployment fell to 7.5% in December 2025 from 8.1% a month earlier, yet total employment also dropped, from 4.396 million to 4.377 million people. The improvement reflects a shrinking labour force, with roughly 50,000 individuals moving into economic inactivity rather than finding work.

Source: tovima.com