July 2019

Greece’s Declining Population

While most people would be aware that Greece has experienced significant economic upheaval, with total GDP declining from US$280 Bn in 2008 to US$208 Bn in 2018 it is probably less well known that the population has also experienced considerable change.

Specifically, while the birth rate has now stabilised, it has declined from 2008 levels and as a result increasing number of deaths (as a result of an ageing population) exceed births by 35,000 persons per annum – increasing to 59,000 per annum by 2028. The population’s aggregate natural change over the next decade is projected to be a reduction of 485,000 persons – on a total population in 2018 of 11.06 million.

In addition with a significant decline in Fixed Capital Investment and resulting impact on work opportunities there has been a consistent level of emigration of 20,000 per annum since 2010 – which if it continues at a slightly slower rate through to 2028 as the economy (hopefully) picks up, that adds a further reduction of 189,000 persons. Consequently, the population of Greece is expected to decline by 674,000 in the next decade to 10.4 million.

On the bright side, provided Fixed Capital Investment increases modestly to 19% of GDP (it is 14% in 2018) then the well-educated (remaining) workforce will lift productivity quickly and be back to 2008 levels by 2028.

Prior to 2008 Greece had a socio-economic profile which generally looked good for the future well being of its population.


·      It had a workforce participation rate of 42% of population ( 74% of males aged 15 to 64 years – the core working age band -  and  47% for females) which was also close to the average rate for 28 countries in the European Union

·      Its working age population was well educated and certainly competitive with most countries in the world and the European Union.  A reported 52% had upper secondary or better education.

·      Productivity per worker was US$58,656 which was lower than other countries in the European Union but which was also reflected in lower wages making it competitive – especially if investment could be encouraged to lift the productivity of the worker

Then the 2008 financial crisis took place and the economy of Greece got into significant trouble – which was not solved internally, and a solution was imposed by the European Union/ECB in 2017.

Unfortunately, that difficult economic period resulted in significant unemployment and that in turn would appear to have driven emigration.  That is not surprising, in that under European Union rules a worker of any one member country can easily move to another for work.  As shown below, the (presumably) more skilled left and went elsewhere in Europe (and in some cases beyond- e.g. Australia) for work and higher wages.

This trend in loss of working age (and family age) population was further aggravated by a change in the natural change of the population.  In 2010 the total number of births was for the first time less than total deaths.  The population was not sustaining its size naturally let alone losing from 2011 onward some 20,000 person per annum through net migration

The net result is that Greece’s total population declined from 11.446 million in 2010 (its peak) to 11.058 million by 2018 (latest published estimates).   Not a big loss – 3.4% in 8 years.  But it would appear to be the start of a continued decline in total population.  Should this be a concern?

Birth rates and death rates do not normally fluctuate suddenly so the trend in those is likely to continue through for the next decade.  However, in Greece, birth rates did drop after 2007 which is a normal reaction to a period of financial uncertainty.  In 2007 it had a birth rate of 43 births per thousand women of childbearing age (15 to 49 years).  By 2015 this had dropped to 37.4 and it has stayed at that level through to 2018.  It is expected that birth rates will stay at around that level or increase marginally to 2028 as that is quite a low rate by global standards.  Death rates are expected continue at their current level by age group (with an increasing death rate overall as a result of ageing population).  As a result of these two trends the gap between total births and total deaths increases from 35 thousand per annum in 2018 to 59 thousand per annum in 2028.  Collectively between 2018 and 2028 Greece can expect a loss of 485,000 persons as a result of deaths exceeding births.  This is summarised in Figure 1.

Figure 1: Historic and Medium-Term Population Trends for Greece.

Fig 1.jpg

It might be noted that the projected decline in total births is almost inevitable. It is difficult to suddenly change the propensity of a population to have a child.  Many countries have tried to increase their birth rate – to no avail.  The reality is that the key determinant of the decline in total births in Greece is rapid decline in the number of women of childbearing age.  In 2008 there were 2.76 million females aged 15 to 49 years.  By 2018 this had declined to 2.34 million – partially because of emigration (see below) and given the current age profile of females the number of such females in 10 years’ time will have declined further to 1.96 million.  This is shown in Figure 2.  The reader might note that while this is partially a function of emigration, it is nonetheless significantly impacted by the age profile of women who are alive today.  The 5 years old today will be 15 in 10 years’ time. 

This leads to the issue of emigration.  Given reported population figures, births and deaths, indications are that Greece lost around 20,000 persons per annum for the years 2015 to 2018.  It lost at a higher rate for the years back to 2011.

The concern here is this loss is biased to the more skilled members of the workforce which can find jobs in other more robust economies within the EU.  So it is not necessarily the unemployed that left but rather the skilled, as the overall prospects of the economy were not good.  Why did they move?

Figure 2: Implications for Greece’s Workforce to 2028

Fig 2.jpg

First, because they can.  Under European Commission rules an individual citizen of any EU country can live and work without a visa in any other EU country. 

Second, because it is attractive.  The average wage in Greece in 2010 was US$40,984 compared with US$63,494 for France, US$59,266 in Germany and US$57,824 in the UK.  In short by relocating with the European Union an individual could lift their take home pay by around 25%.  Tax effects may reduce that difference but that is not known.

Thirdly, they moved because there were clear signs that the Greek economy was stagnating.  Fixed Capital Investment, which is demonstratively important to creating employment and lifting productivity of the worker declined significantly in both absolute terms as well as a percentage of GDP after 2008.   Most countries spend around 25% of the previous year’s GDP on Fixed Capital Investment – and variance from that norm is generally constrained to a few years.

In Greece, Fixed Capital Investment as a percentage of total GDP declined from 24% in 2008 to 11.5% in 2014 and has increased marginally to 13.9% by 2018.  In absolute terms it declined from US$66.7 Bn to a low (in 2016) of 23.9 Bn.  This is significant as it means resources per worker are reduced over time as is employment opportunities (installing the infrastructure financed by this investment).

As it happens, the reduced Fixed Capital Investment has meant that total employment has dropped rather than productivity per worker.  Between 2008 and 2018 the total employed persons declined from 4.8 million to 3.96 million.  Over the same period the GDP per worker declined from US$57,876 to US$52,387.  In short those in work largely retained their income.  The economy took the route (probably unintentionally) of lower employment rather than lower incomes. 

Furthermore, it might be noted that while the unemployment statistics look bad, they would have been worse if there had not been 20,000 persons a year (mainly of working age) leaving the country.  Of the reduced number of jobs (from 4.8 million to 3.96 million – specifically minus 800,000) an estimated 25% (216,000 jobs) of that reduction was alleviated by persons leaving the country.

What of the future?  The natural decline in total population (births minus deaths) is going to continue and that is not a weakness despite many commentators claiming countries must maintain their total populations.  It is better to maintain living standards than person numbers.  For the next decade Greece will suffer a natural reduction of population of 485,000 persons.  By 2028 Greece will have 58,800 more deaths than births per annum.

Over the next decade even if emigration continues at a slower rate it is nonetheless estimated to total 189,000 persons over the next decade – biased to working age.  The emigration is expected to continue because of the high skill/education level of the Greek population and the wage differential between Greece and more affluent countries in the European Union.  The education/skill level enables them to pursue higher earning opportunities within the European Union.  It is to some extent ‘skill theft’ by the more affluent countries – but that is another discussion. The combined effect of negative natural population and estimated emigration is that by 2028 there will be a total reduction in the population of 674,000 persons (on a base of 11.058 million in 2018).  That is significant.  Particularly as it results in a reduced number of households and hence the potential value of the key asset of households.

What about economic outcomes?   This is very much a function of what happens to Fixed Capital Investment.  If that is increased back up to 25% over time (and assume 19% by 2028) then it is estimated that productivity per worker would lift significantly.  It is expected to reach US$62,106 in 2028 compared with US$38,232 in 2018 and US$71,009 in 2008.  (But note, this is still below that of the more affluent countries in the European Union and hence the forecast of continued emigration.)


Figure 3: Historic and Projected Fixed Capital Investment Rate, Accumulated Fixed Capital Investment per worker^ and GDP per worker.

Fig 3.jpg

The reason for a positive prognosis here is that it is Fixed Capital Investment that is the constraint on productivity.  The other key driver of worker productivity is education and Greece, already scores well internationally on that and it is widely ingrained in the population (i.e. over 50% of adults have upper secondary or better education, not just a select few).  Consequently, the ability of the economy to gain strength as a result of increased investment is good and while the natural decline in population will continue the emigration may well ameliorate.

^ Accumulated Fixed Capital Investment per worker is the sum of Fixed Capital Investment over the last 10 years depreciated at 10% per annum divided by the number of employed persons.  This is found to be a better indicator of productivity per worker than Fixed Capital Investment per annum.  It tends to follow education level of the workforce.

This Insight was prepared using our on-line database.

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