Greece to offer ₹1.58 lakh 'baby bonus' to couples to increase birthrate

As the new year dawned, Maria Pardalakis was in the throes of labour. The clock had barely struck midnight when she delivered a healthy boy in a clinic on Crete.

With her son’s birth – the first in Greece this year – Pardalakis and her husband, Christos, became the first people eligible for a €2,000 (£1,700) government baby bonus. “It’s been a new year like no other, the best gift my wife could give me,” Christos enthused. “And, sure, the benefit will help – not just us, a lot of families.”

Athens’ centre-right government has been galvanised into action on the back of projections that Greece’s population of 10.7 million could shrink by a third in the next three decades unless declining birthrates are reversed. At current rates, by 2050, 36% of the population will be above the age of 65, according to Eurostat, a prospect with severe implications for the workforce and a social security system already under strain. In 1970 just 7% of the Greek population was in that age bracket.

“People might think this is an issue of national pride but it’s actually one of national preservation,” said Domna Michailidou, a former Cambridge University academic and the deputy minister of labour and social affairs, who has pushed for the bonus and other benefits for parents. “Given that high productivity rates are associated with young populations and not actively ageing ones, it’s also an economic growth priority. The picture becomes even more gloomy when compared with the difficult state of our pensions system.”

Greece is far from alone in facing such demographics. Declining birthrates in Spain, Italy and Cyprus have spurred fears of Europe’s north-south economic divide deepening, but Greece is also living with the impact of its troubled last decade.

Close to 500,000 people emigrated between 2010 and 2015, when unemployment rates nudged a record 28%. Many were young professionals now settled in more prosperous areas of the continent, plus the US, Canada and Australia. “Having 5% of our most educated population – people able to earn high incomes and of reproductive age – leave the country has further compounded everything,” said Michailidou.

Even before Greece’s great depression – during which it lost a quarter of its economic output – birthrates had fallen well below replacement level. When crisis hit and stringent cuts were imposed in return for international rescue funds to keep the country afloat and in the eurozone, the health budget fell by more than 40%. “The big drop in funding and the effect it had on medical services, especially on islands and in remote mountain areas, created a lot of insecurity in women,” said Dr Stefanos Chandakas, a gynaecologist whose NGO, Hope Genesis, focuses on providing free healthcare to pregnant women. “Stillbirths increased because many women missed out on crucial prenatal tests and a lot decided to postpone having children at all.”

Chandakas, a British-trained fertility expert, said that while visiting more than 30 islands at the height of the budget crisis, he and his team were shocked at the lack of pregnant women. Schools, similarly, were bereft of children. At some schools, parades took place with a single child.

“In the case of Fourni, which has a population of 1,000 people, there were zero births in 2014 and 2015,” he recalled. “Now that we are offering medical services and have this safety network in place, we are convincing more to have children. Today there are 11 ongoing pregnancies on Fourni.”

Michailidou, who at 34 is the cabinet’s youngest member, has championed opening more nurseries and creches. “We have to ensure that women re-enter the labour force,” she said. “I feel very strongly about this. We have seen how in countries like France it works.”

The policies are the most serious step that Greece has taken to address its demographic problem. The baby bonus is expected to cost €180m a year, equivalent to 0.1% of GDP. It is available to resident non-EU as well as EU citizens, a decision that has raised eyebrows among the more conservative supporters of the prime minister Kyriakos Mitsotakis’s government.

Greece’s frontline role as an arrival point for Europe-bound migrants and refugees has raised hopes that newcomers from Africa, Asia and the Middle East will further help boost the population. “Greece has to accept that in the next 20 years it is going to be multicultural, like other European societies,” said Chandakas. “It’s going to have to adapt, our education system is going to have to change, it will be a challenge for the young as well as old.”

Greece has the advantage of history on its side, according to George Prevelakis, a professor at the Sorbonne and Greece’s permanent representative at the Organisation for Economic Co-operation and Development in Paris. “Greece has repeatedly renewed itself both demographically and economically through migrant waves that were not part of a state plan but the result of geopolitical developments,” he said.

These included millions of refugees arriving from Turkey in a massive exchange of populations after Greece’s disastrous military campaign in Asia Minor in 1922, and an influx of 500,000 Albanians after the collapse of communism.

“If the Greek government pursues an intelligent migration policy, the country can function as a demographic pump,” he said. “It can both receive and integrate immigrants while sending Greeks abroad who in turn can strengthen the global Greek presence through diaspora communities. The brain drain is not a loss. These people will never lose their sense of Greek identity. In an age of networks, they can act as a bridge between Greece and the outside world.”