“Greeks do not save much, while people in core European countries do so significantly more”. This is one of the most commonly talked about themes in the press. But is it true?
As the following graph shows, it surely is, if we take Netherlands to be representative of the core EU countries.
|source: AMECO, own calculations|
But how can this be explained?
One factor that can explain a part of this divergence in savings rates between Netherlands and Greece is the fact that the percent of people over 65 years of age is higher for Greece. Usually people this age are retired, especially in Greece where we admittedly are notorious of early retirement, among other vices. People in this age group, since their income has diminished due to retirement, tend to save less than younger people who are still economically active.
One further determinant could be the participation rate or else the ratio of total labour force to total population.
This ratio surely is higher for Netherlands, which means that dependent people in each household are less than they are in Greece. In turn this, in most cases, means that there is more room for saving.
A recent and ever more occurring phenomenon in Greek society is the fact that young people tend to spend more years as students due to the higher perceived need for higher education. This keeps them more years outside the labour force.
Even if such a social/educational trend is present in Netherlands, it doesn’t show in the stats for the more relevant age group, that of 20-24 years of age. Instead one can observe the peculiarity, that the share of employment for this particular age group is higher than their share of total population. This means that people belonging in this age group are either a larger part of the labour force than they are of the overall population or that some of them keep more than one job each, which skews the data.
On top of all these you can add the higher propensity of Greek people to consume…
|source: United Nations|