The recent minimum wage increase in Cyprus has sparked significant criticism from both employers and trade unions. Labour Minister Marinos Mousiouttas emphasised the government’s aim to protect the purchasing power of workers while maintaining business viability. Speaking during an interview on RIK television, Mousiouttas noted that the Ministry’s role is to mediate, ensuring industrial peace and improving earnings without jeopardising the economy’s ability to absorb these changes.
Employers Raise Concerns Over Economic Impact
The Cyprus Federation of Employers and Industrialists (OEB) has voiced strong opposition to the minimum wage hike, which they believe exceeds the real economy’s capacity. The OEB estimates an approximately 8.8% increase, arguing that this rise is not justified by productivity levels. They warn that the total cost to employers could surpass €1,250 per employee, placing additional pressure on businesses, particularly those that are only marginally viable.
OEB representatives have also expressed fears that passing these increased costs onto consumers could fuel inflationary pressures. The Federation’s concerns reflect a broader apprehension within the business community regarding the sustainability of such wage increases in the face of potential economic downturns.
Trade Unions Demand More for Workers
Conversely, trade unions argue that the minimum wage increase is still inadequate. The Cyprus Workers’ Confederation (SEK) has stated that the new minimum wage fails to meet basic subsistence needs, particularly for workers in sectors such as retail, cleaning, supermarkets, and security. Despite recorded economic growth, SEK highlights that wages in Cyprus remain disproportionately low compared to the GDP and productivity.
Andreas Matsas, the General Secretary of SEK, has called for a review of the minimum wage decision before it is finalised. He pointed out that workers earning the minimum wage are largely unaffected by recent tax reforms, suggesting that the government should have taken more sensitive measures to support these individuals.
A New Minimum Wage Structure
The new minimum wage will come into effect on 1 January 2026, with a scheduled review in 2028. According to the decision made by the Council of Ministers, the minimum wage will be set at €979 for newly hired employees and will increase to €1,088 after six months of employment. This structure aims to provide a gradual increase for workers while allowing businesses time to adjust.
Ongoing Dialogue and Negotiations Ahead
The discussion surrounding the minimum wage is expected to continue beyond the festive period, with both employers and unions likely to engage in further dialogue. The government’s mediatory role will be crucial in balancing the needs of workers with the economic realities facing businesses. As the implementation date approaches, stakeholders will be keenly observing the impact of this increase on both the labour market and the economy at large.
As tensions rise and differing opinions emerge regarding the minimum wage, it is clear that this issue will remain a focal point in Cyprus. The government’s commitment to safeguarding workers’ purchasing power, while also considering the viability of businesses, reflects a complex challenge that requires careful navigation.
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