Cyprus’ economy continues to record growth above the EU average, wages are rising and inflation is easing. Yet a significant part of the population continues to face financial hardship, with only a limited share able to live comfortably.
Even the middle-income group in Cyprus, which is expanding as a proportion of the population, is increasingly struggling to meet mortgage repayments on a primary residence or to cover rent. At the same time, domestic goods and services remain expensive, placing sustained pressure on household budgets, with many families finding their income depleted well before the middle of the month.
This situation persists despite falling prices for imported goods, which have contributed to a statistical decline in inflation. The picture is further complicated by persistently low wages in several sectors of the economy, even as salaries rise sharply in others, such as technology.
Moreover, the tax reform approved by Parliament this week, despite offering significant relief and support for the middle class, leaves out a large segment of society that falls below the tax-free income threshold. This group arguably has the greatest need for financial support.
The three-tier reality
Data published on Monday by the Statistical Service highlight pronounced disparities between households in the lower, middle and upper income brackets, as well as a widening income gap.
According to the publication Population by Income Class, 27.8% of Cyprus’ population, or 267,600 people, fell into the lower income bracket in 2024. Of these, 14.6% (139,900 people) were classified as being at risk of poverty. In 2023, the corresponding figures stood at 29.2% (275,800 people), with 14.9% at risk of poverty.
The middle-income group accounted for 64.6% of the population, or 620,100 people, in 2024, up from 63.5% (599,500) in 2023. The upper income bracket represented 7.6% of the population, or 73,100 people, compared with 7.2% (68,200) the previous year.
Based on OECD methodology, the middle-income group comprises households earning between 75% and 200% of the national median income. Those earning above 200% fall into the upper income bracket, while those below 75% are classified as lower income.
Median equivalised disposable income in 2024 stood at €12,271 for the lower income group (up from €11,497 in 2023), €23,517 for the middle-income group (from €21,979), and €51,316 for the upper income group (from €46,944). The income gap between the lower and upper brackets widened to €39,045 in 2024, compared with €35,447 a year earlier.
Among those in the lower income group, 36.6% are employed and 35.9% are pensioners. In the middle-income group, 68.6% are employed and 14% are pensioners, while in the upper income bracket 71.7% are employed and 14.3% are pensioners.
Household composition and financial stress
Households without children account for 56% of the lower-income group, 45.9% of the middle-income group and 57.4% of the upper-income group. Households with one dependent child represent 11.9% of the lower-income group, 20.5% of the middle-income group and 21.2% of the upper-income group, while those with two dependent children account for 18.4%, 24.2% and 18.9% respectively.
By age group, individuals aged 65 and over make up 30.5% of the lower-income group, with children accounting for 18.1%, young people for 13.1% and working-age adults for 38.3%. In the middle-income group, 53.6% are working-age adults, 18.7% children, 15.5% young people and 12.2% pensioners. In the upper-income group, working-age adults account for 59.5%, pensioners 16.3%, children 13.9% and young people aged 18–29 for 10.3%.
Historically, the highest share of households falling behind on mortgage or rent payments is found in the lower-income group. In 2024, 27% of lower-income households reported arrears, down from 31.2% in 2023. The corresponding figure for the middle-income group rose to 9.9% from 8.9%, while in the upper-income group it increased slightly to 3% from 2.8%.
'Wages overstated'
Commenting on the data, Fiscal Council chairman Michalis Persiannis said that while official statistics on wages and inflation are accurate, they do not fully reflect lived economic reality.
Average wages are rising, he noted, but income distribution remains uneven. Certain sectors continue to see strong wage growth, while others experience stagnation. By his preliminary estimate, around 37%–40% of the population is performing very well economically - but “the rest are not”.
A similar pattern is evident in inflation trends, he said. While falling prices are largely driven by imported industrial goods, energy and fuel, domestic goods and services continue to rise in cost, maintaining pressure on household finances.
Concern over inflexible spending
Mr Persiannis also noted that the economy remains on a strong growth trajectory, with public debt falling below 60% of GDP - a development that shields Cyprus from multiple risks.
However, he reiterated the Fiscal Council’s concern over the steady rise in inflexible public expenditure. Looking ahead, he warned that substantial increases in spending on infrastructure, energy, water management and responses to natural disasters are inevitable, and stressed the need for early and careful planning.