Is €1,088 a reasonable level for the minimum wage in Cyprus? At first glance, the answer might appear positive, given that it is close to the European average. However, a closer examination that takes into account the cost of living and unemployment rates leads to different conclusions. With almost mathematical certainty, the minimum wage will need to be revised upwards if businesses themselves wish to continue attracting workers.
Minimum wage and purchasing power
At €1,088, Cyprus’s minimum wage may appear competitive in nominal terms, but this perception changes when purchasing power is taken into account. In Spain, where the minimum wage stands at €1,381, the cost of living index according to Numbeo is 51.6, placing the country 29th in Europe. In Cyprus, by contrast, the cost of living index reaches 58.6, ranking the country 21st.
The conclusion is clear: the minimum wage in Cyprus should be significantly higher. Even in Greece, where the minimum wage stands at €1,027, purchasing power may be stronger, as the cost of living index is 54, placing the country 25th. Notably, among Numbeo’s rankings, only Estonia combines a higher cost of living index with a lower minimum wage than Cyprus.
In several EU countries, the minimum wage even exceeds the median wage in Cyprus. Luxembourg, for example, has a minimum wage of €2,704, albeit with a substantially higher cost of living index of 78.
Labour mobility and unrealistic expectations
The solution, of course, is not for workers to pack their bags and leave for Luxembourg, although this option is understandably appealing to young people in a country where unemployment reaches 12 percent. Nor is it realistic to promise workers that the minimum wage will rise to €1,500 in order to match Spain.
Nevertheless, Cypriot businesses must seek ways to offer better pay. This will not be achieved solely through ministerial decrees or stronger trade union organisation, although these may contribute to some extent. What is required is modernisation and rationalisation of operating costs.
Structural pressures on businesses
Specifically, businesses need:
- Access to basic services such as electricity at costs that reflect the real capacity of the economy.
- High-quality public services and efficient digital access, so that time and money are not wasted on unnecessary private-sector intermediaries.
- Protection from corruption, particularly in light of recent findings that many businesses are forced to pay for “protection” from or to criminal elements.
Savings generated through these measures would make it easier for trade unions to demand higher wages for workers. At the same time, similar corrective reforms would help households reduce their cost of living.
Cost of living and household pressure
In parallel, the following areas require immediate attention:
- The cost of basic services, particularly transport, must move to the centre of public debate rather than remaining marginalised. The cost of owning and maintaining a private vehicle is prohibitive for minimum-wage earners. Cheaper and better bus services, as well as a suburban rail system connecting the capital with the port and the airport, would constitute a genuine development intervention.
- Improved public education services that reduce reliance on private tutoring would help lower household expenses.
- Incentives and disincentives to prevent high-value properties in city centres from remaining unused would contribute to more rational housing prices, making accommodation more accessible for low-income earners.
Public debate and political priorities
These are the issues that should shape public debate ahead of the parliamentary elections. This is where political attention should be focused, rather than on gossip or the promotion of individual candidate egos.
Source: Politis Sunday edition