Rising energy prices and inflation are continuing to put pressure on household purchasing power in Cyprus, according to the European Commission's European Employment and Social Outlook 2026 report.
While real wages in Cyprus are expected to be 10.4% higher in 2026 than in 2019, inflation is limiting the benefits for households, with Cyprus among the countries experiencing one of the sharpest slowdowns in real wage growth.
The report also found that between July 2025 and July 2026, Cyprus and Slovenia were the only European Union countries where the minimum wage declined in real terms.
Minimum wage loses ground
In Cyprus, the real value of the minimum wage fell by 2.8%, despite broader increases in minimum wages across the EU.
Slovenia recorded a smaller decline of 0.4%.
The largest real increases in minimum wages were recorded in:
- Croatia: 9.9%
- Lithuania: 8.6%
- Czech Republic: 6.9%
According to the report, increases in minimum wages support not only workers earning the minimum wage but also employees earning slightly above it.
On average, a 1% increase in the minimum wage leads to a 0.3% increase in earnings for the lowest-paid 25% of workers.
Real wage growth slowing
Across Europe, real wage growth is slowing significantly.
After rising by 2.6% in 2024, growth slowed to 1.7% in 2025 and is projected to fall further to just 0.5% in 2026, as higher energy costs push inflation upwards and absorb part of wage increases.
Cyprus is among the countries where the slowdown in real wages between 2025 and 2026 is expected to exceed three percentage points, alongside:
- Bulgaria
- Croatia
- Lithuania
- Romania
Outlook across Europe
The strongest real wage increases in 2026 are forecast in:
- Hungary: 5.9%
- Latvia: 3.3%
- Poland: 3.0%
- Slovenia: 3.0%
Meanwhile, real wages are expected to decline in:
- Austria: -0.6%
- Belgium: -0.7%
- France: -0.6%
- Italy: -0.4%
- Romania: -1.9%
- Slovakia: -0.4%
Cyprus remains above pre-pandemic levels
Despite the short-term pressures, Cyprus continues to perform relatively strongly compared with 2019.
Real wages in Cyprus are projected to be 10.4% higher in 2026 than in 2019, placing the country among those that have achieved substantial improvements in workers' purchasing power over recent years.
By contrast, real wages in 2026 are expected to remain below 2019 levels in:
- Greece: -0.1%
- Finland: -1.3%
- France: -2.4%
- Italy: -3.9%
Ten other countries are expected to record real wage growth of less than 5% over the same period, including Austria, Belgium, the Czech Republic, Denmark, Estonia, Germany, the Netherlands, Slovakia, Spain and Sweden.
Strongest gains since 2019
A total of 13 EU countries are expected to post real wage gains of more than 5% between 2019 and 2026.
Alongside Cyprus, they include:
- Ireland: 5.3%
- Luxembourg: 7.3%
- Malta: 11.1%
- Portugal: 18.1%
The largest increases over the period are projected in:
- Bulgaria: 44.8%
- Hungary: 30.3%
- Romania: 27.7%
- Lithuania: 26.6%
- Croatia: 26.2%
