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An extensive, largely unseen system for recruiting foreign workers appears to have been operating for years behind the official structures of Cyprus’ labor market. The picture is shaped by illegal agents, weak oversight by the relevant authorities and an industry built on the exploitation of people who arrived in Cyprus seeking work.
Contracting firms, hotels and other labor-intensive businesses are increasingly turning to unlicensed agents, bypassing legally registered private employment agencies.
These practices are not new to the Cypriot market but have long disadvantaged workers, many of whom live and work under exploitative conditions. The president of the Federation of Private Employment Agencies, Iakovos Pembetzian, told Kathimerini that illegal agents in Cyprus now outnumber licensed ones by roughly two to one, driving corrupt hiring practices in a system that persists simply because it is economically выгодно for its users.
At the same time, the hidden recruitment network is producing broader fallout: declining quality in key sectors such as tourism, erosion of the formal labor market through informal and illegal procedures, and a rise in workplace accidents.
Testimonies from workers who have approached private agencies and the industry federation reveal a recurring pattern.
Illegal operators
Illegal agents are wreaking havoc on the market. According to Pembetzian, there are currently about 250 licensed agents, while the number of illegal operators is estimated to be nearly double, creating unfair competition and distorting the sector.
As a result, legitimate agencies are being squeezed out, losing clients because they follow proper procedures and cannot match the low costs offered by illegal networks.
Market insiders say the illegal system survives because employers can quickly secure cheap, willing labor and reap significant profits. Many workers, meanwhile, feel compelled to accept these conditions and avoid filing complaints for fear of losing their jobs.
The Federation of Private Employment Agencies has launched a dedicated complaints platform to systematically record and assess the true scale of the problem. Early data suggest the issue is far larger than initially believed, reinforcing industry concerns.
“We are not bringing in goats or objects,” Pembetzian said. “We are bringing people, and how we treat them reflects the level of our society.”
The contracts
Worker testimonies submitted to private agencies and the federation reveal a consistent pattern.
The salaries listed in contracts often bear little resemblance to the net pay workers actually receive. For example, a contract may state a monthly salary of €1,400, while the worker takes home just €500, with the agent citing excessive deductions for transportation, uniforms, laundry, accommodation and operating costs.
Industry representatives say it is particularly striking that large companies across multiple sectors do not turn to licensed employment agencies to meet their staffing needs.
As one representative noted, when an illegal agent delivers 15 workers from third countries directly to an employer, few companies bother to verify whether proper hiring procedures were followed or whether all legal requirements were met. In effect, convenience for the employer is assured, while illegal agents avoid the high cost, exceeding €200,000, of recruitment missions to countries of origin such as Bangladesh and Vietnam.
Licensed agencies, the official added, follow formal procedures: they conduct interviews, verify workers’ skills via video and document the entire process to ensure that candidates brought to Cyprus are properly matched to the jobs offered.
The hotels
The hotel industry appears to face the most serious problems in the hiring of foreign staff. According to industry sources, long-standing practices include illegal financial transactions between hoteliers and agents, as well as the placement of untrained personnel in key positions that directly affect the visitor experience.
There are also reports of hotel employees acting as “internal agents,” along with hiring through family or personal networks that bypass established procedures.
This is particularly troubling in the tourism sector, which contributes more than 14% of the country’s GDP, where such practices risk degrading the tourism product and undermining service quality, ultimately hurting the economy’s overall competitiveness.
Oversight gaps
Industry stakeholders say the Ministry of Labor and the Deputy Ministry of Migration have effectively opened the door to illegal agents. “The state knows but does not intervene,” they say, expressing deep concern.
According to these sources, the Department of Labour conducts only sporadic inspections, which are insufficient to address the scale of the problem. Complaints and investigations are also said to get bogged down in bureaucracy, preventing timely and meaningful enforcement.
Stakeholders further argue that gaps in the Employment Strategy allow illegal practices to flourish. The quota system for foreign workers, set at 30%, 50% or even 70% in special cases, is applied mechanically, they say, without regard to specific skills or actual labor needs.
In addition, recent changes to housing rules, including raising the allowable deduction to 25%, have triggered a new wave of abuses, as some employers simply deduct the maximum amount regardless of whether the accommodation justifies the charge.
The road ahead
Without meaningful intervention, industry officials warn, the sector faces a critical future.
If the unchecked activity of illegal agents and tolerance of distorted hiring practices continue, unfair competition against licensed agencies is likely to intensify, and the exploitation of third-country workers may become further entrenched.
Service quality, particularly in key sectors such as tourism, could also decline further, potentially damaging Cyprus’ international reputation as a safe and reliable employer and destination.
