Dorita Yiannakou
After intense behind-the-scenes talks that stretched right up to the holidays, the government has locked in Cyprus’ new national minimum wage at €1,088 a month, a decision that settles one debate but opens several others.
Labour Minister Marinos Moussiouttas confirmed that the long-running discussions were wrapped up following his meeting with the finance minister, allowing the issue to be “closed” before Christmas. The relevant decree was approved at Tuesday’s Cabinet meeting and will apply for two years, coming into force on January 1, 2026. The government now wants to turn its attention to the next big battle: pension reform.
Speaking to K, Moussiouttas acknowledged that setting a single national minimum wage is never going to please everyone. “Different views are expected,” he said, stressing that the government’s role is to avoid extreme positions and ensure all sides are heard through a clear and institutional process.
What changes, and what doesn’t
Under the new decree, the minimum monthly wage for full-time workers who have completed six months with the same employer rises from €1,000 to €1,088. For workers still in their first six months, the minimum increases from €900 to €979.
The new rate includes an automatic cost-of-living adjustment (ATA) of about 2%. What it does not include, however, is any reference to an hourly minimum wage, despite earlier government assurances.
According to the labor ministry, the increase takes into account inflation in 2024 and 2025, solid economic growth well above the eurozone average, falling unemployment, and forecasts pointing to near full employment next year. At the same time, Moussiouttas said, the government deliberately avoided a sharper increase so as not to hurt jobs or place extra pressure on small and medium-sized businesses.
The minister insists the move strikes a balance: boosting the purchasing power of low-paid workers without fueling inflation or undermining competitiveness. Around 50,000 workers are expected to benefit.
Protecting low-income earners from poverty and social exclusion, he added, remains a central pillar of government policy.
Unions angry, employers alarmed
If the aim was balance, the reaction suggests the landing was anything but smooth.
Trade unions have blasted the decision, arguing that the new minimum wage actually represents a step backward. They point out that in 2024, the minimum wage stood at 58.5% of the median salary. Under the new figures, that ratio drops to 57.9%, falling short of the European Union’s 60% benchmark for a “decent” wage.
Unions accuse the labor minister of provocation and say the decision once again exposes a government policy tilted against workers.
Employers are equally unhappy, but for very different reasons.
The Cyprus Employers and Industrialists Federation (OEB) has labelled the increase disproportionate and economically unjustified, warning of “unpleasant consequences.” The minimum wage, OEB argues, is not a social policy tool but the baseline pay for any worker over 15, regardless of skills or experience.
The federation notes that the 8.8% increase lifts Cyprus’ minimum wage to around 58% of the national median, higher than the ratios in Germany, the Netherlands, or Luxembourg. “Apparently, some believe the Cypriot economy is stronger than the EU’s largest economies,” OEB said pointedly.
The concern, it adds, is that the increase will ripple through the labor market almost automatically, pushing wages higher across the board, squeezing businesses, and potentially fueling inflation.
Who it applies to, and who it doesn’t
The national minimum wage applies broadly, but not universally. Domestic workers, agricultural workers, shipping employees, and hotel staff fall under separate regulations. The updated minimum wage decree for the hotel industry came into force on January 1, 2025.
The next big fight: pensions
With the minimum wage file now closed, attention shifts to pension reform, the next major challenge on the labor minister’s desk.
Work is expected to begin in 2026, with legislation following a set timetable. A key meeting of the Labour Advisory Body is scheduled for January, although Moussiouttas has made it clear that more groundwork is needed.
One of the most sensitive issues on the table is the controversial 12% reduction for early retirement. The minister stresses this is technically an “actuarial adjustment,” not a penalty, a distinction that has been lost in public debate.
“Everything must be looked at as a whole,” he said, “as part of a comprehensive pension reform.”
If the minimum wage decision is any indication, the next round of talks won’t be any quieter.
*Read the Greek version here.
