Chamber of Commerce warns of risks from Cyprus’ 1.5% wage hike

The Cyprus Chamber of Commerce and Industry (CCCI) has expressed concern over a new agreement between the Ministry of Finance and public sector unions to grant a 1.5% general wage increase starting in October 2024.

CCCI's statement highlighted that this increase is additional to the annual raises based on salary scales and the Automatic Price Adjustment in the public sector. The chamber noted that Cyprus already has one of the highest public sector wage bills in Europe, which continues to grow.

“The continuous increases pose a risk of becoming unsustainable, potentially leading public finances and the economy back to unmanageable levels,” CCCI said.

The wage hike follows a recent International Monetary Fund (IMF) report urging the Cypriot government to find ways to control the public wage bill and adjust salaries based on macroeconomic developments and productivity, CCCI pointed out.

Given the international challenges and uncertainties, CCCI stressed the need to limit the increase of the state payroll, including increments, general raises, ATA, new hires, and promotions, to the rate of GDP growth, while also considering productivity.

CCCI concluded by advocating for the expedited digitization of the public sector, which they believe will gradually reduce operating costs and enhance efficiency.

[Information sourced from CNA]