**Construction labour costs rise despite recession**
The Cyprus construction sector was worth EUR 3.1 bln in 2010 measured in gross output current market prices according to the annual Construction and Housing Statistics report from the Statistical Service, but this was 9.7% lower than the EUR 3.4 bln recorded in 2009.
In terms of value added, the construction sector fell in real terms by a provisional 7.0% compared with a drop of 18.6% in 2009.
Yet despite recessionary conditions, the much loved wage indexation mechanism meant that labour costs continued to climb, rising by 3.5%, after an increase of 4.8% in 2009.
Input costs also rose, with the price index of construction materials recording a rise of 2.7% compared with a decline of 3.5% in 2009.
Not surprisingly, this led the sector to shed labour.
Employment in the sector fell from 36,384 in 2009 to 34,937 in 2010 and accounted for 9.3% of the gainfully employed population.
The number of registered unemployed in the sector increased from 2,598 in 2009 to 3,497 in 2010. By February 2012 that number had climbed to 6,232.
According to business sources, two-thirds of the unemployed are Cypriots.
The politicians say that wage indexation is said to have secured peaceful labour relations.
Yet all it seems to have done is push out Cypriot workers in favour of non-unionised, cheaper ones from elsewhere.
Fiona Mullen, Director Sapienta Economics Ltd.
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