Professional services is the new driver of jobs and growth in Cyprus, according to a report launched by PwC on Tuesday, but the professionals and the government need to work better together to leverage the jobs and growth that this sector has to offer.
According to the report, written by Fiona Mullen of Sapienta Economics Ltd and Marina Theodotou of Curveball Ltd, international services (professional services and international financial services) grew 40 times faster than tourism in the past 5 years (8.3% v. 0.2%) and created considerably more jobs, while also complementing tourism through the encouragement of high-spending tourists.
However, the research also points out that the professional services sectors has several weaknesses and faces a number of threats.
Weaknesses identified included lack of coordination by the industry players and the government to promote the industry, as well as overdependence on one market.
Threats include European Commission attempts to introduce an EU-wide tax base and the threat of the loss of young talent because of high unemployment.
In a benchmarking exercise against its peer group for business services, Ireland, Malta, Luxembourg and Singapore, the report also found that Cyprus seriously lags behind its peers in innovation and sophistication.
However, there are also plenty of strengths and opportunities which the sector can leverage.
With these in mind the report concludes with ten, low-budget strategic and actionable recommendations for policy makers, the sector and the sector representatives (voice of the industry) that could support the economy and create jobs in the next 12 to 24 months.
Recommendations for the next 12-14 months
For the government, key strategic recommendations include consulting the professional services sector on a regular, structured basis and targeting improvement in the global rankings, since foreign investors pay a great deal of attention to these.
The private sector is encouraged to be pro-active with respect to the threats identified by the authors, to build capacity in new areas and to foster innovation and technology and empower the youth.
Key recommendations for the voice of the industry representatives include tighter coordination among the different players to strengthen its voice, to revamp websites and to leverage technology and social media.
The report also includes specific recommendations. For example, the government can use the troika’s recommendation on transferability of staff to create a dedicated double taxation treaty team, while the private sector can help channel private investment into entrepreneurship.
According to the authors of the report, the adoption of these specific recommendations could lead to the creation of 9,700 new jobs in 5 years.
Evgenios Evgeniou, CEO of PwC Cyprus, stressed the importance of this report during a period where Cyprus is about to take crucial decisions for its financial future.
“This report, through the in depth analysis of the sector, recommends specific actions to generate economic growth in Cyprus and decrease unemployment by creating new jobs,” he said.
“I hope and wish that these recommendations can form the basis for a constructive dialogue between the government and the private sector that would lead to a clear plan of action ".
The Professional Services: Driving jobs and growth in Cyprus is available at www.pwc.com.cy
Get all the latest news and videos in your inbox. Register FREE