Cyprus unemployment underlines government dependency

The number of registed unemployed rose by 1,256 persons compared with the month earlier to 12,197, or 3.4% of the workforce in June.

Although a rise between May and June is something we have seen for at least the past two years, the fact that the rate was also higher than in June 2004 is a worrying sign. Compared with June 2004, the number of registered unemployed rose by 1,288, or from 3.1% to 3.4%.

Meanwhile, other data gathered on an EU-compatible basis, show unemployment at more than 5%.

The broad public sector, including education and health and social services, has taken the brunt of unemployment, rising by 2,049 compared with June 2004: in other words more than making up for the fall in unemployment in some other categories, such as restaurants and hotels.

For the whole of the second quarter, unemployment in the broad public sector rose by 1,506 compared with the same period of the previous year.

Since the government never lays anyone off, this figure must simply be the result of a squeeze on new recruitment: not converting temporary contracts to new ones, and no new jobs for the next wave of trained teachers (758 people classed as being in the education sector joined the list in June).

The figures underline just how dependent the economy is on the broader public sector. It employs around one in every five workers, and grants them multiple pay rises per year, which in turn keeps them consuming.

Goodness knows what would happen to the economy if the government ever started actually cutting jobs.

But just in case it does, a word of warning to our business readers. If your business depends only on the Cyprus consumer market, now is the time to start diversifying.

Fiona Mullen