Good news for some 25,000 low-paid private sector workers in Cyprus, as the minimum wage will go up from €940 to €1,000 a month, Labour Minister Yiannis Panayiotou announced on Wednesday following a cabinet meeting.
The current minimum wage stands at €885, increasing to €940 after a six-month period.
The minister did not specify the implementation date of the decree, but indicated that it would likely occur upon its publication in the official gazette, in time for the increase to be effective as of January 1.
In a statement, Panayiotou explained that the government, in line with the president’s governance programme and after evaluating all relevant data, has decided to issue the decree on the Minimum Wage Limit of 2023 based on the proposal of the Ministry of Labour and Social Insurance.
“This proposal stipulates that the monthly minimum wage for full-time employment, after completing six months of continuous service, will increase from €940 to €1,000,” he said.
The decision follows months of negotiations with trade unions and employers’ organisations. Initially, employers opposed any increase, proposing €970, while unions sought €1,020.
The proposed formula included calculating the minimum wage based on 60% of the respective median wage.
In 2022, the median wage closed at €1701, in 2021 at €1606, and in 2020 at €1573.
During the cabinet meeting, Panayiotou presented the labour advisory committee’s findings, which, although influential in formulating the minister’s recommendation, were not binding.
The advisory committee was made up of representatives from trade unions and employers’ organisations.
Employers’ concerns
Throughout the year, employers had argued against any increase, citing concerns about heightened operational costs for businesses. They pointed to rising energy costs, increased transportation expenses, and higher interest rates, contending that these factors have raised companies’ borrowing costs.
In contrast, trade unions asserted that inflation eroded the current minimum wage’s purchasing power, necessitating an increase.
They also referenced data indicating increased employment rates and productivity during 2023.
Trade unions argued that in 2023, the workforce increased, employment rose, the unemployment rate decreased, and the youth unemployment rate (16 to 24 years old) also declined.
Productivity has seen a significant improvement, with an average 1.6% increase over the three-year period.
The profitability of businesses, as a percentage of GDP, has risen from 18% to 29% in the last two years, while workers’ earnings have decreased from 48% to 41%.
The minimum wage decree does not cover certain categories, including domestic workers, those employed in agriculture and livestock, seafarers, and hotel workers who fall under a separate decree issued back in 2020. It is also not valid for part time workers.
According to the latest Eurostat data, on 1 July 2023, 22 out of the 27 EU member states had a national minimum wage, including Cyprus (as of 1 January 2023).
Monthly minimum wages vary widely across the member states, from €399 in Bulgaria to €2,508 in Luxembourg.
EU countries without a national minimum wage were: Denmark, Italy, Austria, Finland and Sweden.
