Cyprus unemployment hits 14%, yet wages are up

**CPI-indexation has now been suspended**
The Cyprus unemployment rate reached a shocking 14% in November, according to estimates produced by Eurostat, joining the other euro area peripherals who recorded a sharp increase: Spain (26.5%), Greece (26.6%) and Portugal (16.3%).
In November 2011 the Cyprus unemployment rate was 9.5%.
Only five years ago, Cyprus boasted near full employment with an unemployment rate of just 3.7%.
Meanwhile, the monthly registered unemployment figure, which count only those registered for unemployment benefits, breached 40,000, rising by 26.5% to reach 41,625, compared with 31,826 recorded in December 2011.
The figures by occupational category serve as an advertisement for higher education.
By occupational category, the largest number of unemployed are found among those with elementary occupations (9,649), followed by service and sale workers (8,259) and clerks (6,511).
However, there were also 2,418 professionals without work in December.

But wages keep on rising
Despite the alarming increase in unemployment, wages have continued to rise, by thanks in large part to the wage-indexation known as the cost of living allowance (COLA).
Average earnings rose compared with the year earlier by 1.1% in the third quarter of 2012 to EUR 1,912.
From 2013 one might expect to see a contraction in earnings. As part of the terms of its hoped-for bailout, the government suspended COLA for public-sector workers at the end of last year.
There is also anecdotal evidence to suggest that the private sector has already stopped implementing wage indexation.
The government also implemented cuts of up to 12.5% for any public-sector worker earning more than EUR 1,000 per month. Cystat says that these cuts will not affect gross earnings figures but only net income.
www.sapientaeconomics.com