The government of Cyprus has started a major project to change its building and construction industry. It sees this sector as very important for the country's future economic strength. President Nikos Christodoulides recently announced a set of planned changes to industry leaders. He said the government wants to create a simpler and clearer system of rules. This effort to modernize construction is happening at the same time as another significant challenge. The country's labour unions are strongly demanding a large increase in the minimum wage. This situation is creating an important debate about the nation's policies.
Speaking to a group of building contractors, President Christodoulides explained that the government's actions are a response to both global economic difficulties and local needs. He stated that even with international problems and conflicts, Cyprus's economy is performing very well. He suggested that bigger European countries might even be jealous of this success. The proposed changes have several goals: to make building projects happen faster and to address the ongoing problem of high housing costs. One key financial change is a plan to greatly reduce the defence tax, from 17% down to just 5%. The government intends to present this new law to Parliament before the end of the year.
However, labour unions are strongly challenging this positive story about the economy. The PEO trade union has published a report that argues against the government's position. Their analysis says that the rewards of the country's economic growth have not been shared fairly, and workers have not been paid enough. According to their findings, Cyprus is one of only four countries in the European Union where the share of national income going to workers is less than 50%. The report admits that wages have gone up a little, but it argues this increase is not enough to fix a long-term problem where income has been moving away from employees.
Based on this data, the union is making a bold demand. They want the minimum wage to be raised by about 28% to match the country's development, and by 26% to match increases in productivity. Sotiroula Charalambous, the General Secretary of PEO, supports these findings. The report also challenges a common idea, stating that it is "false" to think wage increases should automatically follow inflation. It says this ignores other important factors that affect prices, especially company profits.
The fact that these two issues are happening at once—government reform for the building sector and union demands for higher wages—creates a critical point for Cyprus. The government wants to help the construction industry by cutting rules and taxes to attract more investment. On the other hand, if the union's plan is accepted, it would make it much more expensive for all businesses, including construction, to operate. The result of this debate will greatly affect the country's ability to compete, the fairness of its society, and how the benefits of economic growth are finally shared.