**NICOSIA** – The Cypriot government has formally sanctioned an upward revision of the national minimum wage, a decision that has immediately ignited a robust debate between labour unions and employer federations, underscoring the perennial challenge of balancing economic realities with social equity. The Cabinet, following deliberations spearheaded by the Ministry of Labour and Social Insurance, finalised the adjustment on Tuesday, with the new rates slated to come into effect from January 1, 2026. This move is anticipated to impact approximately 50,000 low-wage earners across the island.
The revised decree will see the monthly minimum wage for employees with more than six months of continuous service increase from its current €1,000 to €1,088 gross. For those with less than six months of tenure, the figure will rise from €900 to €979 gross. This represents a notable 8.8% increment for the longer-serving segment of the workforce, a measure the government asserts is designed to bolster the purchasing power of vulnerable households, thereby fortifying social cohesion and mitigating the risks of poverty and marginalisation. In tandem, the government maintains that the increase is calibrated to preserve the competitiveness and long-term job creation capacity of businesses.
The decision was underpinned by a comprehensive review of prevailing economic indicators and future projections. The Ministry of Labour and Social Insurance factored in the 2024 inflation rate of 1.8% and a projected 0.2% for 2025, culminating in a total inflation consideration of 2%. Economic growth is also a significant component, with 2024 witnessing a robust GDP expansion of 3.9%, and a forecast of 3.4% for 2025. Furthermore, the unemployment rate, currently at 4.9% for 2024, is projected to recede to 4.3% in 2025, a level the government views as indicative of near-full employment.
However, the announcement has been met with considerable consternation from labour unions. Prior to the decision, union leaders had issued a stern warning to the President, signalling that any figure falling short of €1,125 would provoke “dynamic reactions.” Their advocacy had previously aimed for a benchmark closer to €1,170, reflecting a desire for a more substantial uplift in the minimum earnings. The current increase of 8.8% has been labelled by some as insufficient to genuinely address the cost of living pressures faced by low-income workers.
Conversely, the Employers and Industrialists Federation (OEB) has expressed strong disapproval, characterising the 8.8% hike as “unprecedented.” The OEB argues that this adjustment will elevate Cyprus’s minimum wage to a position that is disproportionately high when measured as a percentage of the median salary, potentially surpassing that of established economies such as Germany or the Netherlands. Their concern is that businesses, particularly small and medium-sized enterprises, may struggle to absorb the increased labour costs. This could, they contend, lead to either a jeopardisation of business viability, or the passing of these costs onto consumers through higher prices, thereby eroding the real income gains for workers.
Labour Minister Marinos Mousiouttas, in his defence of the government's stance, emphasised the inherent complexity of setting a national minimum wage. "The establishment of a single minimum wage always requires a delicate balance between social protection for workers and the viability of businesses," he stated. The government, for its part, remains optimistic that the increase will not precipitate inflationary pressures or compromise the competitiveness of Cypriot enterprises. Looking ahead, the Minimum Wage Adjustment Committee is scheduled to continue its deliberations throughout 2026, with a mandate to explore the alignment of the minimum wage framework with hourly productivity metrics, signalling a potential shift towards a more nuanced approach to wage setting in the future.