The Cyprus Chamber of Commerce and Industry (Keve) voiced its concern on Friday over the agreement reached between the finance ministry and public sector unions for a general wage increase of 1.5 per cent starting October 2024.
The private corporate body issued an announcement detailing how the recent agreement sparked concern about the financial sustainability of increasing public sector wages and urged for measures to control wage growth and improve government efficiency.
This 1.5 per cent increase in the public sector is additional to the annual wage increases based on salary scales and Cost of Living Allowance (COLA), the announcement stressed.
Furthermore, Cyprus already has one of the highest public salary scales compared to many countries, exceeding the European Union average. “These ongoing increases risk making the wage bill unsustainable, potentially leading to unmanageable levels with all negative consequences for public finances and the economy,” Keve noted.
The increase comes “following a recent report from the International Monetary Fund, which has urged the Government to find ways to control the state salary bill and adjust wages based on macroeconomic developments and productivity”.
According to Keve, in a time of international challenges and uncertainties, it is crucial to limit increases in the state salary bill (including increases, general raises, COLA, hiring, and promotions) to the rate of GDP growth, taking productivity into account.
“It is essential to accelerate the digitisation of the public sector, which will gradually reduce operational costs and increase efficiency,” the statement added.
Under the deal concluded on Thursday – covering full-time as well as part-time workers – the 1.5 per cent pay rise kicks in on October 1.
The deal affects an estimated 60,000 people, with a minimum increase to a person’s base salary of €27.61 a month.
