The Chairman of the Fiscal Council, Michalis Persianis, has intervened in view of the revision of the National Minimum Wage, underlining that "decisions should be made in light of the long-term impact they will have, not the immediate impressions they will make."
More specifically, in his statement, Persianis states that "as the Fiscal council noted in its recent Final Report for 2025, the picture of the economy is positive, and we believe that it will show satisfactory resilience to the expected pressures of 2026."
At the same time, he adds, "and while the levels of uncertainty are elevated, we note that there is no horizontal wage increase recorded across all industries in the country, as a result of which we identify significant and growing discrepancies in earnings between sectors of the economy."
Therefore, he emphasises, the intention to revise the minimum wage is legitimate and responds to the pressures exerted on households, however, " extremely careful judgment and prior analysis should be exercised, so as to avoid collateral effects from a hasty decision."
Specifically, he points out, specific economic data should be taken into account:
- That the average and median salaries based on Gross Domestic Product differ significantly from estimates based on the Gross National Product.
The second more accurately reflects the per capita income in Cyprus and is more relevant to reality. The misleading analysis based on GDP, from afar, does not reflect reality as the data is contaminated - and driven - by a small number of sectors of the economy.
- It should be taken into account that, despite the ongoing conditions of full employment, there is high unemployment among young people and especially new entrants (12.7%), whose employment is subject to additional pressures from Cyprus' new development model and new technologies.
- The Beveridge curve of the Cypriot economy, which records the relationship between job vacancies and unemployment levels, has shifted significantly over the last three years, indicating that pressures on the economy stem from a skills mismatch, making it even more difficult to employ young people.
- Small and medium-sized enterprises, especially those with fewer than 10 employees, which employ almost 40% of workers, should be protected. These enterprises also record high gross income and are family-run.
More generally, decisions made with large businesses in mind disproportionately affect small businesses, especially very small ones (micro, under 10 people), which nevertheless constitute 94.8% of the country's businesses.
With a hasty decision, employment in these businesses could be jeopardised and the overall picture of the economy could be endagered.
- The terms of trade of the Cypriot economy continue to decline, thus reflecting reduced competitiveness, if high-tech enterprises, which are largely foreign-controlled, are excluded from the data.
Preserving competitiveness is key to maintaining current growth rates and employment levels, especially for permanent residents of Cyprus and young people.
In any case, the Chaurman of the Fiscal Council adds, "we must keep in mind that the current picture of the macroscopic indicators of the economy is not an indication of its course in the coming years."
"Decisions will be implemented even in periods of reduced growth, increased unemployment and increased structural inflation, and their planning should not suffer from a shortsightedness that takes into account exclusively current circumstances," he further indicates.
The Cypriot economy generally records competitiveness indicators that are gradually declining, he further warns, emphasizing that "the current conditions of uncertainty, both endogenous and exogenous, make decisions important for the future of employment and the disposable income of households."
"Decisions should be made in light of, not immediate impressions, but the long-term impact they will have," Persianis concludes.
(Source: InBusinessNews)
