Labour productivity in Cyprus increased by an average annual rate of 1.70% in the period 2022–2025, while real labour compensation rose by 1.30% based on sectoral output prices and by 1.95% based on the Consumer Price Index (CPI), according to a new Bulletin by the University of Cyprus' Economics Research Centre (CypERC).
A particularly strong performance was recorded in the Information and Communication sector, which includes ICT, where labour productivity increased by an average annual rate of 6.51% in 2022–2025. Over the same period, real labour compensation in the sector rose by 10.37% based on sectoral output prices and by 9.93% based on the CPI.
By contrast, Agriculture recorded an average annual decline of 4.06% in labour productivity, while real labour compensation fell by 1.83% based on sectoral output prices and by 0.74% based on the CPI.
Over the full 1996–2025 period, labour productivity in Cyprus increased by an average annual rate of 1.44%, with significant differences across economic sectors.
The Information and Communication sector recorded the strongest performance, with average annual labour productivity growth of 5.27%, followed by Financial and Insurance Activities at 2.33% and Wholesale and Retail Trade at 1.61%.
Negative productivity growth rates were recorded in Agriculture, Forestry and Fishing (-0.90%), Real Estate Activities (-0.84%), Arts and Other Services (-0.82%) and Construction (-0.10%).
A similar picture emerges from estimates of Total Factor Productivity (TFP) through 2024. TFP across the economy as a whole increased by an average annual rate of 0.99%, while in Information and Communication the corresponding rate was 4.38%. Negative rates were recorded in Agriculture, Construction, Manufacturing, and Arts and Other Services.
The analysis also examines developments in labour compensation relative to labour productivity. Over 1996–2025, real labour compensation increased by an average annual rate of 1.10% when measured against sectoral output prices and by 1.12% when adjusted using the CPI, compared with labour productivity growth of 1.44%.
According to CypERC, “productivity improvements have been concentrated in a relatively small number of sectors,” while “the relationship between productivity and labour compensation varies significantly across economic sectors.”
CypERC also notes that “sustained productivity growth is a key prerequisite for strengthening Cyprus’ competitiveness, achieving long-term increases in labour income and improving living standards.”
The findings, according to the centre, suggest that horizontal policy measures may not be sufficient, making interventions that take into account the characteristics and performance of each sector necessary.
(Source: CNA)
