Unemployment in Cyprus has risen to its highest level since 1974, reaching 9.3% at the end of 2011. In the same period the unemployment rate among people under 25 has exceeded 25%. As the wave of job losses, which reached a peak in the last three months of 2011, continues into 2012, the Ministry of Labour and Social Insurance is examining a new package of measures to support unemployed people, the main focus of which will be on under-29s and the long-term unemployed.
Unemployment in numbers
Unemployment in Cyprus has reached its highest level since 1974, according to Eurostat data published on 31 January 2012, which showed that unemployment in the EU had risen most during 2011 in Cyprus, Greece and Spain.
In Cyprus it rose by 3.2 percentage points, reaching 9.3% at the end of 2011 compared with 6.1% in December 2010. The rate for young people under 25 also rose rapidly from 15.3% in December 2010 to 25.8% in December 2011.
Statistical indications are that men’s employment appears to have been more severely affected by the financial crisis. Specifically, between December 2010 and December 2011 the unemployment rate for men increased from 5.8% to 9.5% (a rise of 3.7 percentage points), while increasing for women from 6.6% to 9.1% (2.5 percentage points).
Dismissals peaked in the last three months of 2011 and have continued into 2012, and the available data from the Statistical Service of Cyprus for January 2012 shows that the number of registered unemployed, adjusted for seasonal fluctuations, had increased by about 800 since December, standing at 32,262, compared to 25,142 in January 2011. The increase is believed to have been caused primarily by job losses in the sectors of trade, construction, tourism and catering, manufacturing and public administration.
The most common occupations declared by those currently registered as unemployed are cleaners, messengers and unskilled workers, service employees and sales staff, clerks, typists and production technicians.
New measures to support the unemployed
In an effort to support unemployed people and to halt rising unemployment, the Ministry of Labour and Social Insurance is examining a new package of measures which is expected to be finalised in early March 2012.
These are essentially measures to help the unemployed re-enter the labour market, with a focus on the groups most affected, specifically people under 29 who have been unemployed from three to six months, and the long-term unemployed, defined as those who have been out of work for more than seven months. Current proposals focus on offering financial incentives to businesses for hiring people who fall into these categories.
Subsidies to be agreed
The cost of wage subsidies to be paid by the government and employers will be agreed in collaboration with social partners, in the framework of the National Employment Commission.
Information from the Ministry of Labour and Social Insurance indicates that the scheme will cover 50-65% of wage costs, whereas for unemployed people placed in the construction sector (one of the sectors most affected by the crisis), 60% of wage costs will be covered.
Members of the National Employment Commission represent the social partners as follows:
Cyprus Chamber of Commerce and Industry (CCCI);
Employers and Industrialists Federation (OEB);
Democratic Labour Federation of Cyprus (DEOK);
Pancyprian Federation of Labour (PEO); and
Cyprus Workers' Confederation (SEK).
The Commission agreed to set up a technical committee to codify all the Ministry of Labour and Social Insurance’s proposals. It also dealt with measures being promoted by the Ministry to protect the registered unemployed, so they can be absorbed into newly created jobs, especially in public works.
Public sector support
Labour Minister Sotiroula Charalambous has stated that public tender documents are now being amended to state that contractors taking on public works, not only in construction but also in other sectors such as cleaning and security, can hire unemployed people from the public sector lists. Public tenders will exclude all those who have been convicted of employing undeclared workers or violating other legislation such as minimum wage legislation.
Also ongoing are schemes from the Human Resource Development Agency (HRDA) and the Productivity Centre (KEPA), mainly involving training measures aimed at various categories such as employed workers, the unemployed, non-active female workers and recent graduates.
Education and training
Technical education is also of interest. As Minister Charalambous herself has stated, the increased flow of young people into technical jobs, along with better education and training, will help bring down unemployment among young people.
In the Cypriot labour market shortages in some technical occupations have been accompanied by a lack of interest in training for such occupations among young people.
To try and combat this, it is hoped that the second National Skills Competition in February 2012 will awaken the interest of young people in technical occupations by showcasing a range of education and training opportunities being offered by the state.
The Pancyprian Federation of Labour (PEO) has suggested a number of proposals to encourage the employment of particular groups such as new labour market entrants, the majority of whom are young scientists, and the long-term unemployed, who are mainly older and/or low-skilled individuals.
Apart from the need to create a wide range of new jobs and encourage enterprises to hire unemployed people, PEO has also stressed the need to create new jobs specifically for young graduates in sectors such as energy, the environment and new technologies.
Among other things, PEO proposes introducing an employment clause that obliges private businesses using public funds to create new jobs. In the hotel sector, PEO has revived an earlier proposal that hotel business should not be suspended during the winter season, and that unemployment benefits in the tourist low season should be replaced with subsidised wages.
Combating cheap labour
In an effort to address the increasing tendency for permanent jobs to be replaced with cheap, unprotected labour, PEO has made two proposals:
- giving statutory support to workers’ right to organise;
- introducing legislation that would extend a collective agreement reached within one part of an economic sector to the whole sector, regardless of whether all the enterprises in it are organised, along with the mandatory enforcement of collective labour agreements.
It also proposes strengthened legislation on social insurance to oblige employers to declare the employment of workers from their first day on the job, thereby more strictly implementing procedures for issuing work permits to workers from third countries. The PEO also wants to see the obligations of public works contractors to observe collective labour agreements extended to all parts of the broader public sector. A further proposal is that public contractors who need labour should be obliged to apply to the public employment services.
Finally, it is proposed that the procedure for certifying job qualifications in various skilled jobs should be tightened by introducing strict requirements for mandatory knowledge of the Greek language, stepping up monitoring of illegal and undeclared work, and stricter penalties for employers who violate the law.