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Cyprus Aims to Strengthen Wage Adequacy Amid Rising Living Costs

The Ministry of Labour in Cyprus has set its sights on enhancing wage adequacy to help citizens navigate the pressures of rising living costs. Speaking on the issue, Labour Minister Yiannis Panayiotou emphasised that the government is actively working to ensure that wages across the country remain sufficient in the face of escalating inflation and the broader cost-of-living crisis. This commitment comes at a time when many Cypriots are feeling the financial strain caused by global economic turbulence and domestic price increases.

In a recent statement, Panayiotou outlined the government’s strategy, which focuses on safeguarding and improving the standard of living for workers, while also addressing the growing gap between wages and the cost of essential goods and services. The Ministry’s approach involves monitoring economic conditions closely and collaborating with key stakeholders, including trade unions and employer associations, to strike a balance between wage growth and economic sustainability.

Cyprus, like many other European nations, is grappling with inflationary pressures driven by factors such as supply chain disruptions, increased energy costs, and the aftermath of the COVID-19 pandemic. These factors have led to significant price hikes in everything from groceries to housing, creating a financial squeeze for households across the island. For low- and middle-income families in particular, the rising cost of living has outpaced wage increases, leaving many struggling to make ends meet.

The government’s efforts to strengthen wage adequacy also align with broader European Union goals aimed at addressing wage inequality and ensuring fair pay for all workers. The implementation of a national minimum wage in Cyprus, introduced in 2023, was a key step in this direction. However, the current economic climate has prompted further discussions about whether these measures are enough to support the workforce during such challenging times.

While wage increases are necessary to maintain purchasing power, they must also be balanced against the risk of fuelling inflation further. Panayiotou acknowledged this delicate balancing act, stating that the government’s policies would be designed to promote sustainable wage growth that does not undermine economic stability or lead to job losses. The focus will be on targeted wage increases that benefit those most affected by rising costs, while simultaneously supporting overall economic growth.

Looking ahead, the Ministry of Labour is also considering additional measures, including potential revisions to social benefits and tax policies, to further alleviate the financial burden on Cypriot citizens. As inflation remains a key concern, the government’s proactive stance on wage adequacy will be crucial in protecting workers’ livelihoods and maintaining social cohesion in the face of ongoing economic challenges.

Capital Deployment Emerges As Key Growth Driver For Greek Banks

UBS highlighted Eurobank and Alpha Bank in a report shared by Greek business outlet Newmoney, as investors increasingly focus on the lenders’ regional footprints, including Cyprus. Greek banks remain among the clearest beneficiaries of the country’s economic recovery, while more disciplined capital deployment could create further value for shareholders.

Despite recovering from lows during the Middle East crisis, Greek banks continue to trade at a discount to European peers. UBS sees potential for a rerating as lenders combine selective acquisitions with higher shareholder distributions.

Strong Fundamentals Support The Outlook

UBS expects performing corporate lending to grow about 8% annually between 2025 and 2028, while net interest margins are believed to have reached their low point. Improving net interest income and fee income should support earnings, while non-performing exposures and the cost of risk have fallen more than expected.

Greece is also expected to sustain GDP growth of roughly 2% annually, supported by investment backed by the EU’s Recovery and Resilience Facility. The country has received around €25 billion of the €36 billion available, while UBS forecasts a primary surplus of up to 3.5% of GDP in 2025 and public debt falling to 138% of GDP in 2026 and 133% in 2027.

Eurobank And Alpha Bank Stand Out In Cyprus

Eurobank drew particular attention following its acquisition of Hellenic Bank in 2025, which expanded its presence in Cyprus. UBS sees further growth potential across south-eastern Europe and considers the Hellenic Bank and Eurolife acquisitions positive for profitability and return on tangible equity.

Eurobank received a buy rating and a €5.10 price target, implying 11.7% upside. Alpha Bank also received a buy recommendation, with a €4.90 target implying 8.7% upside, supported by improving profitability, value-enhancing acquisitions and its share buyback program.

Piraeus And National Bank Offer Further Upside

Piraeus Bank was UBS’s top pick, with a buy rating and a €12 price target implying 18.8% upside. The bank cited long-term growth prospects, improving return on tangible equity and the expected acquisition of National Insurance, which would expand its financial services and bancassurance platform.

National Bank of Greece received a buy recommendation and an €18.70 target, implying 12.7% upside. UBS cited its profitability, capital position and credit quality, while its agreement with Allianz could provide further support to earnings and return on tangible equity.

Capital Discipline To Shape The Next Phase

UBS expects stronger lending, fee income, lower credit risks and continued economic growth to support Greek banks. However, the report argues that capital allocation will increasingly determine performance as lenders move beyond balance-sheet expansion.

For Eurobank and Alpha Bank, regional expansion, acquisitions, improving profitability and shareholder returns are expected to drive the next phase, while UBS sees further upside across the sector as lending and capital distributions strengthen.

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