Hourly labor costs in Cyprus rose 3.8% year on year in the second quarter of 2026, faster than the euro area and EU averages, according to Eurostat and the Cyprus Statistical Service (Cystat).
Labor Costs Rise Faster Than Regional Benchmarks
The 3.8% increase in Cyprus compared with 3.1% in the euro area and 3.2% across the EU. Both wage and non-wage costs contributed to the increase.
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Hourly wages and salaries rose 3.9% from the second quarter of 2025, while non-wage labor costs increased 3.6%, according to Cystat.
Growth Accelerates From The First Quarter
The annual increase also accelerated from 3.4% in the first quarter of 2026 and was slightly above the 3.7% recorded a year earlier.
Wage growth rose from 3.4% in the first quarter, while non-wage costs increased at a faster pace than the 3% recorded during the same period.
Labor Cost Index Continues To Rise
Cyprus’ unadjusted total labor cost index reached 121.87 in the second quarter, up from 119.43 in the previous quarter and 117.38 a year earlier. The index for wages and salaries rose to 122.20, compared with 119.79 in the first quarter and 117.64 in the second quarter of 2025.
The non-wage labor cost index stood at 120.48, up from 117.92 in the first quarter and 116.33 a year earlier. Cystat uses 2020 as the reference year, with an index value of 100.
Seasonally Adjusted Costs Rise 1%
On a seasonally adjusted quarter-on-quarter basis, total hourly labor costs increased 1% in the second quarter. Wages and salaries also rose 1%, while non-wage costs increased 0.9%.
The quarterly increases were stronger than those recorded in the second quarter of 2025, when total labor costs and wages and salaries each rose 0.6%, while non-wage costs increased 0.5%.
Business Economy Labor Costs Remain Elevated
Eurostat data also showed relatively strong labor-cost growth in Cyprus’ business economy. Annual growth reached 4.3% in the second quarter, compared with 4.4% in the first quarter and 4.1% a year earlier.
Across the euro area, business-economy labor costs increased 3% year on year, down from 3.3% in the first quarter and 4.5% a year earlier. Wage costs rose 3%, while non-wage costs increased 3.2%.
EU business-economy labor costs rose 3.1%, compared with 3.5% in the first quarter and 4.8% in the second quarter of 2025. Wage costs increased 3.1%, while non-wage costs rose 3.2%.
Construction Records Fastest Growth Across Main Sectors
Across the wider economy, hourly labor costs rose 3.1% in the euro area and 3.2% in the EU during the second quarter.
Construction recorded the fastest growth among the three main sectors in both regions. Costs increased 3.9% in euro-area construction, compared with 2.9% in industry and 3% in services, while the EU recorded increases of 3.9%, 3% and 3.1%, respectively.
Wage Growth Varies Across EU Economies
The largest annual increases in hourly wage costs were recorded in Bulgaria at 9.9%, Lithuania at 9.6% and Croatia at 8.9%. Luxembourg and Romania recorded the lowest increases at 1.8%, followed by France and Italy at 2.1%.
For non-wage costs, the largest increases were reported in other service activities at 5.7%, real estate activities at 4.9% and administrative and support services at 4.8%. Mining and quarrying recorded the smallest increase at 0.7%, followed by professional, scientific and technical activities at 1.6% and electricity, gas, steam and air conditioning supply at 1.7%.
Cyprus therefore entered the second half of 2026 with annual labor-cost growth above both regional benchmarks, while wage and non-wage costs continued to increase domestically.
