Breaking news

Cyprus Struggles With Overqualification: The Hidden Gap In Its Labor Market

In 2024, Cyprus found itself facing a significant labor market challenge, with the third-highest overqualification rate among EU nations. According to Eurostat, nearly 28.2% of Cypriot workers are employed in roles that don’t fully leverage their tertiary education. Even more striking is the gender disparity: 31.2% of women are affected by overqualification, compared to 24.6% of men, revealing a worrying trend of underutilized talent.

Across the EU, the overqualification rate stands at 21.3%, with Spain and Greece leading the pack. Cyprus follows closely behind, highlighting a mismatch between educational qualifications and available jobs. While Luxembourg and Czechia boast lower overqualification rates, countries like Cyprus are grappling with this inefficiency.

This issue isn’t isolated to Cyprus; across 21 of the EU’s 27 member states, women face higher overqualification rates than men. The most significant disparities are found in Italy, Slovakia, and Malta, suggesting that the issue may be more systemic, with women particularly impacted by labor market challenges.

Cyprus, however, is not just facing a problem of underemployed graduates. It is also witnessing a steady rise in overall employment, with a 79.8% employment rate in 2024 — higher than the EU average of 75.8%. This figure reflects a growing labor force but also underscores the challenge of ensuring that more individuals, especially women, are not overqualified for their roles.

Despite these hurdles, Cyprus is seeing signs of positive economic shifts. The country’s GDP per capita has grown by 22% between 2018 and 2022, reaching €30,400 in 2022, though it still lags behind the EU average. Key sectors such as tourism, technology, healthcare, and renewable energy are expected to fuel further growth, but the country’s labor market will need to adapt to meet the needs of an evolving economy.

With the rise of digitalization and the ongoing demand for tech-savvy professionals, Cyprus is seeing a rapid shift in the types of jobs available. Information and communications technology professionals are in particularly high demand, while sectors like traditional agriculture and retail are facing challenges.

As Cyprus navigates these complexities, the growing reliance on skilled immigration is another factor shaping its workforce. Immigrants now account for over 21% of the country’s active workforce, with the largest portion coming from non-EU countries. This highlights the labor shortages in critical areas, and the continued demand for foreign talent to fill gaps in key sectors.

Cyprus’ labor market in 2024 presents a complex landscape. While the employment rate is rising, the challenge of overqualification remains a pressing issue, especially for women. As the country faces the growing demand for digital skills and tackles evolving economic and demographic pressures, addressing this mismatch between education and employment will be crucial for future growth and stability.

Bank of Cyprus Upgrade Signals Fresh Optimism For Greek And Cypriot Banks

Regional Banks Enter A More Favorable Cycle

Bank of Cyprus and Eurobank are well positioned to benefit from a renewed re-rating of Greek and Cypriot bank stocks, according to Cyprus-based investment firm Roemer Capital, which upgraded Bank of Cyprus to a buy rating and reaffirmed its positive view on Eurobank.

The firm cited easing geopolitical tensions, resilient economic growth in Greece and Cyprus, lower funding costs and Greece’s expected transition to developed-market status as the main factors supporting the sector.

Roemer Capital also lowered its cost of equity assumptions, updated its forecasts following first-quarter 2026 results and extended its valuation horizon to the end of 2027, raising target prices across its banking coverage.

Bank Of Cyprus Gets The Largest Upgrade

Bank of Cyprus received the biggest revision, with Roemer Capital upgrading the stock from hold to buy and setting a target price of €11.10, implying potential total upside of 27%.

The firm highlighted the bank’s strong capital generation, profitability and projected 100% dividend payout, describing it as the strongest capital-return story among the banks under coverage. Roemer Capital maintained its buy rating on Eurobank, assigning a target price of €4.90 and forecasting potential upside of 28%. The report said the bank is well placed to benefit from loan growth, improving operating performance and merger-and-acquisition synergies.

National Bank of Greece and Piraeus Bank also retained buy ratings, with expected returns ranging from 25% to 36%. Optima Bank was upgraded to buy, while Alpha Bank remained at hold on valuation grounds.

Why Growth Still Sets The Region Apart

According to Roemer Capital, Greek and Cypriot banks continue to benefit from stronger economic fundamentals than many western European peers. The report pointed to faster economic growth, healthier balance sheets, low levels of non-performing exposures, capital ratios approaching 20% and strong customer deposit bases.

Analysts expect performing loans across the sector to grow at a compound annual rate of 6% to 8% through 2028, supported by private investment, digitalisation, green manufacturing, supply-chain expansion and a gradual recovery in household lending.

The report also said the conclusion of lending under the EU Recovery and Resilience Facility is unlikely to materially affect credit growth, as banks have already shifted back towards traditional commercial lending. Roemer Capital expects Euribor to remain between 2.2% and 2.5%, a level it believes should support both lending activity and net interest margins.

Geopolitics, Valuation And Market Structure Support The Case

The report said improving geopolitical conditions have strengthened the investment outlook, noting that Brent crude prices have largely returned to pre-war levels while Greek government bond yields have stabilised at around 3.5%. Although geopolitical risks remain, Roemer Capital believes the likelihood of a major inflationary shock or significant pressure on bank profitability has eased.

Another important catalyst identified by the firm is Greece’s expected promotion to developed-market status by FTSE Russell, STOXX and MSCI over the coming months.

According to the report, the reclassification should improve liquidity and attract a broader base of international investors. Roemer Capital also said Euronext’s acquisition of the Athens Exchange is expected to strengthen market infrastructure and increase international visibility, particularly for Bank of Cyprus and Optima Bank.

The firm noted that Bank of Cyprus has already benefited from its Athens listing, with average daily trading value increasing from less than €400,000 before its September 2024 move to nearly €6 million afterwards.

Economic Momentum Remains A Core Tailwind

Roemer Capital said both Greece and Cyprus have moved beyond post-crisis recovery and are now supported by private-sector-led growth. For Cyprus, the report highlighted recent tax reform and efforts to simplify the legal and regulatory framework, while also noting that limited foreign banking competition continues to support domestic lenders.

Overall, Roemer Capital expects Greek and Cypriot banks to remain well-positioned for profitable loan growth over the coming years.

The Future Forbes Realty Global Properties
eCredo
Aretilaw firm
Uol

Become a Speaker

Become a Speaker

Become a Partner

Subscribe for our weekly newsletter