Amid unprecedented support measures implemented across the European Union to mitigate the economic impacts of the COVID-19 crisis, Cyprus has emerged as one of the most vulnerable nations. Detailed analysis from the July 2024 issue of the “Review of Cypriot Economic Policy” reveals significant financial difficulties experienced by households during the pandemic.
Authors Maria Iliophotou and Nikoletta Pasiourtidou utilised data from the EU Survey of Income and Living Conditions (EU-SILC) to explore factors contributing to these economic hardships. Their study indicates that employment profiles play a crucial role, with households containing unemployed or self-employed individuals, those in hospitality, and service sectors facing the highest risks.
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Additionally, working-age households, immigrant families, larger households, and those with health issues exhibited increased financial strain. Key indicators included reduced household income and delayed payments on essential expenses such as rent or mortgage.
Comparative analysis within the EU identified Cyprus, alongside Greece, Romania, Bulgaria, and Malta, as particularly susceptible to the pandemic’s economic fallout. Despite various relief measures, the financial resilience of Cypriot households remains a pressing concern, underscoring the need for targeted policy interventions to bolster economic stability.
Employment Profiles and Economic Hardship
The study highlighted the correlation between employment status and financial vulnerability. Households with unemployed or self-employed individuals faced significant income reductions, exacerbating their financial instability. The hospitality and service sectors, heavily impacted by pandemic restrictions, saw widespread job losses and reduced working hours, further straining household budgets.
Demographic Factors Influencing Financial Strain
The analysis underscored that demographic factors such as age, immigration status, household size, and health conditions played a crucial role in financial vulnerability. Working-age households, especially those with young children, encountered heightened economic pressures. Immigrant families, often engaged in precarious employment, faced disproportionate economic challenges.
Impact on Household Income and Expense Management
The pandemic resulted in widespread income reductions across Cypriot households. Many families struggled to manage essential expenses, with significant delays in rent and mortgage payments. The financial strain was particularly acute among larger households, where the burden of multiple dependents exacerbated economic difficulties.
Comparative Vulnerability within the EU
When compared with other EU nations, Cyprus emerged as one of the most vulnerable to the economic impacts of the pandemic. Alongside Greece, Romania, Bulgaria, and Malta, Cyprus showed heightened susceptibility to financial distress, despite the implementation of relief measures. This comparative analysis highlighted the need for robust, targeted interventions to mitigate long-term economic repercussions.
Policy Recommendations for Enhancing Financial Resilience
To address these vulnerabilities, the study recommends comprehensive policy measures aimed at enhancing the financial resilience of Cypriot households. These include targeted support for unemployed and self-employed individuals, initiatives to stabilise the hospitality and service sectors, and programs to assist immigrant families and larger households. Furthermore, the study advocates for improved access to healthcare and financial services to support households with health issues.
