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Government Employment Trends in Cyprus: Sector Shifts and Contract Dynamics

Government employment in Cyprus reached 52,530 personnel in September 2025, reflecting a marginal decline of 0.1 percent compared to the same month in the previous year. This slight contraction—amounting to a reduction of 50 employees—masks significant underlying shifts across core sectors and contract types.

Sectoral Performance Overview

Key public sectors display varied trajectories. The civil service, encompassing ministries, departments, and essential government functions, experienced a decrease of 1 percent. Meanwhile, the security forces saw a sharper decline of 2.4 percent, largely attributable to the non-renewal of fixed-term contracts in July 2025. In contrast, the educational service, which includes school units, the Cyprus Productivity Centre, and the Higher Hotel Institute of Cyprus, registered a robust growth of 3.3 percent.

Contractual Trends and Their Impacts

An analysis by contract type reveals diverging trends. Employees on definite-duration contracts increased by 4.8 percent over the past year, with the educational sector leading the change with an impressive 15.5 percent surge. Conversely, positions held under indefinite-duration contracts declined by 2.3 percent, while the security forces experienced a dramatic 70.8 percent fall in similar contracts—underscoring the strategic termination of specific roles.

Year-to-Date Employment Insights

When examined on a year-to-date basis from January to September 2025, the total government workforce demonstrated a modest overall increase of 0.7 percent relative to the same period in 2024. This uptick reflects a dynamic public sector balancing act amid evolving administrative and operational demands.

Understanding the Public Sector Workforce

The government employment sector in Cyprus broadly encompasses three distinct areas: the civil service, the educational service, and the security forces. Each of these is tailored to serve specific public needs, with varying contractual arrangements—including permanent staff, employees on indefinite or definite-duration contracts, and hourly paid workers, whether regular, casual, or seasonal. These classifications illuminate the complexity inherent in managing a diverse workforce within an era of fiscal prudence and operational realignment.

Such trends are vital for policymakers and industry observers, as they offer a detailed cross-section of public sector labor market dynamics in Cyprus—providing essential insights for strategic human resource and budgetary planning.

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.

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