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Illegal Employment on the Rise in Cyprus as Undeclared Work Declines

A recent report on the labour market in Cyprus has revealed a worrying increase in illegal employment, even as the rate of undeclared work shows signs of decline. The findings, which were discussed during a parliamentary session, have raised concerns among lawmakers and authorities alike about the ongoing challenges in combating labour exploitation and maintaining fair employment practices.

According to data presented by the Ministry of Labour, the issue of illegal employment—workers being hired without proper work permits or contracts—has escalated in recent months. This rise comes at a time when efforts to reduce undeclared work, where employees are not registered or insured, have seen moderate success. Despite progress in regulating the labour market, illegal employment remains a significant issue, especially in industries such as construction, agriculture, and hospitality.

Understanding the Distinction Between Illegal and Undeclared Employment

Illegal employment refers to the hiring of individuals who are not legally permitted to work, often due to their immigration status or lack of proper documentation. These workers are typically vulnerable to exploitation, receiving lower wages and lacking access to basic protections such as healthcare and social security benefits. In contrast, undeclared work involves the employment of individuals who may be legally allowed to work but are not officially registered, depriving them of insurance coverage and other legal protections.

While authorities have made strides in reducing undeclared work, particularly through stricter inspections and penalties, the rise in illegal employment presents a new challenge. Lawmakers pointed out that illegal employment poses even greater risks, as it not only harms the workers involved but also undermines the integrity of the labour market and contributes to unfair competition among businesses.

Factors Driving Illegal Employment

Several factors contribute to the increase in illegal employment, according to the Ministry of Labour. One key driver is the influx of migrant workers, many of whom lack the necessary documentation to work legally in Cyprus. Without proper channels for legal employment, these individuals often turn to unregulated jobs where they are vulnerable to exploitation.

The growing demand for cheap labour, particularly in sectors like construction and agriculture, also plays a significant role. Employers seeking to cut costs may resort to hiring illegal workers, bypassing the legal requirements for contracts, wages, and benefits. This practice not only puts workers at risk but also creates an uneven playing field, where businesses that comply with legal standards struggle to compete with those exploiting illegal labour.

Efforts to Combat Illegal Employment

In response to these findings, the government has pledged to intensify its efforts to combat illegal employment. This includes increasing inspections, imposing harsher penalties on employers found guilty of hiring illegal workers, and strengthening collaboration with immigration authorities. Additionally, there is a push to create more pathways for legal employment for migrant workers, ensuring they can enter the labour market with proper documentation and protections.

DISY Calls For Faster AI Adoption In Cyprus To Boost Business Competitiveness

Cyprus needs to move beyond announcing artificial intelligence ambitions and focus on integrating the technology into businesses, public services and the wider economy, Democratic Rally (DISY) president Annita Demetriou said.

Speaking at a press conference titled “Artificial Intelligence, Competitiveness and Economic Growth”, Demetriou warned that Cyprus risks falling behind despite strong public interest in AI.

Cyprus Faces An AI Adoption Gap

More than four in 10 people in Cyprus used AI in the previous year, placing the country among Europe’s leaders in individual adoption. However, local businesses rank near the bottom in AI use, while citizens also lag in advanced digital skills.

“The problem is not the people or the businesses. It is the policy gap. And policy must close it,” Demetriou said.

She criticised the government’s ambition to make Cyprus a regional AI hub, arguing that it lacks sufficient planning for energy demand, clear budget commitments and effective workforce reskilling measures.

Six Priorities To Accelerate AI Adoption

DISY outlined six priorities to turn AI into a driver of economic growth:

  1. Reskill Workers: Establish funded training programmes supported by tax incentives.
  2. Support Businesses: Offer tax incentives and exemptions to encourage AI integration.
  3. Attract Investment: Bring international companies with significant AI operations to Cyprus.
  4. Modernise Public Services: Connect government systems, reduce bureaucracy and improve services.
  5. Secure Affordable Energy: Ensure sufficient capacity and competitive electricity prices for digital infrastructure and data centres.
  6. Protect Rights: Safeguard personal data, privacy and human rights through effective oversight.

“Our answer is not to stop technology. Our answer is to ensure no one is left behind. Reskilling becomes a social policy priority,” Demetriou said.

Public-Sector Reform Is Essential

Konstantinos Mountoukkos, who oversees digital policy, research and innovation on DISY’s Council for Monitoring Government Work, argued that AI adoption requires changes to public administration, not just new technology.

He called for secure interoperability between government systems, a move from pilot projects to practical implementation and stronger safeguards against inaccurate outputs, privacy breaches and cybersecurity threats.

Mountoukkos also urged the government to modernise technology procurement. Digital projects should have clear objectives, timelines and measurable results, including their cost, time savings and impact on public services.

Skills Will Determine Cyprus’s Competitiveness

Michalis Ioannidis, head of DISY’s Council for Monitoring Government Work, described AI adoption as a social policy priority. DISY spokesperson Onoufrios Koullas warned that without adequate training, Cyprus could lose ground in workforce productivity and economic competitiveness.

The party said it would present further proposals on managing the risks associated with AI and digital life at a future press conference.

The central challenge for Cyprus is to turn public interest in AI into wider business adoption, a more skilled workforce and measurable improvements in public services.

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