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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.

Cyprus Tourism Recovers After Difficult Start To 2026

Cyprus’ tourism sector is recovering after a sharp decline in arrivals earlier this year, but Deputy Minister of Tourism Kostas Koumis has warned that the industry remains vulnerable to external shocks. Presenting the department’s €59.4 million budget for 2027, he stressed that continued growth cannot be taken for granted.

Arrivals Recover After A Sharp Early-Year Decline

Tourist arrivals fell by 5.6% in the first nine months of 2026 compared with the same period last year, Koumis said. This marks a significant improvement from the 17.9% decline recorded during the first four months, although the recovery remains incomplete.

Despite the setback, arrivals between January and September were 4.1% higher than in 2024 and 8.5% above 2023 levels. Koumis said the figures indicated that the sector had entered a recovery phase, but added that more work was needed to restore demand in certain markets.

An Unprecedented Shock For The Industry

Koumis described 2026 as one of the most difficult years for Cyprus’ tourism sector in decades. External developments triggered widespread cancellations and a sharp slowdown in bookings during March and April, with tens of thousands of reservations cancelled and new bookings largely stalling.

“2026 will undoubtedly remain in the history and memory of those working in the sector as a year during which our country’s tourism industry was called upon to face an unprecedented crisis as a result of external factors,” he told lawmakers.

Budget Focuses On Promotion And Development

Around 62% of the proposed 2027 budget will go towards promoting Cyprus and strengthening its tourism offering. Funding will support marketing campaigns, participation in international tourism fairs and incentive schemes designed to stimulate demand and improve the island’s competitiveness in key markets.

Tourism Revenue Remains Below 2025 Levels

Tourism receipts fell by 7% in the first seven months of 2026 compared with the same period in 2025, according to the Cyprus Statistical Service. However, revenue remained 9.2% above 2024 levels and 13.8% higher than in 2023.

Koumis said the final outcome would depend on performance during the remaining months. If receipts follow a trajectory similar to 2025, he expects the full-year decline to be limited to between 3% and 4%, which he described as “a very satisfactory performance” under the circumstances.

Recovery Does Not Guarantee Future Growth

September recorded what Koumis described as the strongest September on record for tourist arrivals in Cyprus. However, he cautioned against complacency, noting that the disruption earlier in the year demonstrated how quickly external events can affect the sector.

“Success in tourism can never be taken for granted,” he said.

The government aims to ensure that tourism continues to benefit Cyprus’ economy, businesses and local communities in 2027. The proposed budget places particular emphasis on promotion and product development, reflecting a strategy focused on consolidating the recovery while preparing the sector for further uncertainty.

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