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IMF Evaluates Cyprus’ Public Wage Bill: Recommendations On The Horizon

by THEFUTURE.TEAM

June 18, 2024

In an ongoing assessment, the International Monetary Fund (IMF) is scrutinising Cyprus’ public wage bill to propose optimisations aimed at fiscal sustainability. A delegation from the IMF is currently in Cyprus, engaging with key ministries including Finance, Health, Education, and Justice, as well as statistical and fiscal authorities. This review seeks comprehensive data on public sector employment, salary scales, and historical wage adjustments, including the Automatic Indexation of Wages (ATA).

The IMF’s focus includes the financial impact of restoring salaries and allowances cut during the economic adjustment period and evaluating the number of public sector employees. Preliminary indications suggest recommendations may involve a gradual reduction in public sector personnel and a tiered approach to wage adjustments based on productivity, although measuring productivity in the public sector presents challenges.

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This initiative follows a broader context where the IMF has consistently advocated for aligning wages with productivity to ensure economic efficiency. The outcome of this assessment will be critical for Cyprus as it navigates its fiscal policies and public sector management.

As Cyprus anticipates the IMF’s recommendations, the government is concurrently addressing workforce needs, evidenced by a recent request to unfreeze 1,311 public sector positions. This balance between maintaining public sector efficiency and ensuring fiscal prudence underscores the complexity of public wage management.

The IMF’s final report will likely shape future policy directions, aiming to enhance the sustainability of Cyprus’ public finances while addressing the intricacies of public sector employment and compensation.

The Future Forbes Realty Global Properties

Cyprus Tech Sector Propels Economic Growth and Reshapes Talent Landscape

by THEFUTURE.TEAM

May 17, 2025

Robust Economic Expansion

At the recent TechIsland Summit, Christophoros Anayiotos, Head of Deal Advisory at KPMG Cyprus, delivered a compelling assessment of the island’s burgeoning tech ecosystem. The 2024 report highlights that the technology sector now contributes 16% of Cyprus’ total Gross Value Added (GVA), up from 12.6% in the previous year. Overall, the sector’s economic impact is estimated at €8.5 billion, with direct contributions of €4.7 billion and an additional €3.8 billion generated indirectly.

Sectoral Contributions and Productivity

Using the Leontief Input-Output Model, the study covers key areas including ICT, professional scientific and technical activities, as well as tech-driven financial and insurance services. Notably, the ICT segment itself delivers €3.4 billion in direct GVA, while professional services and financial operations contribute €840 million and €505 million respectively. This horizontal spread of technological influence underscores the industry’s pivotal role in driving multifaceted business growth.

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Resilience During Economic Downturns

Even amid challenging economic conditions, the tech sector has demonstrated remarkable resilience. In the pandemic-stricken year of 2020, while the broader Cypriot economy contracted by 3%, the ICT sector experienced a robust growth rate of 21%. This momentum accelerated further to a striking 38% growth in 2021, reinforcing technology’s role as a stabilizing economic force.

Divergent Trends in Employment

Anayiotos’ analysis reveals that the tech sector now sustains over 62,000 full-time equivalent jobs in Cyprus, with 45,900 direct and 16,300 indirect roles. For every €1 million in increased sector revenue, approximately 13 jobs are generated. Despite the overall employment surge, there has been a significant shift in workforce composition. In 2015, Cypriot nationals comprised 88% of ICT employees; by 2024, this figure dropped to 50%, with non-EU nationals accounting for 42% and other EU citizens 8% of the workforce.

Cyprus as an EU Leader in ICT

Cyprus now holds a prominent place in the EU, ranking second in the EU27 for ICT’s share of national GVA at 11.4%, a notable rise from 9.4% in 2023. Furthermore, the island leads the bloc in ICT GVA growth, posting a remarkable 347% increase between 2015 and 2024. With a top-five ranking in GVA per ICT employee—whereby each contributes approximately €130,000, compared to the EU average of €116,000—the country’s technology workforce has expanded at an annual growth rate of 12.1%, from 9,300 in 2015 to 26,000 in 2024.

Strategic Imperatives for Future Growth

Anayiotos emphasizes the need for strategic enhancements to sustain this expansion. Key recommendations include improving air connectivity, joining the Schengen Area to boost mobility, and attracting more international banking institutions. Additionally, introducing tax incentives designed to favor stock options is considered crucial in luring and retaining skilled talent. Addressing the limited capacity in private education is also vital to accommodating professionals relocating with families.

Investing in Talent and Digital Transformation

Looking forward, investments in education and digital upskilling remain paramount. There is a clear call for a national initiative aimed at promoting STEM careers, elevating the digital skills of both students and educators, and accelerating the digital transformation of public services. Moreover, streamlining legal procedures will be critical to improving the overall business climate and competitiveness.