European Commission report highlights economic vulnerabilities in Cyprus

A report from the European Commission has identified significant weaknesses in the fiscal and social policies of Cyprus. The findings indicate that the minimum wage lost 2.8% of its purchasing power between July 2025 and July 2026, as wage increases failed to keep pace with inflation.

The report, titled ‘The Socio-economic Value of Quality of Work’, notes that only one in four employees is covered by collective bargaining agreements, falling significantly below the European Union's 80% reference threshold. Additionally, Cyprus recorded the largest negative impact from changes in tax and social policy on the risk of worker poverty within a European comparative analysis for the 2019–2024 period.

These issues are attributed to a lack of indexation for social benefits and tax parameters, alongside the imposition of mandatory healthcare contributions without corresponding tax relief or increased subsidies for low-income households.