Cyprus government policies are mean and unfair

Officials disingenuously claim they can’t adequately compensate employees and pensioners while sitting on sizable surpluses and spending lavishly on themselves and associates and giving favourable treatment to the wealthy and big companiesArticle 9 of the Constitution of the Republic of Cyprus states that “Every person has the right to a decent existence and to social security. A law shall provide for the protection of the workers, assistance to the poor and for a system of social insurance”. However, Eurostat data reveals that in 2025 17.1 per cent of Cyprus households were at risk of poverty, with households of elderly pensioners, having a poverty risk of at least 33.7 per cent. And it is estimated that 30 per cent of employees in Cyprus receive gross wages of less than €1,500 per month, with around one-third of these employees earning the minimum wage, which ranges from €979 to €1,088 per month. Given this information on the economic welfare of households and employees it is contended that the expenditure, taxation and regulatory policies of the government do not enable a significant number of persons to experience a decent existence and right to (adequate) social security in accord with the articles of the Constitution of the Republic of Cyprus. Government expenditure The government, despite its abundant financial resources, is failing with its income and social protection policies in enabling the households of lowly-paid employees and pensioners to experience a decent standard of living. In this connection, the recent statements of government ministers and officials are revealing. Finance Minister Makis Keravnos said that the demands of government’s hourly-paid workers (more than 30 per cent of them earning less than €1,500 per month) were not fully justified and would increase the state payroll by approximately €50 million over three years. Government spokesman Konstantinos Letymbiotis added, incredibly, that this amount “had to be considered in the context of the broader public sector overall wage levels and the (financing) capacity of the State. In view of the government’s ample funds and its total compensation of employees of €4.2 billion in 2025 and the sizable increase in the compensation of other government employees in recent years, the statements of Keravnos and Letymbiotis show that they are being mean in opposing the wage demands of hourly-paid government employees. Indeed, increasing the compensation of these government employees by say €16 million in 2026 would add only a mere 0.4 per cent to the government’s total wage and salary bill. Furthermore, Labour Minister Marinos Mousiouttas said initially that promised “social security reform” would bring pensions to adequate levels. Yet, subsequently, Mousiouttas stated that “raising low pensions to the poverty threshold level was not economically feasible under current conditions” and added that “any further expenditure resulting from changes to benefits must be offset by savings in expenditure elsewhere”. In effect, ministers and top government officials are claiming wrongly and disingenuously that they can’t adequately compensate hourly-paid government employees and pensioners because of limited government funds. This is sheer nonsense as the government is continually producing sizable surpluses (€1.2 billion in 2025), has debt significantly below 60 per cent of GDP, and holds bank deposits amounting to nearly €5 billion. Besides, the government is spending lavishly on the services of parliamentarians, advisors and consultants, on awarding lucrative contracts to favoured developers, and on the travel of President Christodoulides and his entourage. Notably, the NET salary of MPs was increased by 3.8 per cent to €5,466 per month in May 2026. Moreover, it appears that the government does not really care about raising the incomes of the poorer employees and pensioners to levels at which they can afford the basic essentials of life so as to abide with the Cyprus Constitution. Taxation policies Article 24, Section 1 of the Constitution states that “Every person is bound to contribute by his means towards the public burdens”. However, in Cyprus with its increasingly regressive tax system, a considerable share of the burden of taxation falls on a large part of the population that have relatively low means in the form of income and wealth. In fact, a sizable portion of the disposable incomes of lower-paid persons is taken from them through indirect taxes such as VAT and excise duties on their purchases of essential goods and services. In addition, with the progressivity of the personal income tax system being kept relatively modest and the top marginal tax rate of 35 per cent remaining unchanged for over 20 years, despite the recent tax reform, the share of the tax burden required of high-income earners with greater means has been reduced. Furthermore, the absence of significant progressive taxes on immovable property in Cyprus has resulted in wealthy property owners not paying their fair share of taxes in accord with their means. Besides, with no tax on inheritances, wealth inequalities prevail across generations. Government regulations The means of persons are not only affected by government taxation and expenditure policies, but also by government regulations and how they are implemented and complied with. Small and Medium-sized Enterprises (SMEs) account for over 99 per cent of all businesses in Cyprus, employing around 75 per cent of the private workforce. Most of these businesses are family-owned from which many households derive their incomes. Although, intended to protect public welfare, the “use and abuse” of government regulations creates a heavy burden for small businesses, with compliance associated with legal, administrative and other costs resulting in heavy, overhead expenses, let alone in taxing the owner’s time for other matters, in supporting the growth the business. In contrast, larger companies because of their greater scale are less encumbered by dealing with the costs of regulations. In fact, the European Commission has recognised the disproportionate burden of regulations being placed on small businesses, and has called for “less regulatory burden for small businesses”. But, this relatively unfavourable situation for small businesses is even worse in Cyprus with respect to regulatory policies and their implementation. Currently, small shops, notably those in retail food and beverage service activities, are being pestered by government inspectors on their compliance with “all” (some petty) regulations, whereas many large companies, including most hotel chains in Cyprus, are allowed to operate without the relevant licences and are regularly calling for extensions, so that they can “eventually” comply. And large corporations with the aid of their lawyers and accountants can more easily avoid and evade taxes and interpret ambiguous regulations to their benefit. Finally, importantly, large companies with their ample property wealth or collateral are given very favourable treatment by banks in being able to secure credit and obtain generous loan rescheduling and debt write-offs. In marked contrast, small businesses and less wealthy households have found considerable difficulties in being extended affordable loans to supplement their modest or low incomes.