Wage inequality in Cyprus is widening as the benefits of economic growth fail to reach the majority of the workforce, according to the Fiscal Council’s 2025 report.
The data reveals a stark divergence between sectors, with the highest earners seeing the fastest pay rises while real wages have declined for approximately 40% of employment categories since 2021. Only 37% of workers have received pay increases that outpaced cumulative inflation over the same period, explaining why positive macroeconomic indicators have not translated into social satisfaction.
Information service activities saw a 97.1% wage surge over the last four years, reaching an average of €4,959. Similarly, salaries in financial services reached €5,113 in 2024 following a 27% increase. The Council noted that inequality is growing fastest in sectors where pay was already high, driven by concentrated investment and capital formation.
A significant factor in this disparity is the role of foreign-controlled enterprises. The report highlights that nearly 11% of the country’s Gross Domestic Product (GDP) “leaks” abroad to the ultimate owners of these companies. This shift has created a misleading picture of national wealth; while GDP per capita grew by more than 3% between 2018 and 2024, Gross National Income (GNI)—which accounts for these outflows—grew by a more modest 1.74%.
The Council warned that the reliance on high-mobility foreign firms creates structural vulnerabilities. Furthermore, there has been a visible shift in the distribution of income away from labour and towards corporate profits. Despite a tight labour market and low unemployment, which typically drive wages up, capital returns have increased, partly due to European Central Bank monetary policy and rapid local investment trends.
The gap between the “average” and “middle” worker is also expanding. The distance between the mean and median wage in Cyprus has grown by 32% in absolute terms. The Gini index for disposable income, a key measure of inequality, rose to 30.1% in 2024, pushing Cyprus above the Eurozone average for the first time. The Council expects these indicators to deteriorate further in upcoming reports as data lags catch up with recent market shifts.
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