The Cabinet finalised the new national minimum wage at €1,088 gross on Tuesday, a decision that immediately triggered fierce opposition from trade unions and warnings of a “cycle of industrial unrest” across the country.
Under the new decree, which takes effect on 1 January 2026, the monthly minimum wage for employees with more than six months of service rises from €1,000 to €1,088. For those with less than six months of continuous employment, the rate increases from €900 to €979.
While the government framed the 8.8 per cent increase as a balanced step toward social cohesion, Labour Minister Marinos Mousiouttas conceded the decision required a “delicate balance” between worker protection and business viability.
The announcement follows weeks of mounting tension between the Christodoulides administration and trade union leadership. Unions had previously warned the President that any figure below €1,125 would be met with “dynamic reactions.”
Labour leaders had argued for a rate closer to €1,170, based on 58 per cent of the median wage, and expressed frustration that the government used 2024 economic data rather than 2025 projections as a reference point for a decree that will span 2026 and 2027.
”The proposal took into account 2024 inflation and the forecast for 2025, totalling 2 per cent, alongside GDP growth rates that remain significantly higher than the Eurozone average,” Mousiouttas stated.
He added that the increase is expected to benefit 50,000 low-wage workers without triggering inflationary pressures or undermining the competitiveness of small-to-medium enterprises.
However, the private sector’s reaction has been equally critical.
The Employers and Industrialists Federation (OEB) denounced the 8.8 per cent hike as “unprecedented,” arguing it places the Cypriot minimum wage at a higher percentage of the median salary than that of major economies like Germany or the Netherlands.
The federation said that businesses unable to absorb the added costs would face threats to their viability, while others would be forced to pass the cost to consumers, effectively eroding the real income of workers.
The political fallout also marks a departure from the stance of former Labour Minister Yiannis Panayiotou, who had previously signalled that a figure of €1,125 was a feasible minimum. By siding with Mousiouttas’s lower proposal, the Cabinet has effectively invited a confrontation with the unions just as the new year begins.
The Minimum Wage Adjustment Committee is scheduled to continue discussions in 2026 to evaluate the long-term impact on economic growth and the potential for a transition to an hourly wage system.