Cyprus Mail
Opinion

A detailed look at unemployment in Cyprus

By Costas Apostolides

The Republic of Cyprus had full employment from 1962 to 2008, and suffered no recessions, other than those caused by war: the intercommunal conflict of 1963-64, the 1974 coup and Turkish invasion and the 1991 Gulf War.

From all of these the economy recovered very quickly. Recovery was possible because of a strong planning system and good cooperation between political parties, government, trade union and business. But in the current economic crisis Cyprus has suffered both recession and unemployment, and there is serious social distress. Perhaps the worst hit group are those unemployed who do not have other forms of funding, and are not entitled to unemployment assistance.

One of the problems in examining unemployment is that there are various definitions, and figures provided therefore differ from one source to the other. This article attempts to give the essence of the situation, and not to consider the data disparities or variations.

The Eurostat data for unemployment released this week estimate that unemployment in the EU 27 stood at 26 million, having risen by a million over the previous year. Consequently the recession is still there, and it’s hitting hardest the South, though almost all countries are affected. The lowest rates of unemployment were in Austria (4.6 per cent), Germany (5.4 per cent) and Luxembourg (5.7 per cent).The highest levels of unemployment in the EU 27 were all in the South plus Ireland (that has some similar characteristics), and were as follows: Greece (26.9 per cent), Spain 26.3 per cent, Portugal (17.4 per cent), Cyprus (17.5 per cent), Croatia (16.5 per cent), Slovakia (14.5 per cent) and Ireland (13.5 per cent). Cyprus had, however, the fastest increase in unemployment, from 11.7 per cent in June 2012 to 17.5 per cent the same month this year. It is in as bad a situation as Portugal and closing in on Spain. The situation is therefore very serious.

In order to get a perspective on the overall situation in Cyprus, the number of gainfully employed people was estimated at 376,000 in 2012. A break down by Cypriots and non-Cypriots does not seem to be available from the statistics department, but from the social insurance data the labour force consisted at the end of 2012 of the following groups:

  • Greek Cypriots/others 68.3 per cent.
  • Turkish Cypriots 0.4 per cent (1,494)
  • Foreigners (non-EU) 12.1 per cent.
  • EU Citizens 19.2 per cent

Consequently almost a third of the labour force is non-Cypriot, which ties in with immigration data that Cyprus has one of the highest rates of immigration in the EU.

Though all the signs are that foreign, EU citizens and illegal immigrants are leaving because they cannot get jobs here, it seems that immigration policy has not adjusted to the recession. For example one of the few growth sectors of the economy has been household services (basically housemaids mostly from the Philippines and Sri Lanka).

The number of unemployed is estimated at over 70,000 on the basis of the surveys aiming at identifying those in search of work, but in view of the regulations for registration of unemployed only 46,863 was officially registered in June of this year. These were broken down as follows by community:

  • Greek Cypriots 36,624 (74.5 per cent)
  • Turkish Cypriots    480 (0.1 per cent)
  • EU Citizens         8,019 (17.1 per cent)
  • Third Country Nationals           1,740 (3.7 per cent)

The Greek Cypriot community is, therefore, over-represented amongst the unemployed, and the other categories under-represented. In part this is because non-Cypriots tend to leave when they lose their job, but also because they are generally employed on contracts and must leave when their term expires. Illegals are not in the data. The non-Cypriots registered as unemployed are more likely to be legal residents of Cyprus or political refugees.

The majority of the registered unemployed (60 per cent) have completed primary or secondary education, and 10 per cent technical education. Consequently university and other tertiary education graduates are around a third of the total. In terms of regional location 65 per cent are from Nicosia and Limassol, but there is a very high 24 per cent in Larnaca, a disproportionate figure in relation to the population. A majority (65 per cent) have been registered for less than six months, but almost seven thousand (15 per cent) have been registered as unemployed for a year or more.

The numbers of men and women registered are very similar, and rather surprisingly the age structure is also similar. New entrants to the labour market registered as unemployed were 4,583 in June, while by sector the highest numbers registered unemployed were in wholesale/retail (9,370), construction (7,747), manufacturing, and hotel and catering (3,895). The unemployed from the education sector doubled in June to 3,199 but this is normal, since private schools and colleges tend not to pay many teachers in summer, and so they register on the unemployed lists. The above sectors account for 72 per cent of registered unemployed. Unemployment in the financial sector is still relatively low at less than a thousand but will grow rapidly as lay-offs begin.

What are the prospects for employment? Not good I am afraid. In the first quarter of 2013 there were only about 500 places advertised or notified, as against over 2,000 in 2012 in the same period, 4600 in both 2010 and2011, and over 7,500 in 2009 the year when Cyprus went into recession.

The government measures appeared to have helped a number of unemployed find work or be engaged in some activity (a sort of low pay internship scheme), but the number of unemployed has continued to rise, and will increase further in the next few months. Some relief will be provided by the government welfare scheme announced this week but still being prepared, which as from January will cover those who are not provided with assistance today. But it is clear that there has to be a return to growth to turn the economy round and get people back to work otherwise the social consequences are likely to be dire.

 

Costas Apostolides is chairman of EMS Economic Management Ltd ([email protected])

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