UNEMPLOYMENT was unknown in Cyprus until a few years ago. So much so that the authorities were issuing work permits to tens of thousands of third country nationals, not to mention the arrival of thousands of workers from EU member-states, to cover the acute labour shortages faced by the economy. That was in the good old days of a booming economy financed by easy bank credit.
How things have changed in the last few years. The unemployment rate is now 17 per cent, with an estimated 73,000 people out of work, and it is expected to hit 20 per cent this year, an unprecedented level for Cyprus. Unfortunately, it does not look like things are set to improve any time soon with most businesses struggling to stay afloat and no credit available for new ventures that would create jobs. There are no funds for development projects and attracting foreign investment is an impossible task in the current financial environment.
The government has come under a lot of flak for the rising numbers of jobless, but the truth is that its options are very limited. The issuing of permits for foreign workers has all but stopped, while few are being renewed; meanwhile EU nationals who were here to work have packed up and left. It is an indication of how the economy has contracted that, in spite of the big numerical reduction of the labour force there are still 73,000 people out work. And this cannot be attributed exclusively to the fact that Cypriots were refusing to do the low-paid jobs done by foreigners.
The idea of lowering the minimum wage – so foolishly raised in the middle of the recession by the previous labour minister – to stimulate employment was vetoed by the unions that had also opposed the deregulation of shopping hours which went ahead. Although the government tried to ensure Sunday shopping created jobs, it is highly unlikely that it has.
This has left the labour ministry with no choice but to go for the temporary measure of subsidised jobs which it had also implemented last year. On Tuesday, labour minister announced an employment programme worth €40m – 95 per cent of which would be funded by the EU – that would provide work for some 7,500 people. A third of these would be high-school graduates and another third university graduates. Almost half the people under the age of 30 are unemployed and these schemes would help them acquire some work experience, which is no bad thing.
While these schemes offer some relief, the government should perhaps consider funding more ambitious projects with the money it secures from the EU. For instance some of the money could be put aside and offered as start-up capital to youths with original business ideas and cannot secure funding from the banks. This might not be an instant success, but apart from permanent jobs, it could help create an entrepreneurial culture which is totally lacking among our youth.