Coronavirus: Salaries back down to 2013 levels, report concludes

The coronavirus pandemic slashed an estimated three per cent off local wages and salaries in the second and third quarters last year, the annual report on the economy and employment by Peo’s Labour Institute of Cyprus (INEK-Peo) released on Friday concluded.

The report, drafted and presented by Elias Ioakimoglou, covers a year dominated by lockdowns that the European Union estimates led to a 5.8 per cent drop in Cyprus’ GDP. Despite government measures to support employment, the number of jobless has crept dangerously close to double digits, while employees’ income – which has still to recover from the 2013-2015 economic crisis – suffered a new blow, he said.

The presentation came amid hopes that the vaccination programme will bring an end to the pandemic, but continued uncertainty over the speed at which it will proceed, and the dangers posed by variants, he added.

The report analysed the situations as regards salaries, employment and income inequality, and proposed that the way out of the economic slowdown is wage-led growth, which will not only lead to economic recovery but reduce income inequality.

According to the report, the first coronavirus wave was associated with a 3 per cent drop in average salaries over the period of April to September 2020 compared to the corresponding months in 2019 (4.7 per cent drop in in the second quarter and 1.4 per cent in the third quarter).

This drop follows on from the erosion in salaries in the wake of the 2013 economic crisis. As a result, the purchasing power of the average real salary is now at 2013 levels, cancelling out the gains made from 2015 to 2019.

The EU estimates that the reduction in employment earnings for the whole of 2020 will be the biggest (together with Greece) compared to other countries of the European south.

Moreover, the number of unemployed in September remained some 50 per cent higher than the corresponding month in 2008.