Employers call for fiscal prudence and restrained labour cost increases

The president of the Cyprus Employers and Industrialists Federation (Oev) Antonis Antoniou on Tuesday used his speech at the federation’s annual general meeting to welcome the fresh start offered by the new administration’s recent election, before expressing optimism about the country’s development prospects.

The meeting, which took place at the Hilton Nicosia Hotel on April 25, took place just 56 days after the new President Nikos Christodoulides and his government took office.

Antoniou started his speech by highlighting the issues that concern both the entire business community, as well as Cypriot society in general, including the economy, labour relations and human resources, energy, the green transition, digital transformation, education, health, and justice.

He acknowledged the economic and geopolitical environment’s uncertainty, which affects the daily life of citizens, businesses, governments, and the entire international community.

Additionally, he stressed the need for managing uncertainty intelligently and productively and ensuring a strong, healthy, and resilient economy capable of facing unforeseen events.

Moreover, Antoniou acknowledged that businesses are flexible by definition, but the entire ecosystem in which they operate must acquire the corresponding flexibility and adaptability, in order for them to be efficient in how they operate, in turn benefitting the entire economy.

In this spirit, he called on administrative mechanisms and institutions to adapt accordingly in an increasingly fast-paced environment so that they can better support Cypriot businesses.

“The Cypriot economy proved once again in 2022 that it has the strength and ability to achieve spectacular performances, which translate into a high growth rate, low unemployment, production of primary surpluses, and reduction of public debt below 90 per cent of GDP, despite the difficulties and adverse conditions,” Antoniou stated.

“High inflationary pressures have plagued citizens and businesses for at least the last two years, eroding the operating base of businesses and affecting the living standards of households,” Antoniou added.

He also stressed the need to postpone any tax, tariff, or other measures that will further burden the operating costs of businesses until there is a normalization of these pressures.

Furthermore, he also urged that any increase in labour costs in the public and private sectors should be done sparingly and linked this issue to a commensurate increase in productivity.

“The introduction of the national minimum wage last January at a rate exceeding 60 per cent of the national median wage, which met the need to support low incomes, has been carried out by the companies themselves,” Antoniou acknowledged.

He suggested that possible additional needs in vulnerable households should be handled with targeted welfare state interventions.

Antoniou also stressed the timely and successful implementation of the measures and reforms of the National Plan “Cyprus – Tomorrow” to accelerate the country’s pace and harmonise it with that of its partners in environmental and digital adaptation, upgrading its competitiveness, and enhancing development and collective prosperity.

Moreover, he underlined the importance of maintaining fiscal discipline by keeping inelastic expenditures within the limits of growth rates and the production of primary surpluses for a permanent reduction of the public debt.

Antoniou pointed out that the business-friendly tax environment is one of the strongest competitive advantages of Cyprus, as well as any other member state that does not have a strong production base.

“Cyprus cannot operate on terms that are ‘more royal than the king’ by following the increase of the corporate tax rate to 15 per cent for all companies when the international tendency is to impose 15 per cent only on those companies with an annual turnover of more than €750 million,” Antoniou stated.

“We need to modernise and simplify the tax system, which has been almost unchanged for 20 years, due to the introduction of green taxation imposed in a few months,” he later added in his speech.

In this context, he suggested that the state should assign any tax reform to a reputable firm after a tender process, which will then produce a thorough study with a holistic approach, away from piecemeal and hasty moves.