Labour Minister Yiannis Panayiotou has condemned the recent 5 per cent price increase announced by concrete manufacturers, describing it as unprecedented, unjustified, and driven by profiteering motives. Speaking on CyBC’s morning programme Proino Dromologio, Panayiotou clarified that the revision of the sector’s collective agreement aimed to address economic growth and rising living costs for workers, without any justification for passing on the minimal wage increases to consumers.

Panayiotou explained that wage and service increase only contribute less than 1 per cent to overall production costs, according to verified data from social insurance and other relevant services. Despite this, construction companies announced a price hike of approximately 5 per cent, prompting sharp criticism from the government.

“This price increase for concrete is entirely unjustified,” the labour minister said, urging the construction industry to reconsider and warning that profiteering cannot go unchecked. He added that the government is in dialogue with contractors and the Cyprus scientific and technical chamber (Etek) to address the issue, stressing the state’s responsibility to protect consumers, promote competition and safeguard industry professionals.

The price surge follows a month-long strike in the concrete sector, which, according to the Fiscal Council, has caused a potential GDP contraction of between 0.15 per cent and 0.30 per cent. The strike, which lasted from November 7 to early December, significantly disrupted the construction sector, a key pillar of the national economy.

Strikes in critical sectors such as construction can substantially sway the economic landscape,” stated Fiscal Council officer George Loizides. In its analysis, the council estimated GDP losses ranging from €51 million in the best-case scenario to €101 million in the worst-case scenario.

Despite these setbacks, the construction sector showed robust growth throughout the year, with the Gross Value Added (GVA) rising from €360 million in the first quarter to €385 million in the third quarter. The council projected that GVA could climb to €431 million in the fourth quarter, with an annual total ranging between €1.51 billion and €1.58 billion.

For the broader economy, GDP grew from €7.84 billion in the first quarter to €8.71 billion in the third quarter. Although a slight dip to €8.42 billion is anticipated for the fourth quarter, the total GDP for 2024 is estimated at €33.25 billion.

“The annual total reflects strong economic performance and stability, driven by contributions from various sectors, including construction,” the council said, noting that swift recovery efforts are crucial for minimising long-term disruption.

Meanwhile, the president of the federation of associations of building contractors (Oseok), Stelios Gavriel, expressed concern over the sharp increase in concrete prices, which have risen by €2 to €4 per cubic metre. Speaking to Stockwatch, he questioned the justification for these price hikes, given that labour costs have remained stable.

“The strike threw us a curveball, but it still doesn’t explain why concrete prices have soared quite this high,” he said.

Oseok has approached the Cyprus employers and industrialists’ federation (OEV) for assistance in curbing these price increases but has yet to receive a response.

Director of the Cyprus chamber of commerce and industry (Keve), Andreas Andreou, acknowledged the request but admitted the challenge in monitoring individual pricing strategies due to the dissolution of the concrete companies’ association.

“Initial checks with one company indicated no immediate increase, but future hikes haven’t been ruled out,” he noted.

Adding to concerns, the aggregates association has hinted at potential price increases, which could trigger a chain reaction affecting both businesses and consumers.

“As usual, it’s the businesses and citizens who will end up shouldering these costs, sending ripples through the entire economy,” Andreou said.

Former director of the concrete manufacturers, Christos Athinodorou, defended the price increases as essential for the industry’s survival.

We had to raise the concrete price by €1.80 per cubic metre, it was the minimum we could do to manage our escalating costs,” he said, citing slim profit margins and rising labour and transportation costs.

As tension mounts, stakeholders are urging swift government intervention to prevent further price surges, protect market stability, and ensure that both consumers and industry professionals are not unduly burdened by unwarranted cost increases.