Cyprus is experiencing a milestone moment in its labour market. With unemployment dropping to 3.7 per cent in April 2025, the country is not only demonstrating economic resilience, but also leading the European Union in year-on-year reduction of unemployment. While this signals robust growth, it introduces a new challenge for businesses: an intensifying competition for human capital.

According to Eurostat, Cyprus achieved the largest decrease in unemployment among EU member states, falling from 5.1 per cent in April 2024 to 3.7 per cent in April 2025—a remarkable 27.5 per cent drop. This positions the country as third-lowest in unemployment across the Eurozone. The number of unemployed persons shrank from 29,102 to 26,161, while employment figures grew by 16,400, reaching 493,272 employed individuals.

But success has a price. As the labour pool tightens, businesses are struggling to find staff—particularly in sectors like retail, construction, hospitality and financial services. Registered unemployed individuals at regional employment offices dropped to just 8,118, down 13.1 per cent year-on-year. The labour shortage is most visible in tourist hubs, where retail shops, hotels and restaurants display permanent “Staff Wanted” signs.

Retail’s workforce crunch

Among the hardest-hit sectors is retail and, more specifically, supermarkets, which have historically competed on pricing and market share. Now, the game has changed. Supermarket chains are locked in a parallel battle—not just to attract customers, but to secure and retain qualified personnel.

What was once considered an entry-level or temporary job in supermarkets is evolving into a more competitive career path. Major chains are adapting to the new labour market by upgrading their employment packages. Enhanced salaries, better working conditions and additional benefits such as the 14th salary are becoming increasingly common.

A notable example is a Greek-owned supermarket chain operating in Cyprus, which has successfully attracted talent by offering its employees a 14th salary—a practice more commonly found in the public sector or high-tier roles. This strategic move has helped the chain emerge as a preferred employer in a fiercely-competitive hiring environment.

Human capital as strategic priority

This workforce shortage has shifted the power dynamic in the labor market. For the first time in years, employees in retail have a significant advantage, with more options and bargaining power. Businesses that want to stay competitive must now offer more than just a paycheck—they must create an environment where workers feel valued, secure and motivated.

Employers are increasingly aware that retaining talent is more cost-effective than constantly recruiting and training new staff. As a result, investments in workplace culture, employee development and long-term incentives are gaining ground.

Labour surplus to labour scarcity

The transition from high unemployment to labour scarcity highlights the evolving nature of Cyprus’ economy. While low unemployment is a key indicator of macroeconomic success, it brings new structural challenges. Retailers, especially supermarkets, must now innovate not only in pricing and product variety, but also in employment practices.

In this new era, the most successful businesses will be those that view human capital not as a cost, but as a cornerstone of long-term growth. And in today’s competitive landscape, the employer brand may matter just as much as the consumer brand.