“Cyprus offers a well-educated, skilled, and bilingual labour-force;
whereas, labour costs are significantly lower compared to the EU
average”
According to Eurostat’s Labour Force Survey, carried out in 2003, Cyprus
exhibits an employment rate of 69,2% for the age class 15-64; the rate is the
highest among the ten EU acceding countries and is above the average employment
rate of the EU 15 (64,4%). This rate positions Cyprus in line with the EU’s
Lisbon Target of 70% by 2010. Moreover, Cyprus has a low youth unemployment rate
(age class 15-24) of 8,9%, compared to the EU average of 15,9% and a high
employment rate for women of 60,2%, compared to 56% of the EU average.
Furthermore, Cyprus ranks among the first countries in the world in terms of
university degree holders in relation to the population, with 70% of secondary
school leavers in 2000 continuing their studies. Consequently, a well-educated,
skilled, and bilingual pool of managerial, clerical, administrative, and
technical staff is available in Cyprus.
Labour costs are significantly lower in Cyprus compared to the EU average.
Legislation provides for minimum wages in six service occupations, sales staff,
clerical workers, auxiliary healthcare staff and auxiliary staff in nursery
schools, crèches and schools. The minimum wage on recruitment is CY £345, while
that for staff completing six consecutive months of employment with the same
employer is set to CY £367.
The Cyprus labour market has a tradition of social dialogue and a
well-developed institution of free collective bargaining. Approximately 70% of
the labour force is unionized and/or is covered by collective employment.
Collective agreements regulate employment conditions such as remuneration,
working hours, health and safety, annual holidays and provident fund.
Since Cyprus’s accession to the EU, the European Union’s legislation
framework regarding labour regulations has been adopted. Based on a study,
conducted by the Federation of European Employers, social insurance employers’
contribution is relatively low in Cyprus.
The participation to the social insurance scheme is mandatory for all
employees; employers must contribute 6.3%, employees an additional 6.3% and the
Government 4%, summing up to a total contribution of 16,6%. In the case of
self-employed individuals, 11,6% is contributed by the self employed and 4% by
the Government, summing up to a total contribution of 15,6%.The scheme provides
for several benefits, such as the maternity allowance, sickness allowance,
unemployment allowance, pension, widow’s pension, orphan’s allowance, allowances
for industrial accidents and occupational diseases.
In addition, employers are also obliged to contribute 1.2% to the Redundancy
Fund, 0.5% to the Human Resources Development Fund and 2% to the Social Cohesion
Fund, excluding international business companies that exercised their option of
paying tax at 4.25% until the end of 2005 and shipping / ship management
companies.
Under the employment Termination Law, the employer must provide a minimum
period of notice to the employee, depending on the length of employment. In the
event of redundancy, employees are protected by a Redundancy Fund payment
amounting up to 13 weeks of pay, provided that the employees has been
consistently working for 26 weeks prior to the employer’s insolvency.
Residence and work permits are handled by the Ministry of Interior and the
Ministry of Labour and Social Insurance. In the case of international business
companies, arrangements have been made whereby the Ministry of Interior may
issue and renew the temporary residence-employment permits of expatriate
executives. No distinction is made between nationalities on granting working and
residence permits. The decision lies upon the availability of EU nationals for
the specific job, on scientific and academic qualifications and on the
probability of investment to be made by the applicant. Foreigners must register
at the District Aliens and Immigration Branch of the police. However, labour
legislation and collective agreements apply equally to EU nationals and foreign
employees. An employment contract is issued regulating monthly wages, overtime
rates, and leave entitlements. The employee’s travel cost, medical insurance,
and accommodation cost is covered by the employers. In addition, foreign
employees are entitled to one month’s notice prior to repatriation irrespective
of the length of employment.
“The EU’s legislation framework regarding labour regulations has been
adopted. According to a study by the Federation of European Employers, social
insurance employers’ contribution is relatively low in Cyprus”
