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Earnings in the private sector, excluding banks, continue to drop and this may go on for as long as the unemployment rate remains persistently high, an employer business group spokesman said.

“There is an oversupply of labour which cannot be absorbed by the new vacancies created,” Michael Antoniou, deputy director of the Employers and Industrialists Federation, widely known by its Greek acronym OEV, said today in an interview.

“In some cases, where companies reach their limits, they continue to resort to cost cutting, while others which have not done so in the past may do so now gradually. The private sector did not react in a uniform way after what happed in 2010 or 2011”.

Antoniou, who is also in charge of the labour relations department of the business group, said official figures showed that the drop in average earnings in the economy continues, well into 2015, even as the situation with respect to workers earnings “stabilised in the public sector and banks”.
Average earnings dropped an overall 11 per cent in the public sector as a result of the fiscal consolidation measures agreed by the previous government in 2011 and 2012 with civil servants union PASYDY, he said. Workers at Bank of Cyprus and the cooperative banking sector saw their earnings drop 15 per cent on average following the 2013 banking crisis, while in the rest of the banking system, earnings shrank by up to 9.5 per cent.

“In the rest of the private sector, pay cuts were comparable or higher compared to those at Bank of Cyprus,” he said.

According to Cystat, the downward trend in employee earnings started in the third quarter of 2012 and continued until the first quarter of 2015, for which the latest available figures apply. Average workers monthly earnings fell a total of 5.7 to €1,879 in these 11 quarters, with men suffering the largest cut in earnings. Male workers earned in the first quarter of 2015 €2,037 on average a month, which is 6 per cent lower compared to the second quarter of 2012, while those of female workers fell average a 5 per cent to €1,703. The figures apply to gross earnings as reported to the social insurance register, include both the public and private sector excluding persons employeed in private households.

In January to March 2015, average workers earnings dropped an annual 1.8 per cent and a quarterly 0.4 per cent. Cyprus’s unemployment rate stood in June at 16.2 per cent and was the third highest in the European Union, according to Eurostat.

“One could reasonably come to the conclusion that earnings continue to drop in the private sector,” Antoniou said. He also expressed doubt about the informational value of the Cystat figures saying that that overall pay cuts in the economy exceeded the reported values.

“These figures show some other kind of data rather than the extent to which wages dropped in the economy,” he said. “That is being recorded is the situation of a body that is continuously being transformed. In reality, where you have either voluntary or mandatory retirements, those who retire are the ones with the higher earnings as the latter already have matured”.

“The renewal of staff could hence demonstrate a decrease which could be in small percentages,” he added.

By Stelios Orphanides