While business profits as a percentage of GDP are rising, wages are decreasing according to data released by the Statistical Service of Cyprus, the latest report by KPMG Cyprus and the Department of Economic Studies of SEK trade union.
Everything seems to increase disproportionately in relation to wage rises in recent years. Both rents and business profits recorded a rise during the economic recovery. But, wages, on an average, remain stagnant.
As regards the rise in rental prices, the figures are indicative of the situation created during the economic recession as well as during the period of the economic recovery. According to data released by the Statistical Service and KPMG Cyprus, wage increases were minimal compared with rental increases, indicating the extremely difficult and unprecedented conditions that employees continue to face. Specifically during the period of the economic recovery and particularly in 2016 and 2017, wage growth was limited.
In 2016, salaries moved by only 0.3% compared to the previous year, while rents increased by 4.9%. In 2017 salaries moved by 0.5% while rents increased by 4.9%. In 2018 salaries moved by 2% while rental prices shot up by 17.8%.
Finally, according to SEK’s data derived from the analysis of National Accounts, wages in the period 2011-2017 as a percentage of GDP followed a continuous downward trend while the net operating surplus of enterprises (i.e. profits) followed an upward trend. SEK data also shows that in 2011 earnings of employees as a percentage of GDP were at 48.1% and in 2017 these were down to 43.6%.
On the contrary, while earnings of employees as a share of GDP followed a downward trend, net operating surplus increased from 18.6% of GDP in 2011 to 21.4% in 2017. It should be noted that there has been a historically significant reduction in wages and increase in profits in the period 1997-2001. Specifically, earnings in 1997 stood at 41.8% of GDP and declined to 39.3% in 2001, while corporate profits rose from 24.4% to 28.7% in the same period.