Cyprus Wage Growth Tracks EU Trend as Labour Costs Continue to Rise

Hourly labour costs in Cyprus rose by 3.5 per cent in the third quarter of 2025, placing the country close to the European Union average and reflecting ongoing wage and cost pressures faced by employers across Europe, according to the latest figures released by Eurostat.

Data from the EU’s statistical office show that during the same period, hourly labour costs increased by 3.3 per cent in the euro area and by 3.7 per cent across the EU as a whole, compared with the third quarter of the previous year. The figures underline a continued upward trend in labour costs throughout Europe, driven by rising wages and higher non-wage expenses.

Labour costs comprise two main elements: wages and salaries, and non-wage costs, which include employers’ social security contributions and other related charges. In the euro area, hourly wages and salaries increased by 3.0 per cent in the third quarter of 2025 on an annual basis, while non-wage costs rose more sharply, climbing by 4.0 per cent over the same period.

Across the European Union, hourly wages and salaries recorded a year-on-year increase of 3.5 per cent in the third quarter of 2025. Non-wage labour costs in the EU rose by 4.2 per cent compared with the same quarter a year earlier, signalling continued pressure on total labour costs.

Breaking the data down by type of economic activity, Eurostat reported that hourly labour costs in the euro area increased by 3.1 per cent in the mainly non-business economy and by 3.3 per cent in the business economy. Within the business economy, labour costs rose by 3.3 per cent in industry, 4.3 per cent in construction and 3.2 per cent in services.

In the EU overall, hourly labour costs increased by 3.4 per cent in the mainly non-business economy and by 3.8 per cent in the business economy. Industry saw labour costs rise by 3.7 per cent, construction experienced a stronger increase of 4.7 per cent, and services recorded a 3.7 per cent rise.

At the sectoral level, the largest increases in hourly wage costs across the EU were observed in other service activities, where costs rose by 4.5 per cent. Construction and professional, scientific and technical activities both posted increases of 4.3 per cent in hourly wage costs.

By contrast, the smallest annual rise in hourly wage costs was recorded in electricity, gas, steam and air conditioning supply, where wages increased by 2.5 per cent.

Non-wage labour costs showed the strongest growth in the construction sector, rising by 5.8 per cent across the EU. Other service activities followed closely with a 5.6 per cent increase, while real estate activities recorded a 5.5 per cent rise. The most modest increase in the non-wage component was seen in mining and quarrying, at 2.5 per cent.

Looking at individual member states, the sharpest increases in hourly wage costs for the whole economy were registered in Bulgaria, at 12.4 per cent, followed by Lithuania at 9.7 per cent, Croatia at 9.1 per cent and Hungary at 8.8 per cent.

At the other end of the scale, the lowest increases were recorded in France, at 1.3 per cent, Slovenia at 1.6 per cent, Spain at 2.0 per cent, Austria at 2.1 per cent and Italy at 2.4 per cent. Malta stood out as the only EU member state to post a decline in hourly wage costs, with a decrease of 1.4 per cent.

Within this broader European context, Cyprus’ 3.5 per cent rise in hourly wage costs positions it near the EU average, pointing to moderate but persistent labour cost growth that continues to shape the economic environment for both employers and workers.

By fLEXI tEAM