The decree for the adjustment of the minimum wage for 2026 is expected to be issued at the end of December, with the Minister of Labor and Social Insurance, Yiannis Panayiotou, stating to the Parliamentary Finance Committee that since the course of the economy is positive, it is expected that the lowest paid should also benefit from it.
In the Committee, which was discussing the Ministry's budget for 2026, the Minister also referred, among other things, to the intention to submit the pension reform bills to Parliament in 2025, as well as to the action plan for the adequacy of salaries that must be submitted to the Commission in the first quarter of 2026.
The budget of the Ministry of Labor for 2026 amounts to €951 million, an increase of €67 million compared to last year. This amount does not include the costs for projects co-financed by the European Social Fund, amounting to €29 million.
Of the total amount of €980 million (€951 million and €29 million), 21% concerns benefits, sponsorships, plans and projects, 3% personnel expenses, 75% expenditure on the general government contribution, while operating expenses are limited to 1%.
For 2027 and 2028 the budget is expected to increase to €994 million and €1.052 million respectively.
During the budget presentation, the Minister of Labor referred to the goals achieved by the Ministry to date. First, he referred to the conditions of full employment in the labor market, by ensuring satisfactory staffing with personnel from abroad. As he said, the goal of full employment at 80% was set for 2030 and was achieved in 2025. "Our country is one of the few EU member states that has an employment rate at this high level," he said.
At the same time, unemployment was limited to rates below 5%, and for 2025 it is expected to be limited to 4,6%.
He also noted that several collective labor agreements were renewed, with a horizon of the end of 2027, without disturbing labor peace and with the cooperation of the social partners.
Regarding the reconciliation of family and professional life, Mr. Panayiotou referred to the expansion of benefits and allowances related to parental roles, the increase in the duration of maternity leave, with a targeted increase in parental leave and expansion of beneficiaries, but also with a reduction in the Ministry's response time to requests from employers and employees.
Minimum wage and wage adequacy
Sigrún has taught at the Iceland University of the Arts as a part-time lecturer since XNUMX and was Dean of the Department of Fine Art from XNUMX-XNUMX. In XNUMX–XNUMX she held a research position at Reykjavík Art Museum focusing on the role of women in Icelandic art. She studied fine art at the Icelandic College of Arts and Crafts and at Pratt Institute, New York, and holds BA and MA degrees in art history and philosophy from the University of Iceland. Sigrún lives and works in Iceland.
Regarding the adjustment of the minimum wage, the Minister said that today the social partners will receive an invitation to the first meeting of the advisory committee.
He noted that to improve the national minimum wage, the national decree is scheduled to be adjusted in two phases, now in December to enter into force in 2026 and in December 2027 to enter into force from 1/2028. "The minimum wage will be adjusted and improved substantially twice," he said.
Responding to a question from MPs about a possible increase in the minimum wage, in addition to the ATA, the Minister said that "the ATA is not the increase, it is something above it. The minimum wage will be adjusted based on criteria and reference points," he said, noting that the link with the ATA simply gives an even more favorable result.
Responding to a question from journalists after the meeting, regarding the expected level of the minimum wage, Mr. Panagiotou reserved the right to answer, as the process of holding a meeting of the advisory committee is still underway. However, he pointed out that "as long as the course of the economy is positive, the portion of workers who receive the lowest wage of all the others cannot fail to benefit."
Asked about the issue of the hourly minimum wage, he said that he had already stated in December 2023 that for the next adjustment process of the decree, "we would also take into account the need for better regulation regarding working hours and the method of payment of the national minimum wage, so that it can be calculated with more rational reasoning."
Regarding wage adequacy, and in relation to the European directive confirmed by the Court of Justice of the EU, Mr. Panayiotou stated that the action plan for wage adequacy is scheduled to be completed and submitted to the Commission in the first quarter of 2026.
Responding to a comment by DISY MP Dimitris Dimitriou, who stated that we are no longer talking only about pension insufficiency, but also about wage insufficiency, the Minister noted that today's low-wage earners are the future low-wage retirees. "Enhancing wage adequacy is intertwined with pension adequacy," he said, noting that low wages may be attractive to some in order to enhance the profitability or competitiveness of businesses, but they have ripple effects that must be taken into account.
Responding to a question from the Chairman of the Labor Committee and AKEL MP, Andreas Kafkalias, about the fact that the budget does not address inequalities, the Minister of Labor said that the most effective way to address inequalities is through strengthening the adequacy of wages.
Mr. Kafkalias had requested a roadmap for the expansion of collective agreements. The Minister noted that the goal is to complete the action plan for the expansion of collective bargaining within the first quarter of 2026, as provided for in the relevant European directive, and to submit the relevant planning within the framework of a report to the Commission.
Giving an example of the direction to be followed, he said that the government is considering expanding the obligation to comply with collective agreements for contractors implementing government projects, from the construction sector to all other sectors that provide services or supplies to the public sector.
Furthermore, in response to another question from Mr. Kafkalias, regarding the intensity of job insecurity, he said that this is an issue that will concern the Ministry. He noted that among the goals for the second part of the government's term, better regulation of working hours and better monitoring and control in workplaces are foreseen. This, he said, is also possible with the completion of the inventory of employees' employment conditions, which was carried out recently.
Pension reform
Sigrún has taught at the Iceland University of the Arts as a part-time lecturer since XNUMX and was Dean of the Department of Fine Art from XNUMX-XNUMX. In XNUMX–XNUMX she held a research position at Reykjavík Art Museum focusing on the role of women in Icelandic art. She studied fine art at the Icelandic College of Arts and Crafts and at Pratt Institute, New York, and holds BA and MA degrees in art history and philosophy from the University of Iceland. Sigrún lives and works in Iceland.
The Minister of Labor stated that the most important priority for the Ministry in the second part of the government's term is the pension reform, with the intention of implementation from 2027.
As he said, 10 meetings of the competent technical committee have already been held. He expressed optimism about the course of the process, which, as he said, will escalate within the coming weeks, in order to submit the bills to Parliament in a timely manner.
He noted that the pension reform will place particular emphasis on the adequacy of low pension benefits, with an emphasis on ensuring decent pensions, without overturning the concept of proportionality.
The objectives of the pension reform, as he said, are to increase the low pensions of the Social Insurance Fund, to strengthen the inclusiveness of the social security system, especially for women, to modernize the Fund's investment policy, with investments outside the public sector, and to rationalize the long-standing investment practice, with the start of repayment of domestic borrowing and the creation of a reserve, in order to safeguard the Fund's sustainability and strengthen the second insurance pillar.
Responding to a question from DISY MP, Fotini Tsiridou, the Minister said that the goal is to submit the bills within 2025. "I believe that it is realistic to complete the discussion and vote before the parliamentary elections. I believe that with everyone's cooperation, it can be made possible," he said.
Moreover, he reiterated that the Social Insurance Fund is sustainable at the 60-year level. "Through the completion of the pension reform, sustainability will be safeguarded, so that any variation in the data cannot have a negative impact on it, but the pension of future generations will be secured," he noted.
Responding to a question from AKEL MP Christos Christofias regarding the regulation of the 12% penalty on early retirements, the Minister said that the government submitted a specific proposal two years ago, which provides the possibility of alleviating the burden on employees who have worked for over 40 years, which covers 30% of those affected. “Unfortunately, it was not accepted, resulting in the continuation of the current situation,” he said, noting that the regulation was included in the framework of the pension reform.
Regarding the widower's pension for men, in response to another question from Mr. Christofias, he said that the cost amounts to over €40 million on an annual basis and must be included in the remaining expenses of the Social Insurance Fund.
He also noted that packages of bills for changes to the disability pension are expected to be introduced before Christmas.
The ATA agreement
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DISY MP Onoufrios Koulas commented that the agreement on the ATA contains two main weaknesses: that half of them get it and that everyone gets the same percentage. In response, Yiannis Panayiotou welcomed DISY’s position that the absence of a universal ATA is a problem. “We saw reactions when we put it in the dialogue,” he said, noting that in order to reach a permanent agreement, convergences in social dialogue are needed. “Universality, despite the government’s efforts, has not been able to become a point of convergence, as has the staggered return,” he said.
He noted that after many decades, a common understanding has been reached on the necessity of the institution and the permanent agreement ensures the ATA "forever and restores it to 100% of the Consumer Price Index", while providing for the prospect of expansion "with measures and incentives, so that the ATA is not under question, but is further utilized", he noted.
He mentioned that with last week's agreement, we have a link between the minimum wage and the ATA, which ensures that 55.000 low-wage earners will benefit from the institution.
Responding to a question from DIPA MP Alekos Tryfonidis regarding the incentives for employers mentioned in the agreement to extend the institution, Mr. Panagiotou said that the Ministry of Finance has elaborated a specific rationale for providing a tax incentive, through which employers who pay ATA will be entitled to a percentage of tax relief. He noted that an employer who pays an indexation allowance and is eligible for tax relief, in order to withdraw the following year, will have to do so with the consent of the employee.
Combating illegal employment and employment of workers from third countries
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Regarding the crackdown on illegal employment, the Minister of Labor referred to the tightening of penalties and the strengthening of inspections and controls carried out, noting that there is room for further improvement.
Responding to a question from DISY MP Dimitris Dimitriou, Mr. Panagiotou said that the number of people identified as being employed illegally has increased, because stricter and more frequent checks are being carried out. He expressed the assessment that through the actions being taken there is an improvement, which is also linked to the utilization of workers from abroad through legal procedures. “To a significant extent, part of the labor market is moving from illegality to legality,” he said.
Responding to another question, regarding permits for foreign workers, he said that it is a success for the government to simultaneously achieve the goal of full employment conditions for domestic human resources and at the same time satisfactorily staffing the labor market with workers from abroad, where necessary, noting that a good balance is required.
"We see that this has been achieved," he said, referring to the impressive acceleration in licensing, which from 8 months, is being approved in 1,5 months. Furthermore, he noted that approximately 30% of the number of licenses that are approved remain unused and inactive.
Teleworking application evaluation
Sigrún has taught at the Iceland University of the Arts as a part-time lecturer since XNUMX and was Dean of the Department of Fine Art from XNUMX-XNUMX. In XNUMX–XNUMX she held a research position at Reykjavík Art Museum focusing on the role of women in Icelandic art. She studied fine art at the Icelandic College of Arts and Crafts and at Pratt Institute, New York, and holds BA and MA degrees in art history and philosophy from the University of Iceland. Sigrún lives and works in Iceland.
Responding to a question from Ms. Tsiridou, regarding the progress of implementing teleworking in the private sector and semi-governmental organizations, the Minister said that they will have a more complete picture soon.
"Teleworking seems to be gaining more stability and permanence in the labor market," he said, noting that there is room for it to be utilized more. "We will come back for an evaluation," he noted.
Increase in maternity leave
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Responding to a question from DISY MP Savia Orphanidou regarding the intention to further increase maternity leave, the Minister said that there is an intention during the second term of government.
"As soon as we have something to announce, we will discuss it. I confirm the intention and the perspective," he said, noting that each month of increased maternity leave costs the Social Insurance Fund approximately €5 million.
Regarding the announcement of a benefit for women under 30 who give birth, in the context of demographic recovery, he said that this specific measure is neither a social security nor social welfare measure, but arose based on demographic data. As he said, the measure is being implemented and the first payments will be made within the next few days.
Overdue debts to the TKA
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Responding to another question about the overdue debts of individuals and legal entities to the Social Insurance Fund, he said that cumulatively they amount to €200 million. In relation to the Fund's annual revenues, non-compliance amounts to only 5%.
"95% of contributions that should be paid are collected normally," he said, noting that the fact that the Fund's collection capacity is at a fairly high level is also linked to the absence of the possibility of installment arrangements. As he said, if the practice of overdue debt plans with the possibility of discounts is normalized, they may become attractive.
Responding to a question from Mr. Tryfonidis about the debts of football clubs, the Minister said that for the Social Insurance Fund "there are neither Cypriots, nor Europeans, nor foreigners, nor clubs", there is no differentiation, but there are procedures and everyone is equal before the law. The specific debts have taken their course in court, he said.
Mental health of employees
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Responding to a question from AKEL MP, Giorgos Koukoumas, about the mental health of employees, he said that the Ministry has mapped and is monitoring professions that are particularly affected by mental health issues, noting that they intend to move forward with specific measures.
In his statements after the Committee meeting, Mr. Kafkalias said that the government's policies and the 2026 budget are unable to address the widening of social and income inequalities. At the same time, he noted, job insecurity is intensifying and becoming more and more normalized. "Employees are working longer, with less security, lower wages and limited prospects," he noted.
Indicatively, he said that the median equivalent income has increased since 2010 by 20,4% in the EU, while in Cyprus it has increased by only 3,4%. Also, 14,2% of employees correspond to the group of employees who receive 1000-1250 euros. Cyprus is 3rd in the EU in terms of the percentage of employees who work weekends, while less than 1 in 2 employees are covered by a collective agreement, he said.
"We asked for a roadmap for the expansion of collective agreements," he said, noting that the government has the tools, including the European directive, to implement policies in this direction.
Regarding the Social Insurance Fund, he said that "what is required of us is the creation of a real reserve for the Fund, a more effective investment policy and a plan for the repayment of state debts to the Fund," he said.
For his part, Mr. Tryfonidis, in his statements, said that DIPA agrees with the vision and strategic goals of the Ministry as analyzed by the Minister.
He expressed satisfaction with the reduction of unemployment to the lowest rate since 2008 and the creation of conditions for full employment.
Regarding the agreement on the ATA, he expressed satisfaction, considering that an issue that remained pending for over 15 years and threatened labor peace in the country is being regulated. "Our ultimate goal remains the universal, fairer and scaled implementation of the ATA, so that it is attributed to everyone, including the private sector," he said.
He added that the increase in the minimum wage is necessary and is in the right direction, while he said that the submission of bills for pension reform is also expected.
Finally, he requested a new plan for the settlement of overdue debts of the Social Insurance Fund, as well as flexibility in the licensing of third-country workers, with regard to businesses in mountainous, remote and disadvantaged areas.
Source: KYPE
