In 2019, it was €2.7 billion, while in 2024, it reached €3.7 billion. The state payroll increased by 15.4% in 2024 compared to 2023, excluding the latest general increases of 1.5%, as stated by the Director General of OEB, Michalis Antoniou, who also emphasized the need for rationalization of the Public Service.

Mr. Antoniou further added that in 2023, compared to 2022, it was again increased by 11.6%.

He noted that the annual increase in the state payroll results in a burden on the fiscal accounts of €1 billion over five years.

"In 2019, the state payroll was €2.7 billion, while in 2024, it reached €3.7 billion," he said, highlighting the need to develop a new organizational chart for the number of positions, the type of jobs, and the salaries in the Public Sector.

When asked, Mr. Antoniou clarified that OEB is not calling for layoffs or salary cuts. Instead, the Federation suggests creating an organizational chart that reflects the actual needs of the public service in terms of personnel to increase productivity.

An assessment should be conducted to determine how many public employees are needed, in which positions, and with what salaries. Mr. Antoniou stressed that higher salaries could be offered for important positions created due to new needs and data to attract personnel currently absorbed by the private sector due to the salary gap between the public and private sectors for skilled employees.

Regarding the agreement between the Ministry of Finance and PASYDY for general salary increases of 1.5% for public employees, these will be granted from October 2024. The Ministry of Finance announced that the agreement includes a general increase of 1.5% on basic salaries as of January 1, 2024, with a minimum annual increase of €331.28 or €27.61 per month for low-paid employees. It does not provide for increases for 2022 and 2023. The agreement covers permanent and retired employees, as well as those on indefinite and fixed-term contracts.

Furthermore, the Ministry noted that a similar agreement was reached for renewing collective agreements in semi-governmental organizations and local authorities from January 1, 2022, to December 31, 2024. This covers permanent and retired employees, fixed-term and indefinite contract employees, as well as hourly wage laborers.

It is recalled that the last general salary increase for public employees was granted on January 1, 2009. Since then, due to the global and domestic economic crisis, general increases were zero, in addition to the cuts and freezing of annual increments and COLA.

The Ministry of Finance decided on the general increases considering the course of the Cypriot economy and the rapid recovery from the coronavirus pandemic while remaining resilient to the economic impacts of the Russia-Ukraine war and the Israel-Hamas war. Growth is among the highest in the European Union, and inflation is approaching the 2% target. Fiscal performance remains strong, with public debt on a continuous downward trend.

The estimated additional net cost is approximately €11 million for 2024 and about €38 million for 2025.

It is noted that the fiscal targets (fiscal balance and public debt) included in the 2024 Stability Program are not affected by the implementation of the above agreement.

The Ministry of Finance clarifies that this agreement cannot be linked to the IMF study on modernizing the state payroll, which is ongoing. The terms of reference for this study concern the evaluation and restructuring of the state payroll architecture to ensure its long-term sustainability.

The ultimate goal is to keep the medium-term growth rate of the state payroll at levels that do not exceed the growth rate of the Cypriot economy, thus ensuring its sustainability.

The Ministry of Finance concludes that it follows a human-centered yet prudent economic policy aimed at both encouraging and providing incentives to businesses and improving the working conditions of employees, who are the main contributors to growth.