Productivity per employed person rose at a satisfactory rate of around 3% on average during the period 1989-93, in line with the target of the Plan, surpassing the average annual rate of the improvement of productivity in the countries of the EU, which fluctuated around 2%. As a result, the gap between Cyprus and the countries of the European Union narrowed. This encouraging development mainly reflects the gradual progress made in the sector of training during the last years. Nevertheless, the gap between Cyprus and the European Union remains quite large, since the level of productivity in Cyprus amounts to 45-50% of the average level in the European Union members countries.

Earnings expanded at an average annual rate of 9,5% in real terms during the period 1989- 93, compared to 8,5% which was the target of the Plan, on account of the acute shortage of labour which affected the results of the Collective Bargaining Agreements and the salary increments granted within the context of the C.O.L.A. system. As a consequence, the unit labour costs expanded at a rate of 6,5%, which is also higher than the target of 5%, and higher than the corresponding increases in the countries of the European Union, leading to a fall of the profitability of business units and a deterioration of the competitiveness of the Cyprus economy.

1. Most countries of the European Union have lower participation rates than Cyprus, while only Denmark has a substantially higher participation rate.

Source: www.kypros.org