Cyprus: Employment demand forecast to increase 21% in next decade

A study published by the Human Resource Development Authority in Cyprus has forecast an overall increase in employment demand of 21% over the next 10 years (a need for an extra 78,000 workers). The study adds that there is an urgent need for the public authorities and the social partners to promote training measures.

Background

The Cypriot economy and labour market have experienced significant changes as a result of international economic developments, including the financial and economic crisis. The stabilisation of the economy and labour market has been a priority for the government, as has its adaptation to these developments, along with retaining the growth dynamic since 2015.

The government has mandated the Human Resource Development Authority (HRDA) to conduct, every three to four years, a 10-year forecast of employment needs in the Cypriot economy. The HRDA is a semi-governmental organisation with tripartite management and funding from employers. Its role is to promote vocational training and it is also entrusted with implementing labour market policies (for which it gets additional funds).

The latest employment forecast covers the period 2017–2027, while the previous forecast (published in 2014) covered 2014–2024.

Scope and methodology of the forecast

The forecast is used by the HRDA in planning its basic vocational training and continuous training programmes, and by other public or private entities dealing with the planning of human resources development. It also provides useful information to young people who are considering their career path, or to the unemployed and inactive who are considering retraining. The study delivers forecasts for total employment needs, as well as by economic activity and profession.

HRDA’s study is based on a methodology that incorporates elements of employment forecasting models developed in other European countries and the US. This methodology provides employment forecasts arising out of the country’s economic development (demand due to expansion) and of the permanent withdrawals (demand due to replacement) from the labour market.

The methodology also employs data and projections of employment from the National Accounts and the Labour Force Survey. For the forecast of employment demand due to expansion, the study takes into account the declared strategic development goals of Cyprus, as recorded in various programme documents. These include:

  • upgrade, diversification and further promotion of tourist services
  • development of a casino resort in Limassol, with four satellite casinos in other cities
  • development and exploitation of hydrocarbon reserves in the island’s exclusive economic zone (EEZ)
  • further development of the green economy and maritime activities

The forecasts cover only employment from the demand side; the supply side is not covered by the study.

Total employment needs

Total employment is projected to present an upwards trend, thus recovering from the negative impact of the economic crisis. The study forecasts an overall employment increase of 21% (almost 78,000 jobs) over the next 10 years. Total employment is expected to rise to around 449,000 in 2027, compared to 398,000 in 2011 and 358,000 in 2015. However, employment is not expected to return to the pre-crisis level before 2021. The average employment growth rate over the 10-year period is estimated at 1.9%, peaking at 2.3% in 2017, gradually decelerating to a growth rate of 1.7% in 2027.

The average annual growth rate of employment needs is estimated at 3.9%; of this, 1.9% is due to expansion in employment, plus 2% demand due to withdrawals. (Employment needs are defined as the sum of employment demand due to expansion and employment demand due to replacements.) This corresponds to an annual demand of 15,800 additional employees, comprising of 7,800 new jobs and 8,000 jobs due to withdrawals. In the first half of the 10-year period (2017–2022), employment needs are expected to be slightly higher than in the second half.

Employment needs by sector and economic activity

The biggest employer (by far) is expected to be the tertiary sector; forecast to provide jobs to more than 363,000 people by 2027, increasing its share in total employment to 80.9%, from 79.5% in 2017 and 76.9% in 2012. The services sector is increasing its share at the expense of manufacturing (the secondary sector). Manufacturing activities are forecasted to provide 70,000 jobs, decreasing its share in total employment to only 15.6%, compared with 16.7% in 2017 and 19.9% in 2012. The primary sector is anticipated to provide employment to little more than 14,000 people, with its share in total employment forecast at 3.5% in 2027, slightly less than 2017 (3.8%) and slightly higher than 2012 (3.2%). The need for the aforementioned 15,800 employees is forecast to be concentrated in the tertiary sector (84%), with just 12.9% in the secondary sector and 3.1% in the primary sector.

Further analysis of the forecasted employment needs indicates that the economic activities expected to show the highest annual average growth rates are those benefiting from the country’s economic development. Thus, a forecasted annual growth rate of employment needs in water transport of 6.9% and 6.7% in mining and quarrying is associated with the mining and transport of hydrocarbon products. Likewise, forecasted annual growth rate of employment needs in the food and beverage services of 6.5% and 5.6% in accommodation services are expected due to the upgrading, diversification and further promotion of tourist services. The development of the multipurpose casino resort is expected to lead to a 6.1% growth rate of employment needs in arts, entertainment and recreational activities.

Employment needs by broad occupational categories and professions

The distribution of employment in broad occupational categories is expected to exhibit minor changes. These categories are divided into ‘high-level’ (employees who are graduates), ‘middle-level’ (employees with a secondary education), and ‘low-level’ (occupations where employees do not require any education or training). In 2027, high-level occupations are expected to account for a 48.4% share of total employment (compared to 48.8% in 2017 and 47.1% in 2017), with middle-level occupations having 36.9% of the total (36.5% in 2017 and 36% in 2012), and low-level occupations 14.7% (14.7% in 2017 and 16.9% in 2012).

Professions in the high-level category with high annual average demand growth rates include:

  • economists (6.8%)
  • other language teachers (6.1%)
  • teaching professionals not elsewhere classified (6%)
  • pharmacists (5.5%)
  • financial and insurance branch managers (5.2%)
  • dentists (5%)
  • trade professionals (4.8%)
  • accounting professionals (4.7%)
  • legal professionals (4.5%)

Professions in the middle-level category with high annual demand growth rates are forecasted to be:

  • building caretakers (7.4%)
  • cashiers and ticket clerks (6.6%)
  • ICT installers and servicers (6.3%)
  • waiters (5.8%)
  • childcare workers (5.5%)
  • bartenders (5.1%)
  • transport clerks (5.1%)
  • chefs (4.7%)

Conclusions

Based on the findings, the study concludes with recommendations – addressed to public authorities, employers and unions – that training measures be urgently promoted to sufficiently meet the forecasted demand in employment in rapidly expanding sectors of the economy, such as energy, the emerging green and blue economies, professional services activities and ICT services. The study also highlights the need to design measures supporting the development of the primary and secondary sectors which, in terms of employment, are falling behind other sectors.

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