Poverty rates remain steadily at sixteen to seventeen percent, while unemployment stands at around five percent. What do the data reveal about the ‘income trap’ for thousands of households?
Despite near full employment and positive macroeconomic indicators, poverty in Cyprus is not only failing to decline further but appears to be becoming entrenched. This paradox, an economy with low unemployment alongside persistently high poverty rates, was at the centre of a discussion on SIGMA’s programme “Mesimeri kai Kati,” featuring economist Giannis Telonis and the President of the Cyprus Anti Poverty Network, Eleni Karaoli.
The discussion was prompted by a conference on contemporary trends and dimensions of poverty in Cyprus, held on Thursday evening.
Without a national strategy, poverty is perpetuated
As Ms Karaoli emphasised, the main conclusion to emerge from the discussion was the absence of a comprehensive national strategy to tackle poverty. “Benefits help people move one step forward, but they do not address the core problem or the reasons why an individual or a family is driven into poverty,” she said, stressing that without policies targeting the causes of impoverishment, the phenomenon is simply perpetuated.
According to her, a decisive factor is the inability to enter or re enter employment. Despite the low unemployment rate, around five to five point five percent, many families face increased responsibilities while basic social infrastructure is lacking, such as childcare services, care for older people, or support for ill family members. “This uncertainty leads families into tension and psychological pressure,” she noted.
The figures show progress, but only up to a point
For his part, Giannis Telonis highlighted a crucial distinction between poverty as reflected in the statistics and poverty as experienced in daily life. As with inflation, there is a difference between the official figures and the sense of rising costs felt by citizens.
According to official data, the poverty rate in Cyprus has fallen significantly compared with 2013, when it stood at around twenty-two percent, and now ranges between sixteen and seventeen percent, slightly below the European Union average. “There has been progress, and it would be worrying if there had not been, following the 2013 crisis,” he noted.
However, the problem, he explained, is that this progress has stalled. “We have reached a plateau. We have stabilised at around sixteen to seventeen percent and are not seeing further improvement,” he said, raising the question of how poverty can be reduced even further.
How the poverty trap persists despite full employment
Particular emphasis was placed on the concept of the ‘poverty trap.’ In an environment of near full employment, there are cases where benefits are very close to the income someone could earn from work, reducing the incentive to enter the labour market. “There are people whose benefits are at a level very close to the wage they would earn in the market. As a result, they do not have the incentive to go to work for that additional income,” Mr Telonis explained.
At the same time, the absence of adequate social services acts as a deterrent to returning to work, not because jobs are lacking, but because there are no structures to enable certain groups to work with dignity. “We do not have the social services that would allow some people to re enter the labour market. Not to expand the labour market, but to improve the living standards of these individuals,” he concluded.
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