Deniz: Triple Pay Rises in 2023 Strained Employers

Speaking on “Sabah Postası with Gökhan Altıner” broadcast on Kıbrıs Postası TV, Deniz recalled that the government closed 2024 with a budget deficit of 9.6 billion TL, underlining that the country’s economic structure is no longer sustainable.

He noted that salaries for the public sector in December, January, February, March, and early April were paid by borrowing from the Central Bank, stating, “This clearly shows that the state no longer has the financial capacity to meet its salary obligations.”

"Three Pay Rises Placed Heavy Burden on Employers"

Deniz emphasized that the first of the four core reasons behind the economic bottleneck was the decision to raise public sector wages three times in 2023, instead of the usual twice. He stressed that this placed a serious burden on employers, who were forced to allocate most of their income to salaries. As a result, businesses were unable to invest or purchase new products, stifling economic growth.

"Construction Sector Generates No Lasting Income"

The second reason, Deniz stated, was the government’s prioritization of the construction sector, which he argued does not provide a sustainable economic base in any country. He highlighted Northern Cyprus’s reliance on imported construction materials and the associated VAT costs, noting that domestic production in this field is nearly nonexistent.

Deniz also pointed out the lack of local labour in the sector, leading to the employment of foreign workers who send most of their earnings back to their home countries, contributing very little to the local economy. Once construction projects are completed, he said, money circulates only within a limited group of contractors and intermediaries and fails to spread across the broader market.

"Construction is a Vulnerable Sector"

As a third factor, Deniz cited the vulnerability of the construction sector to stagnation. He explained that any external event could abruptly halt activity in the sector, leading to significant economic disruption. He gave the example of Simon Aykut—currently under arrest in South Cyprus over allegations of misusing Greek Cypriot properties—stating that Aykut’s arrest led to an immediate slowdown in the construction industry in the North. “This shows just how susceptible the sector is to sudden shocks,” he said.

Deniz concluded that all of these factors are deepening the country’s economic woes and stressed the urgent need for the government to revise its economic strategy.