Cyprus’s Demographic Future: Growth Despite Low Birth Numbers

Cyprus’s Demographic Future: Growth Despite Low Birth Numbers

The Mediterranean island of Cyprus has been divided territorially and politically since the Turkish invasion in 1974. The northern part is Turkish, the southern part Greek. The Republic of Cyprus, which joined the EU in 2004, theoretically encompasses the entire island but de facto only the south. The government is not recognised by the north, which is occupied by the Turkish military. Despite the partition, the southern part of the island is one of Europe’s fastest-growing states. In 2016, some 848,000 people lived in the Republic of Cyprus, 14 percent more than in 2006. By 2050, the population could increase to almost a million.

The rapid growth in the population is due both to migration surpluses and to the fact that every year more people are born than die. Relative to the population as a whole, the Republic of Cyprus has the second-highest annual birth surplus in the EU, after Ireland. At first glance this seems surprising, given that the fertility rate of 1.32 children per woman is the second-lowest in the EU, after that of Portugal. But the Cypriot population is very young, which means that many Cypriots are currently of an age when people normally start a family. This is because women in Cyprus still had rather a large number of children until a short time ago: even as recently as 1995, the average number of children per woman was more than two – higher than in any current EU country. Many attribute the dramatic drop in the fertility rate since then to the difficulty of combining a family and a career. Many women work, but there are few day-care places available for small children. Help from the family – for example, from grandmothers – can only partly compensate for this. The poor transport infrastructure and the financial burden of kindergarten fees make having a family even more difficult for working people.

Foreign workers bring about economic miracle

But even more important for population growth than the high number of births is immigration. In the first eleven years of the new millennium, the island state grew by well over one percent annually solely as a result of more people moving to Cyprus than leaving. This mass immigration was based on an economic boom that began in the 1980s, which led the previously isolationist state to cautiously open its labour market to foreign labour from the 1990s onwards and to issue temporary work permits. In particular, the steady rise in mass tourism and the growth of other service sectors were responsible for average annual growth rates of more than four percent in the late 1990s and early 2000s. Cyprus was able to benefit from its migrants in two ways. On the one hand, especially Lebanese fleeing the civil war in that country provided the capital for economic expansion; on the other hand, the demand for labour had risen to a level that could not have been covered by the native population alone.9 Currently, one inhabitant in five was born abroad – a higher share than anywhere else in the EU apart from Luxembourg. Most migrants come from the United Kingdom, the island’s former colonial power. Other important countries of origin are Romania and Bulgaria as well as Greece, Georgia and Russia.

After two decades, the immigration trend ground to a halt in 2012 in the wake of the global financial and economic crisis. The oversized and unstable financial sector as well as the country’s strong economic ties with Greece were among the main reasons why Cyprus suffered badly and was forced to ask for financial assistance from the other countries of the eurozone and the IMF. The country’s economy shrank by 3.2 percent in 2012 and by almost 3 percent in 2013. Cyprus was able to avoid bankruptcy only by pursuing a strict austerity policy and with the help of a rescue package worth 6.5 billion euro that it received between 2013 and 2016. As part of the rescue deal, the country overhauled its banking system, imposing a compulsory levy on large deposits and introducing capital controls designed to prevent large amounts of money flowing out of the country. After three years of recession, the turning point came in 2015. Since then, the Cypriot economy has been growing again and unemployment has fallen. The migration deficit, which had risen to 15,000 people by 2014, is falling once again, too.

Even if the Republic of Cyprus is today in a better position than its neighbour Greece, much still needs to be done. At 21,000 euros, GDP per capita is still well below the 2008 level of 24,200 euros. The services sector, especially tourism, finance and trade, is still of major importance for the Cypriot economy. This makes the country vulnerable to external developments, since a global economic crisis quickly makes itself felt in these sectors. Relative to the share of GDP, the financial sector is larger in Cyprus than anywhere else in the EU except Luxembourg. The banking system is still not considered to have entirely recovered and some private households remain seriously in debt.

Restrictive asylum policy

Cyprus also has some catching up to do when it comes to asylum policy, since despite high immigration figures, the population is still not particularly open to foreign immigration. Moreover, Cypriot migration policy for people from outside the EU is still very restrictive18 – and not least as it applies to refugees. In the past, the government repeatedly detained asylum seekers. And it has tightened up the asylum laws to prevent refugees with subsidiary protection status, which Syrians regularly receive, from later bringing their families to Cyprus. Together with the fact that the Mediterranean island is difficult to reach and to leave and is not part of the Schengen area, this explains why, despite its proximity to civil-war-ridden Syria, Cyprus’s role as a transit country for refugees from the Middle East is negligible. In 2015, only 2.7 asylum applications per 1,000 inhabitants were filed – roughly the average for all 28 EU countries. In 2008, at a time when the total number of asylum applications in the EU was only around a fifth of the 2015 level, the figure was five applications per 1,000 inhabitants./IBNA

Source: Berlin Institute for Population and Development