Why are prices high?

Dr Nicos Peristianis Phd, Sociologist and Executive Dean of the University of Nicosia offers his views

“I think that there are four reasons why prices are so high in Cyprus.

The first reason is that that we have very strong trade unions in Cyprus. This is a good thing in many ways but it has a downside. Some sections of the Trade union movement hold a strong monopoly, in particular the public and semi government sector. They push for higher prices, and their demands are met, because they have the power to paralyse state machinery. Once they have increased prices, everyone else wants to follow, and this creates a spiral of rising prices.

The second reason is that in Cyprus, I feel that there is a strong emphasis on the family, and a weakening collective spirit. Cypriots like to keep wealth, benefits and opportunities within the family. Instead of encouraging collective wealth, families continuously compare themselves with their neighbours, and typically have a strong desire not to be relatively worse off than others. When Government workers raise their prices, everyone else feels obliged to follow.

The third reason is to do with technology. Cyprus is not as technologically developed as some of its neighbours. This means that there is more human labour involved in services and manufacture. The increased cost is reflected in prices

Finally, there is the economic crisis and changes in the stock market, which have pushed up the prices of land. This has created a climate for people to make money quickly, for example, by buying land and waiting for the price to rise. If people made long-term investments in industry it could develop and wealth would balance. We do not have a culture of charity and donation in Cyprus, which would help this development. For example, Warren Buffet, the American Entrepreneur, has given away 90% of his wealth. I can not imagine this happening in Cyprus!

I do not think that these causes for the high prices will change, and so we can expect prices to stay high.”