Recession-hit Cyprus in push to fight unemployment

(NICOSIA) - Recession-hit Cyprus launched a 340-million-euro drive Wednesday to combat record joblessness and help small businesses struggling with a credit squeeze triggered by the a painful eurozone debt bailout.

President Nicos Anastasiades announced a plan to get Cypriots back to work by offering incentives to small and medium-sized companies -- the backbone of the economy -- and creating jobs in the resort island's tourism sector.

In return for 10 billion euros ($13 billion) in emergency loans from a troika of international lenders, Cyprus agreed in March to wind down its second largest bank -- Laiki -- and impose losses on larger depositors in its biggest lender, Bank of Cyprus.

Nicosia has so far passed two reviews from the troika -- the European Central Bank, the European Commission and the International Monetary Fund -- and is hoping to receive a third tranche of cash by January.

Anastasiades said the 10 measures announced on Wednesday are aimed at bringing 7,500 people back into the workforce and providing aid to 2,000 needy families.

The deep recession has seen the number of Cypriots relying on food parcels reach an estimated 40,000.

Anastasiades said 300 million euros will be made available through commercial banks, while the other half of the funding for the employment schemes will come from the European Investment Bank.

Unemployment in Cyprus already stands at a record 17 percent after decades of near full employment, and is expected to rise to nearly 20 percent next year.

"One of the worst effects of the economic crisis we are experiencing is, without a doubt, increasing unemployment," Anastasiades told reporters, saying it could only be confronted by "jump-starting the economy."

One of the new measures will involve granting low-interest loans to small and medium-sized businesses that create jobs or at least remain at current staffing.

In an effort to create jobs for university graduates and school-leavers, the government will offer incentives to employers, pay for retraining schemes and cover half of the salary of the newly hired for the first six months.

Under the terms of the bailout, Cypriots have had to endure tough austerity measures which have seen wages and benefits slashed in both public and private sectors, while consumer and property taxes have risen.

Hundreds are expected to take to the streets on Saturday for protests against unemployment and falling living standards.

The troika expects the Cypriot economy to contract 7.7 percent this year and 4.8 percent in 2014.