COMMENT: Unions Entering A New Era In Cyprus

By Dr. Jim Leontiades

Cyprus International Institute of Management

 

The conflict between the National Bank of Greece and the Bank Employees Union (ETYK) dramatises the opening of a new era in labour management relations. By calling a strike against the decision of National Bank of Greece (NBG) to bring four managers from Greece to Cyprus, unions here are exercising their power as they have always done. But this time there are some major differences.

The first difference is the nationality of the bank. In disputes against local banks, bank management had the choice of either “bending the knee” or facing the extreme damage of an all out strike. The union could be quite certain of “winning” since such a strike would virtually close down a Cypriot bank. This time the conflict is with a foreign bank. The National Bank of Greece has only a small part of its operations in Cyprus. It accounts for only 2% of the industry’s market share and even less in terms of profitability. Compared to its Greek operations, Cyprus represents a small part of NBG’s total business activity. It can sit out a strike without critical damage even if it terminates its operations in Cyprus entirely. Alternatively, it can choose to leave the country altogether and still survive. These are options not realistically available to local banks. The latter option (leaving Cyprus) would of course be highly damaging to this country’s effort to attract foreign investment. The position of the Cyprus government in such a dispute is also altered, requiring it to take into account considerations that are not present in purely local disputes.

This situation is not unfamiliar to unions elsewhere who have had to negotiate with foreign based companies. That is why unions in other countries have made major efforts to coordinate with other unions across national boundaries. In this case it would mean acquiring the support of Greek unions to put pressure on the bank of Greece (e.g., a possible strike in Greece against NBG) in support of the union here in Cyprus. This illustrates precisely why such efforts have not been very successful. Is it likely that Greek bank employees will put their own jobs at risk in support of a union which is obstructing the movement of Greek managers to Cyprus?

Nor is the Cyprus banking market the only market which the NBG management has to consider. Allowing the Cypriot unions to prevent NBG management from moving bank managers to Cyprus would set a major precedent. Unions in Greece and elsewhere could point to it as a reason for similarly preventing movement to Greece from other countries, including Cyprus.

 

— Another Difference

 

The second difference is of course the fact that Cyprus as a member of the EU has entered into certain commitments. Free mobility of labour across EU borders is one of these. The EU itself proclaims that:

“The internal market also means that citizens are free to work anywhere in the European Union”.

The union claims that moving Greek managers to Cyprus without its permission is a clear breach of existing agreements.  That may be true but not permitting such a transfer is also in clear breach of the EU treaty obligations of Cyprus.

Union opposition to such freedom of movement has been tried in other countries. In the final analysis it has not worked. That is not to say that this opposition has not sometimes delayed the full application of the EU rules on free movement of labour. Obstacles to the mobility of workers within the EU have appeared from time to time, usually in the form of requirements for certain local vocational and university qualifications as a prerequisite for employment. These have been vigorously apposed by the EU. Such obstructions have typically proved only a temporary impediment.

 

— The Cyprus Problem

 

In this case – even a delay in complying with EU regulations is unlikely. Enter here the eternal question of the “Kypriako”.

Refusal by Cyprus to abide by its EU commitments would benefit Turkey and its current position blocking Cypriot ships. Turkey has refused to allow Cypriot ships into its ports, a flagrant violation of EU regulations. This would be much less damaging  for Turkey if it could point to Cyprus as doing much the same thing in the area of labour mobility.

Whatever happens in this particular dispute, it is clear that fundamental changes are underway. In a world of instant communications and jet transport, insistence on the preservation of a small local labour market with its own restrictions and practices is archaic to say the least. Nor will all Cypriot employees see such an island mentality to be in their own interest.  Not only are foreign workers coming to Cyprus, many Cypriots are increasingly interested in working abroad. Freedom of labour movement is in their interest and in the interest of any country wishing to remain competitive in a global economy.