Deal on minimum wage hits buffers

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The government is adamant about introducing a national minimum wage despite a deepening gap between unions and employers over the terms.

Reportedly, Labour Minister Kyriacos Koushos has sent an ultimatum to social partners that the minimum wage will be introduced by decree if an agreement is not reached.

This follows several attempts by the ministry to lay down the law, including informing stakeholders of the formula to be followed.

However, the two sides are still arguing over the matter, with differences growing, the latest thorny issue added to the list of disputes being the hours on which the minimum wage is based.

The government’s methodology considers that a working week consists of 40 hours.

This is not to the liking of unions which insist that the minimum wage should be calculated on a 38-hour working week.

This is important as the hours on which the minimum wage is calculated will also dictate when overtime begins.

Kindergarten teachers, for example, have employment contracts that provide 38 hours of work per week, security guards work 44 hours per week, and part-timers work much less than 40 hours per week.

A minimum wage covering nine professions does not define working hours.

Furthermore, employers are demanding additional exclusions, such as young people between the ages of 16 to 21, arguing that they are mostly seasonal workers and students who do not stay long in the positions, which are mainly in hospitality.

The reasoning behind the decision is these employees enjoy free accommodation and food their employers provide.

Trade unions claim that such exclusions are against the essence of a national minimum wage to ensure that low-income workers are rewarded with a salary sufficient to cover their basic needs.

The current proposal from the ministry excludes housemaids and people employed in the shipping and farming industries.

Perhaps the thorniest issue between the two sides is whether the national median wage would be based on the calculations of the statistical service, which are lower than the EU Statistics on Income and Living Conditions (EU-SILC) cross-sectional and longitudinal sample survey.

A minimum wage is to be set at 50% or 60% of the median wage.

However, the Cyprus Statistical Service says the median wage is €1,573, while the EU-SILC European survey calculates it at €1,727, 9% higher than CyStat.

This seemed to have been overcome last week when the Labour ministry told partners the minimum wage would be calculated at 54.3% of the median salary and overtime, based on an understanding between social partners, reaching 60%.

This would mean that Cyprus workers will earn no less than €890 gross a month, increasing to €930 after six months on the job.

Information from the two camps says that sides are dissatisfied, with employers seeking more flexibility and unions a higher wage, arguing the proposed minimum wage will not cover the cost of living hikes.