One step closer to CoLA agreement

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Labour Minister Yiannis Panayiotou on Friday appeared optimistic that unions and employers are one step closer to settling a dispute over the Cost of Living Allowance (CoLA), despite sides clinging to their initial bargaining positions.

In statements to the press after holding separate meetings with the Cyprus stakeholders, Panayiotou said that a mutually acceptable agreement would be reached as early as next week, when a joint meeting is set to take place.

“I am positive that until then, we will reach a mutually acceptable agreement that ensures labour peace,” said Panayiotou.

The initial plan was for the minister to have a joint meeting with social partners to review a mediation proposal he had tabled. However, differences arose in the days leading up to the meeting.

Panayiotou’s proposal foresees renewing the 2017 interim agreement for another three years and increasing CoLA to two-thirds of the Consumer Price Index. This would mean CoLA would go up to a 66.67% from the current 50%.

The first social partner to voice its objections was the Cyprus Chamber of Commerce and Industry, with its chairman, Marios Tsiakkis noting that there are constituents within the group that support the complete abolition of CoLA.

Talking to state radio CyBC, Tsiakkis said that, “the chamber is not satisfied with the mediation proposal but does not reject it in its entirety”.

Tsiakkis said that the CCCI will request clarifications from the Labour Minister, tabling a proposal for tax incentives and compensatory measures for businesses.


He further argued that CoLA is a counter-productive measure, which is not effective in productivity, competitiveness and the sustainability of Cyprus’ businesses.

Unions also initially rejected the proposal, arguing that it does not comply with the philosophy behind the CoLA institution.

In comments to the Financial Mirror, the head of AKEL affiliated PEO union, Sotiroula Charalambous said that the issue with the proposal is that it does not incorporate the philosophy of the previous transitional agreement which saw the CoLA increased by 50%.

“The philosophy for us is clear. CoLA must link workers’ salaries directly to inflation,” said Charalambous.

Charalambous’ comments reflect the stance of all 13 unions which met on Thursday to turn down Panayiotou’s mediation proposal.

On behalf of DISY affiliated SEK union, its general secretary Andreas Matsas said that for unions to support the proposal, there must be a clear timeframe in place for the complete restoration of CoLA to 100%.

So far, only the Employers and Industrialists Federation (OEB) have backed and accepted the minister’s compromise proposal so far.

However, speaking to the state broadcaster, its director general Michalis Antoniou said it was not a unanimous decision to support the proposal.

Antoniou said that, “in fact, Thursday’s meeting where OEB’s members discussed the proposal was intense, and left many people disappointed”.

Nonetheless, he said, “OEB has decided to take a responsible stance to avoid any turbulence, and keep the labour peace. However, the federation will not accept to budge by an inch on the proposal, and will tolerate no compromises over it.

In a communication with the Financial Mirror, OEB’s official said that the employers’ federation was willing to accept the deal even if it came at a cost to businesses, in order to maintain the peace.

As told, businesses that pay out CoLA to their employees, will see their payroll increase by 1.45%, adding to an increase of 4.36%, dished out to cover the 50% CoLA rate rise.