Minister of Labour and Social Insurance, Yiannis Panayiotou
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CoLA deal ‘around the corner’

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Social partners are reportedly ready to settle a dispute over the Cost of Living Allowance (CoLA), by accepting the mediation proposal tabled by Labour Minister Yiannis Panayiotou.

According to news reports, Panayiotou’s proposal on the automatic wage indexation system will be accepted by the majority of unions, while one of the two major organisations representing employers has said it would back the deal, despite reservations.

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

The deal retains the payment of raises to employees as of June 1, in line with 2022 inflation.

According to the new interim deal, based on the principles of the one drawn up in 2017, a structured social dialogue is to be launched in June 2025 to find a holistic solution to the matter.

In comments to news site StockWatch, the head of the DISY-affiliated SEK, Andreas Matsas, said that the trade union will be pushing towards an agreement. SEK’s final decision will be delivered on Thursday afternoon, following a meeting of the executive board.

Matsas noted that the vast majority of employees in the private sector will not benefit from any agreement on the renewal of CoLA, as 60% are not covered by collective agreements.

Civil servants also appear to be on board, as Stratis Matheou, PASYDY’s General Secretary said that he would be suggesting to the union’s members to greenlight the minister’s proposal.

“Under the circumstances, the Labour Minister’s proposal is balanced and fair,” noted Matheou.

PASYDY will also be delivering its decision on Thursday afternoon.

Social democrat EDEK’s affiliated union DEOK has said that it had no intention of turning down the proposal.

PEO’s stance

AKEL affiliated PEO’s stance remains somewhat enigmatic, as the union’s officials appeared less than willing to consent to the mediation proposal.

In comments to the Financial Mirror, PEO’s General Secretary, 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 rate increased by 50%.

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

When it comes to employers’ organisations, so far, only the Employers and Industrialists Federation (OEB) has backed and accepted the minister’s compromise proposal.

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

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.

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.

The Cyprus Chamber of Commerce and Industry, via its General Secretary, Marios Tsiakkis had told media earlier that there are constituents within the group that want 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.

Media reports have the Labour Minister contemplating the reduction of employers’ contribution to the contingency fund, while the CCCI has also tabled suggestions for reduction of their contributions to the redundancy fund.

According to calculations, the implementation of the new CoLA deal will burden state finances with an additional €20 mln a year, as civil servants’ salaries will automatically increase by 1.5% across the board as of June.