Employers and unions failed to reach agreement on extending Cyprus’s cost of living adjustment (COLA/ATA) after a six-hour negotiating session with government ministers on Friday, with disputes over minimum wage integration and tax incentives blocking a deal.
The talks between the Federation of Employers and Industrialists (OEV), the Cyprus Chamber of Commerce and Industry (KEVE), and trade unions alongside the finance and labour ministers made progress on some issues but hit roadblocks that prevented even an in-principle agreement.
The process will continue, with OEV and KEVE holding a joint meeting next Tuesday to determine their next steps. Unions are waiting for that meeting before deciding whether to call a fresh pan-union assembly.
Two main sticking points emerged from the marathon session, according to sources.
The first was the minimum wage. Unions wanted the cost of living allowance integrated into the minimum wage, arguing this would strengthen lower-income groups whilst helping achieve the goal of extending COLA to all workers.
Employers opposed this, making agreement impossible. Unions also complained of a reversal of position mid-process that changed what had been a positive atmosphere.
The second obstacle involved compensatory measures—tax incentives the government planned to grant employers to offset increased costs from raising the COLA percentage and extending the scheme.
Although inflation has remained very low recently and costs are not particularly high, employers want to protect businesses in case the rate rises again.
Despite the difficulties, Labour Minister Yiannis Panayiotou struck an optimistic note after the meeting. He said the round of talks with social partners as part of the mediation process for a permanent COLA agreement had been useful and constructive, producing a framework of convergences that could be used to reach the desired agreement.
He added that certain limited and specific differences remain, which “we believe are too small in scope to limit the prospect of reaching agreement within the next few days”.
The minister said they continue to be in contact with both sides to shape the necessary convergences on these issues to achieve the desired result in the coming days.
Scheduling another meeting between ministers and social partners will be difficult, as several participants including the labour minister will be abroad next week. Possible dates are late next week or early the following week, though a weekend surprise cannot be ruled out.
The impression from statements by employer and union representatives was that unions left somewhat disappointed whilst employers characterised the meeting as useful.
SEK general secretary Andreas Matsas said it was “regrettable and disappointing that after six hours of consultations, at the final stage of the process, we are not in a position to announce any decision, even a preliminary one”.
He noted that unions had set today as their deadline. However, issues have emerged that require informing their collective bodies and other trade union organisations comprising the pan-union assembly, so they can evaluate all the data and determine their next steps.
PEO general secretary Sotiroula Charalambous said “there was in-depth and exhaustive discussion on many issues. We are not at a stage where we can say there is agreement in principle. There are divergences on important issues and we await the next steps”.
On the employers’ side, OEV director general Michalis Antoniou characterised the meeting as “productive and useful”, noting that the OEV and KEVE executive committees will meet in joint session next Tuesday afternoon.
KEVE director general Philokypros Rousounides said much ground has been covered. Nevertheless, “we cannot at this moment speak of any agreement”.
He added that the situation is dynamic and changing. “As close as we are, we are equally far away. There are quite a few convergences, but there are also differences which in this case may ultimately prove thorns, or we may overcome them,” he said.
