Cyprus employers have rejected a government proposal for a permanent cost-of-living allowance settlement, hours after trade unions accepted the deal, leaving the issue that has dominated public debate for months without resolution.
The Cyprus Chamber of Commerce and Industry and the Cyprus Employers & Industrialists Federation said they could not accept provisions on the national minimum wage and objected to a last-minute clause requiring them to authorise ministers “to implement measures to extend COLA to more beneficiaries.”
The government will assess its options today, according to sources. Officials can either restart talks or push through legislation and let parliament decide.
The proposed framework would restore COLA to 100% within 18 months, rising from 66.7% today to 80% on 1 January 2026, 90% on 1 July 2026 and reaching full coverage on 1 July 2027. It includes a 4% inflation cap and links COLA to the minimum wage on an annual basis.
Trade unions accepted the proposal without changes after their pan-union conference, saying the movement made concessions to reach a permanent settlement. They called on employers to show “a similar spirit.”
Employers’ organisations were split between those who wanted to sign despite reservations and those who argued the disagreements were too significant. The latter view prevailed.
The chamber and federation said they accept the need for 100% coverage of low wages for those entitled to COLA, but the draft’s provisions on the national minimum wage “do not relate to the transitional agreements of 2017 and 2023 and as worded cannot be accepted.”
Under the proposal, COLA would be paid once a year if the previous year saw positive growth. The minimum wage would be revised every two years, and the Labour Advisory Board would meet in expanded form if economic risks emerge.
The government and employers also discussed tax incentives for employers, the finance ministry said.
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