The row over Cyprus’ cost-of-living allowance (ATA) is intensifying rather than subsiding, following the government’s recent policy statement. Both unions and employers’ groups are holding separate meetings with Labour Minister Yiannis Panayiotou today and tomorrow, with neither side showing signs of backing down.
The Cyprus Employers and Industrialists Federation (OEB) and the Chamber of Commerce and Industry (KEVE) met the minister this morning, while trade unions will have their turn on Tuesday. In a joint statement on Sunday, the two employers’ organisations said their participation was limited to reiterating positions already submitted, stressing that the universal application of ATA “is not up for discussion.”
Unions hold their line
Unions are equally firm. “Our positions are well known. Workers spoke out last Thursday,” said SEK general secretary Andreas Matsas, referring to last week’s nationwide three-hour strike. “Tomorrow we expect to hear if there is substance behind the minister’s headlines.”
PEO general secretary Sotiroula Charalambous echoed the point, saying unions want clarity on each element of the government’s framework. “We have already set the limits of how far we can go,” she said. “For us, ATA means ATA in its full philosophy - and for everyone.”
Parties urge dialogue, Neophytou calls for tax relief
Political parties have reacted cautiously to the government’s signal that it could legislate, if needed, to extend ATA universally. Most MPs told Politis that workers’ claims should be resolved through the long-standing framework of social dialogue and the Industrial Relations Code. Any concrete regulation, they said, would be studied carefully once tabled.
Former DISY leader Averof Neophytou struck a different note, arguing that “the best defence against high prices is an attack on tax injustice.” He proposed three measures:
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A generous tax cut for workers, based on family income and real household needs.
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Supplementary social support for the 65,000 people living below the poverty line.
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Safeguards for business competitiveness to avoid higher costs being passed on to consumers and fuelling inflation.
Strike threat and fiscal warnings
Last Thursday’s three-hour strike paralysed economic activity across the country, with unions warning of further escalation if no solution is found.
Meanwhile, the Fiscal Council of Cyprus urged caution. In its interim 2025 report, it warned that expenditure growth already outpaces GDP, inflation, and projected revenue trends after 2026. Additional increases in wages or benefits, it said, would worsen the state’s fiscal position, especially in light of the unavoidable costs stemming from the dramatic events of July 2025.
“The risks are clear,” the council concluded. “Any decision on ATA or new hiring -particularly those affecting the public payroll- must be taken with extreme care.”
