By Georgia Channi and Yannis Seitanides
The standoff over the Cost of Living Allowance (CoLA) has evolved into a wider crisis of confidence between Cyprus’s social partners and the government, one that no longer concerns only Labour Minister Yiannis Panayiotou, but the administration as a whole.
Employers’ boycott and presidential intervention
In a highly unusual move, the employers’ federations OEB (Federation of Employers and Industrialists) and KEVE (Cyprus Chamber of Commerce and Industry) announced they would not attend any CoLA-related meetings with government officials until Monday, October 13, when their executive boards would reconvene to assess the situation. The decision laid bare the deep mistrust overshadowing the talks.
Late Monday, the boycott was suspended following direct intervention by President Nikos Christodoulides. In a joint statement, OEB and KEVE presidents said that, “at the President’s urging, they will meet with the Ministers of Finance and Labour in the coming days, ahead of Monday’s joint Executive Committee session.”
What led to the rupture
Tensions peaked after President Christodoulides said on Saturday that he had “not undertaken any specific initiative on CoLA,” contradicting statements from OEB and KEVE days earlier claiming he had personally reactivated the process. Meanwhile, trade unions learned of developments from the media, further fuelling their frustration.
The government has since moved to involve Finance Minister Makis Keravnos, who is now exploring a practical formula to break the deadlock, possibly through compensatory measures. Labour Minister Panayiotou is reportedly sounding out unions about a possible meeting this Friday to restart dialogue.
The Monday meeting fallout
Monday’s meeting at the Presidential Palace, chaired by Christodoulides and attended by both ministers, deepened rather than eased the discontent among social partners.
In a new joint communiqué, OEB and KEVE said their boards will meet again on Monday, 13 October, to “evaluate the situation following the Presidency’s announcement of continued dialogue under the two ministers” and to decide on next steps.
“Until the completion of these internal deliberations,” they stated, “no meeting will take place with any government official on CoLA.”
Earlier, on 2 October, OEB and KEVE had held their first-ever joint session, issuing a restrained statement that reaffirmed their opposition to the universal restoration of CoLA but avoided personal criticism of the Labour Minister, despite internal pressure from some employers to withdraw confidence from him. Following a phone call from the President, they opted for a neutral stance, citing “ongoing efforts initiated by the President of the Republic.”
However, the President’s decision to meet only his ministers, and not the social partners, proved the final straw for employers and unions alike.
Mounting criticism of the Labour Minister
Labour Minister Yiannis Panayiotou’s handling of the process has come under sharp scrutiny from both sides. Unions are equally discontented, arguing they are being left in the dark about key developments.
Despite mounting pressure, Christodoulides continues to stand firmly by Panayiotou, describing his ministers as acting “on behalf of the President of the Republic.” The Labour Minister, a close ally since the election campaign, remains one of the President’s most trusted figures.
The push for an agreement
Even amid the turmoil, the government insists that agreement remains possible.
Addressing Parliament on Tuesday, Panayiotou said the administration remains “committed to social dialogue,” adding that “the necessary groundwork exists for a feasible compromise through full participation in the process.” Convergence on key issues, he said, could pave the way for bridging remaining gaps.
President Christodoulides struck a similar tone late Monday, saying, “We are at the final stage; the conditions exist for an agreement. Separate meetings between the two ministers and social partners will take place first, followed by a joint session aimed at reaching a final outcome.”