Government’s New CoLA Plan Sparks Fresh Labor Backlash

Unions call the draft vague and poorly timed as the government proposes full restoration in 18 months, a 4 percent inflation cap, and links to the minimum wage.

Header Image

GEORGIA CHANNI

The government submitted a new consultation framework on the Cost of Living Allowance (CoLA) while a joint union meeting on potential strike action was still under way. Social partners received the document at 4:30 p.m. on Monday and criticised it as rushed and unclear. They declined to meet the finance and labor ministers within the ninety minutes initially proposed, asking first for written clarifications.

What the government is proposing

According to the new framework, CoLA would be phased back to 100 percent within eighteen months under a “CoLA for all” approach without tiered payouts. A ceiling of 4 percent would apply to the inflation rate counted for CoLA, so if inflation exceeds 4 percent the CoLA payout would still be calculated at 4 percent.

The plan also suggests integrating CoLA into the national minimum wage with a review every two years. For employees who already receive CoLA, the payout rate would rise to 80 percent on 1 January 2026 from today’s 66.7 percent, reach 90 percent on 1 July 2026, and 100 percent on 1 July 2027. CoLA would be granted once a year provided real GDP growth in the previous year is positive, with a committee reviewing the payout rate if growth is double the inflation rate. The proposal includes incentives to encourage wider employer adoption, referencing an annual rebate equal to 50 percent of CoLA paid.

What unions are saying

On Politis 107.6 & 97.6 fm, Panikos Argyridis of SEK (Cyprus Workers’ Confederation) said unions have requested clarifications because several points lack precision. He argued that a negotiation framework should come at the start of talks rather than the end and that unions expected a written mediation text or draft agreement. He added that unions are not opposed to incentives for employers to adopt CoLA, noting their long-standing goal of expanding collective agreements in the private sector, where CoLA would naturally be part of those agreements. Unions accept a gradual path to 100 percent and view a reasonable inflation cap positively, but they warn that tying payouts to growth being double inflation may distort CoLA’s philosophy. He stressed the need to define “CoLA for all” and to extend coverage via collective agreements.

Michalis Papanikolaou, deputy secretary-general of PEO (Pancyprian Federation of Labour), said the all-union meeting is ready to discuss any written mediation proposal that could enable a preliminary agreement. He described the government text as full of ambiguities and insisted CoLA should be paid at 100 percent in line with its founding logic. The crucial element, he said, is “CoLA for all,” either through legislation that covers all workers or through another suitable mechanism. If these elements are present, discussions can move forward. If not, the unions reaffirmed their unity and are prepared to escalate if necessary. They expect word by Friday on a possible meeting and further explanations.

Stratis Matthaiou, secretary-general of PASYDY (Pancyprian Public Employees Trade Union), told Politis they expect the final outline of any agreement on Friday and to be called to a meeting if one is set. Stelios Christodoulou, president of DEOK (Democratic Labour Federation of Cyprus), said the union insists on full restoration to 100 percent so that more workers benefit and also calls for wider use of collective agreements in line with the EU directive on adequate minimum wages. He added that the framework needs clarifications that have been requested and will be evaluated once received.

How employers are responding

Filokypros Rousounides, secretary-general of KEVE (Cyprus Chamber of Commerce and Industry), said KEVE is running impact exercises to decode the proposal and assess effects on the economy, workers and business competitiveness, after which its bodies will respond. He expects a more concrete position early next week. Lena Panayiotou, deputy director-general of OEV (Cyprus Employers and Industrialists Federation), said OEV will submit positions on all aspects of CoLA. She noted there are ambiguous and contradictory points that create problems. Employer organisations plan another joint meeting in the coming period.

What to expect next

Developments are expected on Friday when the labor minister and representatives of the social partners return from the Tripartite Social Summit on 22 October in Brussels. Unions await written clarifications and a mediation text. If sufficient changes are offered on full restoration, coverage, and clarity, talks may shift toward a preliminary agreement. If not, the unions say stronger action is on the table.

Related Articles

08 October 2025

ECONOMY

CoLA Deadlock Tests Trust Between Social Partners and Government

Employers’ brief boycott exposes growing frustration as Finance Minister steps in to salvage talks.

04 October 2025

ECONOMY

CoLA Drives Big Pay Gains for Top Officials Since 2022

New budget figures show how the monthly CoLA uplift boosts net salaries, most for higher earners, while €5.4m is set aside for officials’ pensions and €2m for ex-MPs’ gratuities in 2026.

29 September 2025

ECONOMY

CoLA and Tax Reform Leave Low Wage Earners Out in the Cold, Economists Argue

Middle classes largely ignored, as upper echelons receive benefits

Comments Posting Policy

The owners of the website www.politis.com.cy reserve the right to remove reader comments that are defamatory and/or offensive, or comments that could be interpreted as inciting hate/racism or that violate any other legislation. The authors of these comments are personally responsible for their publication. If a reader/commenter whose comment is removed believes that they have evidence proving the accuracy of its content, they can send it to the website address for review. We encourage our readers to report/flag comments that they believe violate the above rules. Comments that contain URLs/links to any site are not published automatically.