A lengthy meeting between the social partners and the Ministers of Finance and Labour on the Cost of Living Allowance (CoLA) ended without a deal, but no deadlock has been declared. According to information seen by Politis, there has been movement on elements of the government’s negotiating framework, keeping the process alive after months of discussions.
The sticking points
Key obstacles remain. Unions press for an annual CoLA calculation within the minimum wage review, while employers prefer a two-year cycle. There is also disagreement on the size of tax reliefs for employers. On the return to employers of the CoLA already granted on a yearly basis, the government favours 15 percent rather than the original 50 percent proposed in the framework.
Both sides accept the government proposal to phase CoLA back to 100 percent within 18 months, to set a 4 percent inflation cap and to avoid tiered payouts. Specifically, CoLA 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 paid once a year provided real GDP growth in the previous year is positive.
Union reactions
PEO (Pancyprian Federation of Labour) secretary general Sotiroula Charalambous said there is no preliminary agreement and that divergences remain on important issues. SEK (Cyprus Workers Confederation) secretary general Andreas Matsas called the lack of a preliminary outcome after six hours of talks disappointing, adding that unions will brief their collective bodies and other organisations before deciding next steps. He did not rule out another meeting with ministers, but stressed the process cannot be open-ended and must have a decisive timetable.
OEB (Cyprus Employers and Industrialists Federation) and CCCI (Cyprus Chamber of Commerce and Industry) will hold a joint executive session on Tuesday. OEB director general Michalis Antoniou said all sides carry responsibility to their members and to society. CCCI secretary general Philokypros Rousounides said significant ground had been covered, yet no agreement is in sight. He noted there are many convergences, but also differences that could still become a stumbling block if not resolved.
Government position
Labour Minister Yiannis Panayiotou described the mediation round as useful and constructive, saying it produced a set of convergences that can be used to reach a permanent CoLA agreement. Some limited and specific differences remain, which the government considers too small to block a deal in the coming days. He said the ministries are ready at any time to put positions in writing, but the remaining distance between the two sides should narrow further so that any mediation proposal helps rather than hinders. He urged all parties to act carefully and without pressure tactics, adding that after a long period of fluidity for the CoLA regime, a permanent agreement would be an important step for labour relations. If dialogue ceases to be constructive, the government will announce this and take appropriate decisions.
Unions will set the date for a cross-union conference next week to review the dossier and define their course. The government expects both sides to maintain a constructive stance in the days ahead in order to close the remaining gaps and conclude the process positively.