Employers’ federations unanimously rejected the government’s draft “permanent agreement” on the CoLA (Cost-of-Living Allowance), effectively ending months of social dialogue despite efforts by the finance minister, the labour minister and a personal intervention by the president.
Why employers said no
According to OEB (Federation of Employers and Industrialists) and CCCI (Cyprus Chamber of Commerce and Industry), a last-minute clause asked employers to authorise the finance and labour ministers to “apply measures to extend CoLA to more beneficiaries.”
They also object to provisions touching the national minimum wage that, they argue, fall outside the transitional 2017 and 2023 arrangements and their stated position that CoLA should be factored into the biennially set minimum.
Union response
Unions called the rejection a negative development that puts labour relations in “uncharted waters.” They said they accepted the government draft in full, “not changing a single iota,” after making concessions to secure a permanent settlement.
SEK (Confederation of Cyprus Workers) secretary-general Andreas Matsas said unions will assess employers’ reasoning, the government’s stance and next steps.
Who gets CoLA now
SEK estimates about 75,000 private-sector workers and 93,000 in the public and wider public sector currently receive CoLA. Under the draft, a further 55,000 low-paid workers could become eligible.
What the draft provides
• Step-up to full CoLA for current recipients within 18 months: 80% on 1 January 2026 (from 66.7% today), 90% on 1 July 2026, and 100% on 1 July 2027.
• A 4% ceiling as the maximum inflation rate recognised.
• Annual CoLA payment only if the previous year’s real GDP growth is positive.
• CoLA to be calculated into the national minimum wage annually; the minimum wage itself to be revised every two years.
• Authority for the finance and labour ministers to introduce measures that extend CoLA to more workers, with compensatory support for businesses.
• A provision for the Labour Advisory Body to review macroeconomic risks.
Employers’ bottom line
OEB and CCCI say the draft is “not satisfactory” in key provisions and cannot be signed as is, though they state they remain at the table for a commonly accepted agreement.
After the breakdown, the government is expected to set out how it will manage the issue and outline its next steps.