The government and employers appear to have reached common ground on the cost-of-living allowance (CoLA), following adjustments to provisions that had raised concerns among businesses. The final word now lies with the trade unions, which will meet this afternoon to assess the revised framework.
Following a tense weekend of consultations on CoLA, which seemed headed for deadlock after the Cyprus Employers and Industrialists Federation (OEV) and the Cyprus Chamber of Commerce and Industry (KEVE) rejected the government’s draft “permanent CoLA agreement”, the outlook as of late Monday night suggested that the government had managed to realign with the employer side.
Attention now shifts to the unions, which must decide whether to accept the modified framework presented to them last week, one they had already agreed to in principle. The issue could be resolved as early as today, though another stalemate looms if the unions refuse to endorse the new terms.
The revised framework
The updated proposal will be reviewed this morning at 9 a.m. by KEVE’s executive committee, while the unions will convene at 5:30 p.m. at the SEK headquarters.
For employers, the “red line” remains the inclusion of CoLA in the national minimum wage and the authorisation for the ministers of finance and labour to consider expanding CoLA coverage to more workers through compensatory measures for businesses.
According to Politis sources, an agreement has been reached for the minimum wage to be reviewed every two years, as stipulated under the current framework, while the language concerning CoLA’s extension to more companies has been revised.
The employer side also agrees to the gradual restoration of CoLA to 100% for eligible employees over an 18-month period — from the current 66.7% to 80% on 1 January 2026, 90% on 1 July 2026, and full 100% restoration on 1 July 2027 — with a 4% inflation ceiling. CoLA would be granted once annually, provided that the annual real GDP growth rate for the preceding year is positive.
The unions’ stance
The picture emerging from the unions is one of caution, though the tone differs among them.
“We will evaluate all the parameters linked to the CoLA issue,” said SEK (Cyprus Workers Confederation) Secretary General Andreas Matsas, without revealing his position.
From the general secretariat of PEO (Pancyprian Federation of Labour), Politis was told that trade unions remain bound by the joint union decision to accept the government’s original proposal as is, adding that any further appeal should be addressed to the employers’ organisations. “There can be no agreement if the proposal’s essential elements are altered,” a PEO representative stressed.
DEOK (Democratic Labour Federation of Cyprus) President Stelios Christodoulou voiced concern over the employers’ approach: “We are troubled by the employers’ overall stance. We had already agreed to the presence of both ministers, but they later backtracked, which is worrying. The unions will not sign an agreement that distorts the philosophy of CoLA.”
PASIDY (Public Servants Union) Secretary General Stratis Matthaiou added: “All four unions participating in the dialogue will review the proposal together and decide collectively.”