The CoLA impasse continues after employers’ organisations OEV (Cyprus Employers and Industrialists Federation) and KEVE (Cyprus Chamber of Commerce and Industry) accepted the government’s revised framework, but unions did not follow suit. Despite the government’s upbeat signals that the issue could soon be resolved, unions voiced strong reservations and want a meeting with the President of the Republic before taking final positions. A joint all-union meeting will depend on that encounter and the clarifications provided.
New approaches in the text
SEK Secretary General Andreas Matsas said after last night’s two-hour union meeting (PEO, SEK, DEOK and PASYDY) that several points require further discussion, announcing that unions will request an immediate meeting with the president in the coming days.
He expressed concern about “the revised framework and the new approaches” outlined in the text shared with social partners.
Two government changes stand out:
• The incorporation of CoLA into the national minimum wage every two years (instead of annually, as the original framework provided), a shift made to satisfy employers.
• Adjusted wording on the possible extension of CoLA’s application.
According to information obtained by Politis, the revised text states that “for the application and extension of CoLA, the government may adopt policies in agreement with social partners and implement incentives in consultation with the employer side.”
Minimum wage ruling seen as leverage
A key union concern is the reference to integrating CoLA into the minimum wage every two years. In talks with the president, unions intend to leverage yesterday’s Court of Justice of the European Union decision on adequate minimum wages.
The CJEU upheld the validity of the EU Directive on adequate minimum wages and its core provisions, confirming measures that promote collective bargaining, including the requirement for member states to submit action plans to increase collective bargaining coverage.
While the court annulled Article 5(2), which contained detailed criteria for assessing the adequacy of statutory minimum wages, it upheld other provisions, including Article 5(1), which links minimum wages to adequacy with the goal of ensuring a decent standard of living, and Article 5(4), which sets “decency thresholds” at 50% of the average wage and 60% of the median wage as reference points.
Unions: use the ruling and speed up social dialogue
Matsas said the government “is called to make use of this decision.” Cyprus is among five states that have not yet aligned with other members’ obligations, he noted, adding that a bill transposing the directive should be tabled in Parliament and the process expedited so that, with social partners, a strategy can be defined to expand collective agreements to cover all workers.
On the minimum wage specifically, he urged priority for social dialogue through the labour advisory body.
Commission reaction: adequate minimum wage is necessary
The European Commission welcomed the CJEU ruling, describing an adequate minimum wage as “necessary for social justice and for a productive and inclusive economy.” It said it helps protect purchasing power, reduce wage inequality and in-work poverty, support domestic demand and narrow the gender pay gap.
President Ursula von der Leyen stated that every worker in Europe should be able to earn a living, calling the ruling “a milestone for Europeans; for dignity, fairness and economic security,” with implementation to respect national traditions, social partner autonomy and the importance of collective bargaining.
On the rest of the draft, employers and unions agree on:
• Gradual restoration of CoLA to 100% for recipients over 18 months, 80% on 1 January 2026 (from 66.7% today), 90% on 1 July 2026 and 100% on 1 July 2027.
• A 4% inflation cap as the maximum rate used.
• CoLA to be granted once per year provided the previous year’s real GDP growth rate is positive.
SEK to seek wage increases in renewals
SEK also announced it will seek significant wage increases during upcoming collective agreement renewals. Its general council discussed extending collective agreements, improving provident and welfare fund contributions, and the minimum wage. Matsas added that unions place particular emphasis on successfully completing the ongoing tax reform.
After the Cabinet meeting at the Presidential Palace, Finance Minister Makis Keravnos said he expects “a successful conclusion” to the CoLA consultations, optimism he repeated later that day on the sidelines of an event at Larnaca’s old airport. The President has likewise stated that there are no dead ends on CoLA.