Newsroom
Cyprus’ long-running tug-of-war over the cost-of-living allowance, known locally as ATA, has taken a sharp new turn after the country’s two largest employers’ groups declared the scheme unconstitutional for the private sector.
The Employers and Industrialists Federation (OEB) and the Chamber of Commerce and Industry (KEBE) said Wednesday they had sought legal advice from constitutional law expert Achilleas Emilianidis, who concluded that forcing private companies to pay ATA violates the constitution. The announcement was sent to the president and released publicly, fueling an already heated debate over pay and fairness in Cyprus’ workplaces.
The opinion comes just days after unions staged a major nationwide strike on September 11, accusing the government and employers of backtracking on commitments to restore ATA in full. The allowance is meant to adjust wages in line with inflation, a lifeline for workers struggling with rising prices.
Employers argue that applying ATA to private businesses amounts to state overreach. In their joint statement, OEB and KEBE warned that if the government insists on imposing the measure by law, “labor relations will be transferred from the halls of negotiation and cooperation to the halls of the courts and litigation.”
For unions, however, ATA is a matter of fairness. Public-sector employees already benefit from automatic adjustments, while many private-sector workers are left to battle inflation without similar protection. The legal opinion raises the possibility of a two-tier system: one set of rights for public workers and another for private employees.
The dispute also raises broader questions. In countries like the United States, cost-of-living adjustments (COLAs) are common in government programs such as Social Security, but private-sector pay hikes are left to collective bargaining or company policy. Some European countries link wages more systematically to inflation, but the practice is patchy and politically contested.
What happens next in Cyprus remains uncertain. The legal opinion has put pressure on the government to clarify its stance, while unions are unlikely to back down after flexing their muscle in last week’s strike. With tempers already high, the island’s delicate labor peace may soon be tested in court, not at the negotiating table.
