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Cyprus’ two leading employer groups have rejected the government’s proposal for a new Cost-of-Living Allowance (ATA) deal, saying the draft agreement “falls short” on several key points and cannot be signed as it stands.
In a joint statement, the Employers and Industrialists Federation (OEB) and the Cyprus Chamber of Commerce and Industry (CCCI) said their executive committees had unanimously decided to say no to the government’s framework for a permanent ATA arrangement.
According to Kathimerini's Dorita Yiannakou, the decision came after what they described as an “exhaustive discussion,” during which both sides agreed the draft contained important weaknesses, particularly regarding how the system would operate and who would benefit from it.
While the employer groups reiterated their support for 100% ATA coverage for low-income earners, they said the system needs modern safeguards to ensure it doesn’t undermine the competitiveness of private businesses or add pressure to the public sector payroll.
They also took issue with new provisions linking ATA to the National Minimum Wage, arguing that the language in the draft went beyond previous agreements reached in 2017 and 2023.
According to both organizations, a “last-minute addition” by the government proved to be a deal-breaker: a clause allowing the finance and labor ministers to expand ATA coverage to more workers without the employers’ consent.
“This cannot be accepted,” the statement said, adding that such provisions risk making the system unsustainable.
Still, OEB and CCCI stressed they remain committed to dialogue, expressing hope that continued talks will lead to a balanced, long-term deal that supports both workers and economic stability.
The government has yet to respond to the employers’ rejection, but the setback is likely to delay efforts to reach a permanent arrangement on a policy that has long divided Cyprus’ business and labor sides.
Background:
The ATA, or Cost-of-Living Allowance, is a mechanism that adjusts wages based on inflation, aiming to preserve workers’ purchasing power. It was frozen during the financial crisis and only partially reinstated in recent years. Employers argue that automatic wage increases can hurt competitiveness, while unions see ATA as a social safety net that keeps up with rising prices.
