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Cyprus’ long-running debate over the Cost-of-Living Allowance (COLA) reached a turning point this month, with President Nikos Christodoulides presenting a new deal as a major win for fairness and the middle class. But a closer look at the agreement, and who actually gets the money, shows a far more complicated picture.
The government, employers’ groups, and trade unions struck the agreement on Nov. 13, restoring COLA to 100% over the next two years. Christodoulides immediately hailed it as a “permanent reform” that would help spread national income more fairly and strengthen low- and middle-income households.
But experts at the Cyprus Investigative Reporting Network (CiReN) say that claim doesn’t match reality. COLA still applies to less than half of Cyprus’ workforce, and in some cases the biggest beneficiaries are actually high-earning public officials.
What COLA Actually Is
According to CIReN's Kyriakos Pieridis, COLA isn’t new. It’s a system dating back to British rule in the 1940s, designed to protect workers’ purchasing power by automatically adjusting wages in line with inflation.
But not everyone gets COLA, not even close.
It applies mainly to:
- All public and broader public sector employees (more than 72,000 people)
- Private-sector employees covered by collective agreements (roughly 100,000 people)
- Recipients of the national minimum wage (about 55,000 people)
For everyone else—freelancers, most private-sector workers, hourly employees, and small business staff—COLA simply doesn’t exist unless their employer decides to offer it.
That means 288,000 workers, or 56% of the workforce, are still left out.
What the new agreement changes
Under the November deal:
- COLA rises to 80% in January 2026,
- 90% in July 2026,
- and 100% by July 2027
- It will be paid only if the economy recorded growth the previous year
- A new 4% cap on inflation was introduced for calculating the allowance
- COLA now applies to those on the national minimum wage
Inflation this year has been low, just 0.3% in the first 10 months of 2025, so the wage bumps are mild for now. The bigger impact will show when inflation climbs again.
Who gains and who doesn’t
According to CIReN’s analysis, about 227,000 people, or 44% of all workers, will benefit from the new COLA structure.
That leaves more than half the workforce outside the system.
And even among those who get it, the gains are far from equal.
Because COLA is a percentage of salary, the higher your wage, the higher your increase.
For example, with 3% inflation and full COLA:
- A worker earning €2,000 a month gets a €60 raise
- A worker earning €5,000 gets €150
The gap widens even further among top officials.
With full COLA restored:
- The President gets roughly €5,510 extra
- Ministers get €3,572
- Judges get €3,447
- MPs get €2,939
These jumps have fueled criticism that the system gives generous boosts to high earners while leaving middle- and low-income workers with much smaller, less meaningful increases.
Economist Ioannis Tirkidis argues the deal “exacerbates inequalities,” warning that a cap on income, which would limit high-end benefits, wasn’t even considered during negotiations.
Is this really a reform?
Despite the celebratory language, experts say the answer is no.
The agreement restores the old system rather than modernizing it. Its structure remains unchanged. And its reach is still limited.
CIReN concludes the president’s statements are misleading, noting:
- It’s not a true reform
- It’s not a fairer distribution of income
- And it does not improve social cohesion
If anything, the new COLA setup risks widening wage gaps, both between public and private sectors and between high- and low-earners who receive it.
