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20 April, 2024
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Employers and labor unions can't agree on COLA issue

The two sides are moving in opposite directions, raising fears of a new conflict.

Apostolis Tomaras

Apostolis Tomaras

Employers and unions continue to take opposing positions on the issue of Cost of Living Allowance. (COLA). One of the most pressing issues for the labor Minister, who has already held the first separate meetings with the four unions PASYDY, PEO, SEK, and DEOK. Based on what has been said in public and the information available, the two sides (employers and guilds) continue to hold their positions, which led to strike measures prior to the election of the President of the Republic. The guilds' messages to the Minister of labor were that the abolition or change of the wage replacement system would not be accepted under any circumstances, an issue urgently raised by the employers' organizations (OEB and KEBE).

Faced with the situation that has arisen, the government is taking the middle path in order to first defuse the situation for the current year and then gain time to allow all parties to sit at the same table. This prospect appears to be impossible for the time being, as the unions have set a red line for employers to accept that the COLA will remain as it is.

The labor unions

The labor Minister's separate meetings allowed him to form his own opinion on a problem that is causing labor unrest. During the meetings, the guilds categorically denied any possibility of distinguishing the COLA. The guilds' only concession appears to be an agreement that will lead, in the long run, to a return to the pre-2013 regime - the year in which the COLA's payment rate was halved. What is most concerning is that the unions have no intention of reaching an agreement with the employers.  If there is one thing that is being viewed positively, it is the government's position, which essentially supports the workers' position that the COLA will continue to be a wage replacement scheme.

The employers

The employers are waiting for a meeting with the Minister of labor to express their concerns. According to the employers, there has been no substantive discussion to date. Employers are waiting to hear from the Minister of labor to see if the government's stance will be in the same spirit as the President's stance during the election campaign. According to available information, the employers' side has not shifted from its firm position of abolishing the COLA in its current form and replacing it with another model said to be in place in other European countries. A stance that, if maintained, will bring employers into direct conflict with workers.  Employers appear to be taking a wait-and-see approach in order to avoid inflaming the public debate. Both the OEB and the KEBE have stated repeatedly that they will wait for the meeting with the Minister of labor before taking a position based on actual facts.

The Labor Minister

Meetings with employers are expected to seal the involvement of the Minister of labor and the complexity of the entire issue. The labor Ministry intends that there should be no disruption of industrial peace with the new government under any circumstances. A development that would have a negative impact on the government's public image. For the Minister of labor, the ideal outcome would be a one-year agreement that would defuse the current situation and allow time to begin the process of resolving the entire issue.  In this spirit, it appears that the Ministry of labor would prefer that the two parties reach an agreement for 2023 that includes a partial increase in the COLA payment rate. A rate of 60% or 65% is thought to temporarily calm the spirits. Employers, however, do not appear to accept such a development, as they only accept a 50% payment of the COLA for 2023 and its replacement with another model thereafter.

The government's economic concerns

The government may state unequivocally that the ATA will not be abolished, but it appears concerned about the overall state of the European economy. What concerns government employees is the potential impact on their state's finances. In this spirit, the government has concluded that the best option under the circumstances would be for both sides to recalibrate their positions. That is, for workers to abandon the position of paying the ATA at 100%, and for employers to reverse the abolition and replace the ATA with another model.

[This article was translated from its Greek original]

Cyprus  |  economy

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