Minister of Labor in the hot seat on COLA issue

The President of the Republic's directive to the new members of the government that there is no time to waste and that the government should ramp up the initiation of its projects effectively overrides some ministries where pending issues are pressing. The Ministry of Labour and Social Security is one such example, as is the ongoing dispute between workers and employers over the Cost of Living Allowance (COLA) issue. The strikes that occurred on the eve of the presidential elections, as well as the unions' warning to repeat them, do not leave much room for Labour Minister Yannis Panagiotou. In reality, the new minister's adjustment period has been shortened.

According to "K," COLA is one of the issues on which Mr Panagiotou has already begun preliminary work on the sidelines of his regular meetings with social partners. The Minister of Labour has already had a first round of discussions with the guild leaders (PASYDY, SSEK, PEO, DEOK), and he will meet with the OEB and the KEBE in the coming days. If there is the necessary willingness on all sides, the new leadership of the Ministry of Labour will actively arrange to hold an exploratory meeting.

The goal

According to Ministry of Labour sources, there is no room for an immediate joint meeting of all parties at this time due to the Labour Minister's schedule in the next ten days. Panagiotou will have to travel to Brussels next week for his first attendance at a meeting of EU Labour Ministers. During this time, preparations will be made so that a first joint meeting of the social partners can be held the week after next, immediately following the return of the Labour Minister to Nicosia. At this point, the government's goal and ambition is to maintain good industrial relations while also keeping the consultations within the framework of fiscal discipline.  As it was said, things in the economy are uncharted.

The government's stance

The Ministry of Labour's position is to take into account the possibilities and fiscal space in the negotiations that will, in fact, begin to reach an agreement that will calm the labor sector. In this spirit, the Ministry of Labour is taking the steps outlined in the President's program. First, the COLA will not be abolished; second, the percentage of the COLA (50%) currently paid is not being reduced; and third, the payment of COLA cannot be restored to 100% in the current circumstances. In this context, the Minister of Labour will work with the social partners to find a final solution.

The labor unions

According to what is known so far from labor unions, the failure to pay 100% of the COLA is a reason to continue the protests. This was evident in Mr Panagiotou's predecessor, Kyriakos Kousios's, meetings. During those meetings, the unions and the then-Minister of Labour discussed a gradual return to 100% return of the COLA. The unions had stipulated that the employers accept, in the first phase, an increase in the COLA's rate of return to 65% beginning 1/1/2023 and its gradual return over a period of four years. A proposal that they claim was rejected by the employers.  The rift that emerged in the meetings at the time had taken the whole dispute to the extreme resulting in the January 26 demonstrations and the unions blaming the employers' side for the labour unrest.

The employers' interpretation of the entire situation is divided into two parts. First, consider what occurred on the eve of the elections and the window of opportunity that was created for the new government to handle the entire situation. In the first part, employers saw the January demonstrations as an attempt by unions to exert pressure. According to them, the transitional agreement for COLA payment expired at the end of 2021. They claim that the unions did not rush to make a decision for a year and that two months after the dialogue began, they went on strike. The OEB's stance on the issue is diametrically opposed to that of the unions.  The employers' side supports the abolition of COLA, describing it as an outdated wage adjustment system, and an agreement on a new system.

[This article was translated from its Greek original and was originally published on Wednesday in Kathimerini's 'Oikonomiki' edition]