Talks over the Cost of Living Allowance (CoLA) moved into deeper waters after Wednesday’s meetings between the social partners and the ministers of Finance and Labour shifted from generalities to concrete parameters. The government has dropped the earlier idea of extending CoLA universally, firmly rejected by employers, and now aims to restore CoLA to 100% over a multi-year horizon of roughly three to four years.
Employers’ red lines
Employer associations are not expected to consent easily and say they will not accept a full return to 100% without structural reforms and safety valves that protect firms’ cost base and the wider economy. They have pushed for tying CoLA payouts to a minimum growth rate, setting a cap when inflation is high, and offsetting payroll impacts through tax relief so that overall employer costs do not rise, an assurance the President has also embraced.
Unions’ position
Unions welcomed the government’s orientation toward a 100% restoration, the headline number they sought. But a final agreement would require accepting parameters they have long resisted, notably criteria linked to growth and inflation that, in their view, change CoLA’s philosophy. If they want the full restoration, they may now have to accept those conditions.
After Wednesday’s meetings no statements were made; all sides are observing a moratorium on public comment. The Labour Ministry called the talks useful and productive and said discussions resume today, starting at 10:00 with employers and then with unions, with the goal of a permanent agreement.
Government’s role and outlook
The Finance Minister’s direct involvement has added weight to the process, after frustration with earlier handling by the Labour Ministry. With Finance Minister Makis Keravnos now active, moves are more direct and the government’s role more catalytic. President Nikos Christodoulides sounded optimistic, saying the ministers’ framework, built after sounding out both sides, offers a strong basis for swift agreement and that Cyprus’s social partners have historically shown responsibility.