Employers have ruled out the prospect of “CoLA for all,” expressing preference for a gradual or tiered cost-of-living allowance adjustment, while prioritizing modernization of the system and the protection of business competitiveness.
The coming hours are expected to be critical for the outcome of negotiations on the long-debated Cost of Living Allowance (CoLA) mechanism, though signs so far do not point to a breakthrough. Following the return of the Minister of Labour and social partners from Brussels, trade unions and employer groups are awaiting clarifications on the new framework discussed earlier this week, which they say contains several inconsistencies.
Employers’ Unified Stance
According to information obtained by Politis, the Employers and Industrialists Federation (OEv) and the Cyprus Chamber of Commerce and Industry (KEVE) sent a joint letter to the ministers of Labour and Finance outlining their position and identifying ambiguities in the government’s draft proposal.
Employers maintain that the universal extension of CoLA remains off the table, and they also oppose a uniform application across all sectors. They propose that the inflation threshold triggering adjustments be set at 3 percent instead of the 4 percent currently mentioned in the framework.
They also argue that incentives should apply equally to employers who already pay CoLA and to those who choose to start paying it in the future, to avoid unfair treatment. Regarding the annual 50 percent restitution of the allowance, they suggest this should be calculated on a cumulative basis.
Employers further insist that before each four-year review of the national minimum wage, the annual CoLA adjustment rate should be taken into account. They also propose revising the consumer price index basket, which determines CoLA calculations, to reflect updated household spending patterns.
Unions Stand Firm
Trade unions, meanwhile, await the mediation proposal expected to be tabled soon, reiterating that they will not sign any agreement that distorts the philosophy of the CoLA mechanism.
They support a gradual extension of CoLA coverage to 100 percent and agree to setting a reasonable inflation cap, though they warn that linking CoLA payments to periods when economic growth doubles inflation could undermine the system’s core principle.
Unions also stress the importance of clarifying what the phrase “CoLA for all” entails, advocating for its extension to more workers through collective agreements.
Talks are expected to continue in the coming days, as both sides seek common ground on one of Cyprus’s most sensitive labour issues.