Push for deal on CoLA intensifies as deadline nears

Efforts to finalise the future of the cost-of-living allowance (Cola) have entered a critical phase, as Labour Minister Yiannis Panayiotou confirmed on Tuesday that talks are intensifying ahead of the June 2025 deadline.

Speaking to the state radio, Panayiotou said all sides, government, trade unions, and employers have agreed to step up consultations in the coming days. A new round of separate meetings will take place shortly, followed by a joint tripartite session scheduled for July 3 to iron out the details.

This development follows a one-and-a-half-hour meeting between the minister and the social partners, which ended without a breakthrough. Despite the lack of progress, a basic roadmap for continuing dialogue was agreed.

The unions are holding firm on restoring CoLA to its full pre-2013 crisis form. Employers insist the system no longer fits modern economic realities.

“The effort to reach an agreement on the future of CoLA is ongoing,” Panayiotou said, confirming that the labour ministry and all stakeholders have carried out in-depth preparations, supported by their own analysis.

The push for consensus comes after a 2023 deal set June 2025 as the target for concluding a permanent framework on CoLA. That deal allowed time for thorough consultations, which have now moved into a more focused stage.

At the last session, all parties accepted the framework, which includes regular meetings and a freeze on public comments.

“Given this constructive attitude, I believe there is a realistic prospect of reaching acceptance of CoLA,” Panayiotou told reporters.

Yet, despite the apparent goodwill, the positions of unions and employers remain deeply divided.

The general secretary of Peo, Sotiroula Charalambous, confirmed that the unions are prepared to continue negotiations but warned the process will not be simple.

“Things are not easy. We are ready to negotiate based on the agreement we have,” she said.

Her counterpart at Sek, Andreas Matsas, echoed that sentiment. He announced a pan-union meeting for July 7 to review developments and weigh next steps.

“The effort must be to utilise the time we have to exhaust every possibility of a universally acceptable settlement,” Matsas said.

Union representatives have not ruled out taking industrial action if talks fail. Their central demand remains the full reinstatement of CoLA and its extension to more sectors.

On the other side, employer groups continue to argue that CoLA is an outdated model which should be either scrapped or restructured significantly.

Filokypros Rousounides of the Cyprus chamber of commerce and industry (Keve) described the talks as constructive, stressing that employers are engaging in good faith.

“We are approaching the issue in a constructive manner. The aim is to intensify the dialogue so that we don’t delay an outcome,” he said.

Michalis Antoniou, head of the Cyprus employers and industrialists federation, confirmed that any final agreement would come into effect on January 1, 2026.

“The existing commitments remain in place until the end of June 2025. But we are not under pressure that would jeopardise necessary flexibility,” he said.

Beyond CoLA, Panayiotou’s proposal also includes broader measures, chief among them a mandatory 13th salary for all hotel sector workers, with no exceptions.

The draft reforms also propose raising employer contributions to insurance funds by 0.25 per cent in 2026, followed by another 0.25 per cent in 2027. This will bring the total increase to 0.5 per cent.

Additionally, pay for work on public holidays, including Christmas and New Year’s Eve, will be adjusted.

These changes have already been submitted to the House by the finance ministry and reviewed by the House labour committee. They are now set to be debated in plenary.

However, some committee members have expressed concern, urging more clarity on the collective agreement as a whole, including wage increases, severance pay, and implementation mechanisms.

Panayiotou is expected to meet the committee on Wednesday to respond.

“Things are moving in a positive direction,” he said, citing the recent renewal of the hospitality sector’s collective agreement as proof that dialogue is working.