EMCC European Monitoring Centre on Change

Suspended employment in tourism/catering industry

Cyprus
Phase: Management
Typ:
  • Response to COVID-19
  • Income support for workers
  • Working time flexibility
Zuletzt geändert: 03 August, 2021
Ursprünglicher Name:

Προσωρινή αναστολή εργασιών στην Τουριστική/Επισιτιστική Βιομηχανία

Englischer Name:

Suspended employment in tourism/catering industry

Coverage/Eligibility

This instrument applies to the tourism sector: hotels, restaurants and other tourism related activities. The instrument is only available to undertakings operating in tourist designated areas and its annual eligibility period extends from 1 November to 31 March.

COVID-19 response

Due to the lockdown imposed by the government to all hospitality, catering and other tourism related activities due to the COVID-19 pandemic, the eligibility period of the instrument has been extended to 12 June 2020. The extension of the instrument concerned all tourism employees, who on the basis of the provisions of the instrument were registered as unemployed due to suspension of employment.

For the rest of the unemployed in this sector, the normal provision of the unemployment benefit was provided, then the COVID-19 support scheme for unemployed persons. In concrete terms, this means:

  • normal unemployment benefit for six months and
  • thereafter the COVID-19 support benefit of €360 per month payable to all unemployed persons until the end of October 2020.

Main characteristics

Due to the seasonal nature of tourism, an instrument is in place for the tourism sector that provides partial unemployment benefits to employees whose employment has been temporarily suspended due to seasonality reasons. This measure, known as 'Suspended employment in tourism/catering industry', is based on an agreement between the Ministry of Labour and Social Insurance, the employer organisations and the unions. It aims at preserving the bond between employers and employees over the winter months. The suspension of unemployment applies for enterprises which suspend their operations fully or partially from 1 November until 31 March.

Since 2003, the employer pays 2.8% of the basic salary (including cost of living allowance) to the employee during the suspension period. The employer and the employee contribute proportionally (on the basis of the 2.8% payment) to the statutory social security scheme. The employee is entitled to unemployment benefits during the suspension period, reduced by the amount received from the employer. The instrument was firstly introduced in the late 1980s and significantly reformed in 2003. The reform related mainly to the share of salary payable by employers to suspended employees. The previous agreement (before 2003) provided for a payment of 25% of the basic salary (including cost living allowance) during the suspension period.

There is a similar arrangement applying to restaurants and recreational centres in place which is part of the multiemployer collective agreement between OSIKA for the employers and SYXKA-PEO and OYXEB-SEK for the trade unions, and also endorsed by the Ministry of Labour, Welfare and Social Insurance. In this case, the employers are committed to continuing paying part of the employees’ salary amounting to 10% of the basic salary (including cost of living allowance) during the suspension period. The suspended employees are then entitled to unemployment benefit reduced by the amount receivable by the employer. The agreement applies regionally: it only covers Ayia Napa and Protaras, two touristic areas, where most of the enterprises suspend their operations during winter time.

For the purpose of payment claims to the redundancy fund, the suspension of employment period is considered as continuous employment.

COVID-19 response

As mentioned above under coverage/eligibility, suspended employment’s eligibility period due to the COVID-19 pandemic has been extended to 12 June 2020, so as to cover all tourism employees, who on the basis of the provisions of the instrument were registered unemployed due to suspension of employment. While the expenditure for the unemployment benefit of suspended employees is normally covered by the Social Insurance Fund, the additional expenditure to cover the unemployment benefit for the extended period from 1 April to 12 June 2020 has burdened the state budget.

Funding

  • National funds
  • Companies

Involved actors

National government
Funding; based on an agreement between the Ministry of Labour, Welfare and Social Insurance, the employer organisations and the unions.
Public employment services
Social Insurance Services (payment of unemployment benefit).
Employer or employee organisations
Based on an agreement between the Ministry of Labour, Welfare and Social Insurance, the employer organisations and the unions.
Andere
Funded by the employer.

Effectiveness

The suspended employment instrument was firstly introduced for the hotel industry in the second half of the 1980s and was significantly reformed in 2003. For restaurants and recreational centres, the instrument was introduced at the beginning of the 1990s.

The suspended employment instrument was firstly introduced for the hotel industry in the second half of the 1980s and was significantly reformed in 2003. For restaurants and recreational centres, the instrument was introduced at the beginning of the 1990s. The table below reports the number of employees registered by the Social Insurance Services receiving  unemployment benefit on the basis of this instrument

Time Employees  receiving  unemployment benefit
2018/2019 4,397
2017/2018 4,061
2016/2017 4,084 
2015/2016 4,881
2014/2015 5,019
2013/2014 5,679
2012/2013 5,172
2011/2012 4,826
2010/2011 5,140 
2009/2010 4,900 

The instrument is particularly popular in the hotel industry, which concerns approximately 75% of the affected employees. Restaurant and recreational centres' employees account for 15%, while other related activities for 10%. As far as nationality is concerned, in 2018/2019 the share of Greek Cypriots was 71.8% of the suspended employees; third country nationals had a share of 3.9%, EU nationals 23% and Turkish Cypriots 0.3%.

The instrument is particularly popular in the hotel industry, which concerns approximately 75% of the affected employees. Restaurant and recreational centres' employees account for 15%, while other related activities for 10%. As far as nationality is concerned, in 2018/2019 the share of Greek Cypriots was 71.8% of the suspended employees; third country nationals had a share of 3.9%, EU nationals 23% and Turkish Cypriots 0.3%.

Strengths

It is a well-established tool underpinned by collective agreements and enjoying the endorsement and facilitation of the Social Insurance Services. Since its initial introduction, it has contributed to employment security for a considerable number of employees in the tourism sector.

From the employers’ perspective, this instrument secured the very much needed commitment of the employees to work for the same employer in the next season. This was especially important in the 1980s and 1990s when the labour supply was short to meet the labour demand of the rapidly expanding tourism sector.

Weaknesses

Loss of income for the employees affected during the suspended employment period.

The instrument is not legally binding and its implementation depends very much from the general willingness of employers of adhere to the provisions of the sectoral collective agreements, which is observed to have lessened in the last two decades.

The reform of the instrument in 2003 aimed at extending the employment period of employees in the hotel industry. However, the reform did not bring the anticipated impact. Hotel enterprises still proceed to a considerable number of layoffs or to suspended employment during the low season in winter. Despite the drastic reduction of the employers’ cost (from 25% to 2.8% of the basic salary) when resorting to suspended employment, the instrument is observed in the last years to loose attractiveness: in winter 2009/10 the employees who received unemployment benefit on the basis of the instrument made up 74% of the total unemployed persons in the tourism sector (suspended employees + dismissed employees), while in winter 2018/19 this number decreased to 44% of all sector’s unemployed persons.

The sector’s trade unions have repeatedly pointed out that the instrument is not any more adequate to address the need for continuous employment in the tourism sector. Other measures should be put in place providing incentives to enterprises to extend the annual duration of their operation or to stop suspending their operations during winter. For example, trade unions claim that the 2003 reform of the instrument had a reverse impact on the effectiveness of the instrument as relates to its initial intension to lengthen employment in the tourism industry during winter time. With the reduction of the employer’s share on the employee’s salary from 25% to 2,8% it became rather cheaper for employers to suspend the operations of their businesses during low season. Additionally, trade unions claim that the access of the industry’s employers to European labour markets has eased the seasonal recruitment of personnel and therefore employers prefer to dismiss seasonal employees than to resort to the provisions of suspended employment.

Beispiele

No information available.
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