New agreement in the hotel industry

After almost two years of hard bargaining, trade unions and employer organisations representing Cyprus hotel workers agreed in September 2010 to accept the revised proposal by mediators to renew their collective agreement. Effective for four years, the new agreement provides for a total pay increase of about 1.5% in basic wages (but only from its second year). The intransigence of both sides means certain non-pay issues have been deferred for further consultation.

On 7 September 2010, following a difficult round of bargaining (both during the direct talks and at the subsequent mediation stage) that lasted for almost two years, trade unions and employer organisations representing hotel workers accepted the revised mediation proposal (CY1006019I) put forward by the Ministry of Labour and Social Insurance and signed a new collective agreement that covers over 16,000 skilled and unskilled workers. However, 4,000 of these workers are immigrants who in practice may not be covered by the agreement.

On the employee side, the new agreement was signed by:

  • the Union of Hotel and Recreational Establishment Employees of Cyprus (SΥXΚΑ), affiliated to the Pancyprian Federation of Labour (PΕΟ);
  • Federation of Hotel Industry Employees (ΟUXΕΒ), affiliated to the Cyprus Workers’ Confederation (SΕΚ).

The signatories representing the employers were the Cyprus Hotel Association (CHA) and the Association of Cyprus Tourist Enterprises (SΤΕΚ).

As a way of providing industrial peace and based on a demand put forward by the employers’ side, the new agreement will be valid for four years instead of the initially proposed three. It is effective retrospectively from 1 January 2009 until 31 December 2012.

Pay issues

The pay-related part of the agreement does not provide for any pay rises in the first year apart from a €120 lump sum for every worker in employment on 31 December 2008. For the next three years, the agreement stipulates a total increase of about 1.5% per year in basic wages, an increase in line with the average productivity rise over the past three years.

The minimum starting wages of new labour market entrants will be increased by:

  • 75% of the total increase effective from 1 August 2010;
  • another 75% of the total increase effective 1 January 2011;
  • a further 75% of the total increase effective 1 January 2012.

Contributions from both employers and employees to the healthcare funds of PEO and SEK are to be increased by €1 per month from 1 July 2010 and another €1 per month from 1 July 2011.

Non-pay issues

Due to the intransigence of both the employer organisations and the trade unions, certain non-pay issues have been deferred for further consultation. Under Article 6 of the new agreement, the two sides will hold consultations, under the aegis of the Ministry of Labour and Social Insurance, on the following issues raised during the bargaining:

  • how employees will be compensated for work done on Sundays;
  • holidays that coincide with a day off or a weekend;
  • the reference period for the payment of Easter bonuses.

They also need to continue negotiations on the problems faced by the hotel industry, including issues that will contribute to the implementation of the collective agreement in the sector.


Over the past 10 years, there have been growing delays in the renewal of collective agreements in this sector as the two sides have only been able to reach agreement after mediation. This is the third time that the same non-pay issues have been deferred for further consultation under the supervision of the Ministry of Labour and Social Insurance (CY0609019I) because neither side has been willing to accept a compromise. Given this track record and the adverse economic circumstances in tourism and catering in general, the new agreement is vital to the sector’s future even though it does not iron out all points of disagreement between the two sides (after two years of failed talks).

Eva Soumeli, Cyprus Labour Institute (INEK/PEO)

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