2003 Annual Review for Cyprus

This record reviews 2003's main developments in industrial relations in Cyprus.

Political development

Cyprus is a presidential republic. In the presidential elections held on 16 February 2003, Tassos Papadopoulos was elected President of the Republic, with the support of four parties, the Progressive Party of the Working People of Cyprus (AKEL), the Cyprus Democratic Party (DIKO), the United Democratic Union of the Centre (EDEK) and the Ecologists/Environmentalists. This political development is considered to be of particular importance for industrial relations, since governance of the country from 1993 to 2003 by the conservative Dimokratikos Synagermos Party, supported by the Liberal Democrats (EDIK), with Glafcos Clerides as President, was widely seen as having a negative effect on the institution of social dialogue relating to economic policy.

On 16 April 2003, Cyprus's Treaty of Accession to the EU was signed in Athens, with Cyprus joining the EU on 1 May 2004. As regards industrial relations, another important development in 2003 was the partial restoration of freedom of movement between the Greek Cypriot and Turkish Cypriot communities, which came into effect on 23 April and has brought about a significant increase in the employment of Turkish Cypriots in the 'free' areas.

Collective bargaining

Since 1960, when Cyprus was declared an independent republic, the industrial relations system has developed on the basis of two fundamental principles: voluntarism and tripartite cooperation. Collective agreements have traditionally played a leading role in the regulation of industrial relations, with legislation playing a secondary role. The system of free collective bargaining was developed by the 1977 Industrial Relations Code, which has since guaranteed the right to organise and laid down the manner in which bargaining is carried out, along with all secondary issues. The state’s role is advisory and it intervenes - through the Mediation Service of the Ministry of Labour, as laid down in the Industrial Relations Code - in cases where difficulty is encountered in achieving agreement in direct bipartite bargaining between employers' organisations and trade unions.

It should be noted that the 'regulatory' part of collective agreements - ie the terms regulating pay and working conditions issues, along with other issues arising from the provision of labour - is not directly and necessarily applicable to workers, and many people refer to collective agreements as mere 'gentlemen’s agreements'. In this context, the legal status of collective agreements remains a moot point. Such agreements do not create rights and obligations in public law, but in labour and private law, since terms of collective agreements are incorporated in individual contracts.

However, in general, and despite the fact that the content of collective agreements is in general limited to pay and basic 'institutional' issues (such as working hours and leave), the part they play in regulating the terms and conditions of employment is a particularly important one. Collective bargaining as a whole is decentralised, and many collective agreements are concluded at enterprise level. There are no national general collective labour agreements (as in Greece, for example) and the two basic bargaining levels are the sector and the enterprise level. The usual term of the agreements (subject to bargaining) is two years, and in a number of cases three years. According to data from the Industrial Relations Division of the Ministry of Labour, in 2003 there were 13 sectoral collective agreements - in leather goods, clothing, footwear, metal products, construction, construction companies, electrical installations, transports, hotels, catering, oil companies and the financial sector - covering 26.7% of all employed earners (2001 figure). There were also around 450 enterprise-level collective agreements. Most of the abovementioned agreements were signed in 2001 and expired in December 2003. However, there are no available data on the precise number of agreements signed each year.

Pay

According to Pancyprian Federation of Labour (PEO) data, the average collectively agreed wage increase for 2003 was 1.54%. The increases in the metal products, banking and local government sectors were 3.06%, 2.0% and 2.75% respectively.

Working time

According to PEO data, in 2003 average collectively agreed weekly working time was 38 hours. In the metal products, banking and local government sectors, the figures were 38, 37.15 and 37.5 hours respectively. An overall reduction in working time (such as the introduction of the 35-hour week) without loss of pay has not yet been the subject of dialogue in Cyprus.

Job security

Some efforts were made in 2003 to improve job and income security for certain groups of workers. For example, in October, following consultations, a draft agreement was reached by the government and social partners which reforms the payment of unemployment benefits to hotel employees whose employment is suspended for the winter season (CY0311102N).

Equal opportunities and diversity issues

Equal opportunities is a subject of debate in Cyprus. In general, women have a lower employment rate than men and a higher unemployment rate, and are more likely to work part time or on a temporary basis, while their average pay is lower than men's. Specific legislation on workplace gender equality has been introduced only recently, and bargaining does not appear to deal with equality matters (CY0401103F).

In addition, the part played by migrant workers in the Cypriot economy and in society as a whole is increasingly becoming an issue of public debate. In October 2003, PEO held a first conference on the issue (CY0311103F).

Training and skills development

There were no notable developments in the area of training and skills development during 2003.

Legislative developments

The most important legislative developments in 2003 involved the harmonisation of Cypriot legislation with EU employment law. On 1 January 2003, the following laws came into effect:

• the law on the organisation of working time (Law 63(I)/2002);

• the law on fixed-term employees (prohibition of unfavourable and discriminatory treatment) (Law 98(I)/2003);

• the law on part-time employees (prohibition of unfavourable and discriminatory treatment) (Law 76(I)/2002);

• the law on parental leave and leave for emergency reasons (Law 69(I)/2002); and

• the law providing for equal pay for men and women for equal work or work of equal value (Law 177(I)/2002).

The organisation and role of the social partners

In January 2003, the merger of the Union of Cypriot Clothing and Footwear Workers and the Union of Workers in Industry, Trade, the Press and Printing (SEVETTYK) - both affiliates of PEO - was officially announced. It was decided to merge the two unions because of a significant decrease in membership in the clothing and footwear sector, as a result of a sharp fall in production. In the 1980s, the Union of Cypriot Clothing and Footwear Workers had around 20,000 members, but by 2002 their number had fallen to between 2,000 and 2,500. In January 2003, the creation of the PEO-affiliated Pancyprian Union of Services Workers (PASEY) was also officially announced. The need to create this new union arose mainly because of the rapid growth of the services sector at the expense of manufacturing industry and the significant under-representation of service sector workers in the trade union movement. Most of the occupational categories that joined the new union had previously been represented by SEVETTYK. The multisectoral nature of SEVETTYK was considered to have substantially hindered union organisation in certain sectors and occupational categories, in particular scientific staff and highly skilled workers in services.

Industrial action

The number of strikes rose significantly in 2001-2 but fell during 2003. According to official data from the Industrial Relations Division of the Ministry of Labour and the Cyprus Department of Statistics and Research, in 2001 the number of strikes rose to 25, from six in 2000, and the number of working days lost to strike action increased to 4,778, from 1,136 the previous year. In 2002, the number of strikes fell slightly, to 23, but this was accompanied by a large increase in the number of days lost (7,019 in all). Over January-November 2003, 13 strikes were held, in which 2,622 workers participated, resulting in 4,915 working days lost.

Data provided by the Industrial Relations Division show that in the five years from 1999 to 2003, 43% of strikes occurred in the private sector (excluding strikes in enterprises covered by sectoral collective agreements) and 23% in state and semi-state enterprises. More detailed data from the Labour Statistics Division of the Department of Statistics and Research refer only to the years up to 2001, thus making it difficult to draw further conclusions. However, sectors of economic activity with high rates of industrial action include the financial sector and the building and construction sector.

The Industrial Relations Division, which is the main body for collecting data in this regard, records all industrial action lasting more than two hours. The above data also include lock-outs, which, however, are rare.

Of note among the isolated instances of industrial action during 2003 was a strike over renewal of the collective agreement in the hotel industry. Also significant by Cypriot standards was industrial action by dockworkers against the proposed EU Directive on liberalisation of port services (CY0311101N). However, most industrial action concerned the violation or non-implementation of collective agreements, or non-payment of remuneration, including timely payment of wages.

Employee participation

To date, issues regarding employee information and consultation or other forms of participation, as well as the establishment of European Works Councils, have not been dealt with to any great extent by the social partners in Cyprus. On the legislative level, however, in the context of harmonisation of Cypriot legislation with European law, Law 68(I)/2002 on European Works Councils was passed in 2002 and is expected to come into force in May 2004, at the time of Cyprus’s official entry into the EU.

Stress at work

To date, the social partners have not devoted any attention to the question of stress at work, which has not been the subject of public dialogue at any level. However, in the context of revising the existing legislative framework on health and safety in the workplace, it may be possible that new issues, such as stress at work, will be included.

Undeclared work

There is a significant gap in knowledge regarding undeclared work, and the available data are fragmentary and come from a variety of sources. The methods of collecting and processing such data are also unknown. In this context it would be problematic to present any data on this subject.

New forms of work

The most important change in 2003 in the area of new forms of work was the enactment of Law 98(I)2003 on fixed-term employees (prohibition of unfavourable and discriminatory treatment) and Law 76(I)2002 concerning part-time employees (prohibition of unfavourable and discriminatory treatment), which came into force on 1 January.

In Cyprus, new forms of work organisation are still in the first stages of development and study and have not been the particular subject of discussion or bargaining between the social partners. Adoption of the recent legislation on fixed-term and part-time work was a result of Cyprus’s obligation to harmonise its legislation with EU law. In the trade unions’ view, the transposition of the relevant EU Directives into domestic law is a particularly welcome development, since they will make a positive contribution to the formation of a framework of effective protection for the workers concerned. They may also discourage the development of new forms of employment outside the institutional framework. Alongside this, however, the unions have expressed concern over the possibility that part-time employment may increase at the expense of full-time employment.

Overall, 'normal' employment - full-time and open-ended - is the main form of employment for employed workers in Cyprus. The most common new flexible forms of employment, which as a whole constitute a new phenomenon, are part-time and temporary employment. According to official data from the Cyprus Department of Statistics and Research, emanating from the Labour Force Surveys for 2001 and 2002, in 2002 there was a reduction in both part-time and temporary employment. In both cases there is a clear division on the basis of gender, with a greater number of women than men working on a part-time and temporary basis. There were 26,000 part-time employees in 2001, representing 8.4% of total employment. In 2002, this figure fell to 22,600, representing 7.2% of total employment. Of these employees, 7,000 were men (4% of total male employment) and 15,600 were women (11.3% of total female employment); for 2001 the respective figures were 5.1% for men and 12.9% for women. Similarly, temporary employment fell from 10.7% of total employment in 2001 to 9.1% in 2002, or 25,400 and 22,100 workers respectively. Some 16,600 women were engaged in temporary work in 2001 and 14,900 in 2002, compared with 8,800 and 7,300 men respectively.

There is as yet no institutional framework for the operation of temporary agency work. Although no research has been carried out into the matter, the indications are that in Cyprus the phenomenon of temporary agency work is almost non-existent. As concerns the other forms of flexible employment such as teleworking, no data are available.

Outlook

A new round of collective bargaining, scheduled to begin in mid-February 2004, is expected to be of particular interest. It will concern the renewal of most agreements at sectoral and enterprise level. The interest lies mainly in whether the unions will demand pay increases above and beyond increases in competitiveness, aimed at gradually achieving real convergence between wages and salaries in Cyprus and the EU as a whole.

On the institutional level, the possible revision of the legislative framework governing strikes in essential services is expected to be a source of tension.

Social dialogue will also centre on demands by the Cyprus Workers' Confederation (SEK) to readjust the industrial relations system, and especially the non-legally binding nature of collective agreements (CY0402102N).

On the legislative front, two draft bills are expected to be submitted during 2004, the first regarding employee information and consultation, and the second regarding implementation of the European Company Statute, an issue already being examined by the competent technical committee of the tripartite Labour Advisory Body. (Eva Soumeli, INEK/PEO)