Framework agreement reached in semi-state sector

In February 2008, a framework agreement was finally reached regarding the renewal of collective labour agreements in semi-state organisations. Apart from setting the term of collective agreements, the accord stipulates the amount of overall pay increases that will be granted. Employers, however, have criticised the agreement, arguing that the increases provided for are many times higher than productivity levels.

On 19 February 2008, a framework agreement was finally reached on the renewal of collective labour agreements in semi-state organisations, thus avoiding an impasse regarding renewal of the agreements that expired after 31 December 2006 (CY0502104F). The agreement constitutes a framework guideline addressed to the boards of directors of semi-state organisations regarding the renewal of collective agreements in those organisations. It was signed on behalf of workers by the general secretaries of the Pancyprian Federation of Labour (Παγκύπρια Εργατική Ομοσπονδία, PΕΟ) and the Cyprus Workers’ Confederation (Συνομοσπονδία Εργαζομένων Κύπρου, SΕΚ), and on behalf of the government by the then Minister of Finance, Michael Sarris, who has since been succeeded by Charilaos Stavrakis.

Content of agreement

Apart from setting the term of collective agreements, which is to be set at three years for the period from 1 January 2007 until 31 December 2009, the agreement also stipulates the amount of overall pay increases to be granted. Specifically, in terms of pay increases during this period, it has been agreed to increase employees’ salaries and retired people’s pensions as follows:

• no increase for 2007;

• a 2% increase, beginning on 1 January 2008, in basic pay as at 31 December 2007, with a minimum increase amount of €8.54 a month;

• a 1.5% increase, beginning on 1 January 2009, in basic pay as at 31 December 2008, with a minimum increase amount of €6.41 a month.

For 2007 only, the framework agreement provides for an increase of about 0.3% in related benefits, which will be effective retroactively from 1 January 2007. With regard to the minimum amounts of total increases, the agreement specifies that for each percentage point of the total increase, the minimum increase amount will result in an additional €51.26 each year.

The increases stipulated will also cover public servants – that is, people employed in public administration. Employees covered in semi-state organisations also include temporary staff, fixed-term and open-ended contract workers, as well as staff employed on a weekly basis.

Positive response to increases

With regard to the content of the agreement, although the pay increases provided for remain within the framework of the moderate pay rises which have characterised collective bargaining over the past five years, they are still higher than the increases provided for by the previous framework agreement for the three years 2004–2006 (CY0502104F). In this context, both the Ministry of Finance (Υπουργείου Οικονομικών, MOF) and the trade union organisations PEO and SEK, along with the Pancyprian Public Employees’ Trade Union (Παγκύπρια Συντεχνία Δημοσίων Υπαλλήλων, PASYDY), consider the agreement to be fair and balanced, even though the increases provided for are somewhat lower than labour productivity.

Employers react negatively

In contrast, however, the employers are completely opposed to the terms of the agreement. As a result, the agreement has generated strong reactions from the Cyprus Chamber of Commerce and Industry (Κυπριακό Εμπορικό και Βιομηχανικό Επιμελητήριο, ΚΕΒΕ) as well as the Employers’ and Industrialists’ Federation (Ομοσπονδία Εργοδοτών και Βιομηχάνων, ΟΕΒ). In a statement on this matter, OEB expressed its strong dissatisfaction with the government, claiming that it had suddenly backed down and accepted unreasonable demands from the trade unions in semi-state organisations. The federation insisted that the increases provided for are many times higher than productivity and are being granted to a better-paid class of workers without any justification.

According to OEB, the total increases granted, taking into account the pay scales and indexation (Cost of Living Allowance, ATA), amount to about 7% a year at a time when productivity is less than 1.5%. Given that the agreement also covers the public sector, OEB argues that it will have a chain of adverse outcomes, particularly on state pay scales. In the same context, OEB believes that the consequences will be just as unfavourable for the private sector, which is experiencing a high turnover of employees due to its inability to compete with pay and benefits provided for in the broader public sector. For its part, KEBE has focused its criticisms on the inflationary pressures arising from the increases provided for; like OEB, it believes that these increases are being granted to a favoured category of employees without any justification.

Eva Soumeli, Cyprus Institute of Labour (INEK/PEO)