New collective agreement in construction industry

In June 2006, following a difficult bargaining round, agreement was reached on the renewal of the collective agreement for the construction industry. Since industrial tension is widespread in this sector, the agreement between the social partners is seen as an important achievement, both socially and economically.

On 29 June 2006 – exactly three weeks after a bargaining deadlock was declared on 8 June 2006 – the social partners accepted the mediation proposal put forward by the Ministry of Labour and Social Insurance (Υπουργείου Εργασίας και Κοινωνικών Ασφαλίσεων, MLSI) for a new industry-wide collective labour agreement (SSE) for the construction sector. The two-year agreement, which will take effect retroactively from 1 January 2006, will expire on 31 December 2007 and covers approximately 25,000 workers in the sector.

The construction sector in Cyprus comprises workers of different origins: around 11,000 of all construction workers are Greek Cypriots, 5,000 are Turkish Cypriots, while 6,000 are repatriated Greeks from the Black Sea region. Of the remaining 3,000 workers, some 1,000 are from EU countries, 1,000 are from ‘third countries’ and 1,000 are employed illegally.

Main signatories to agreement

The SSE was signed on the employer side by the Federation of the Building Contractors Associations of Cyprus (Ομοσπονδία Συνδέσμων Εργολάβων Οικοδόμων Κύπρου, OSEOK), affiliated to the Employers and Industrialists Federation (Ομοσπονδία Εργοδοτών και Βιομηχάνων, OEB). On the employee side, the agreement was signed by the Cyprus Building, Wood, Mining and General Workers Trade Union, affiliated to the Pancyprian Federation of Labour (Παγκύπρια Εργατική Ομοσπονδία, PEO), and the Federation of Builders, Miners and Relevant Professions, affiliated to the Cyprus Workers’ Confederation (Συνομοσπονδία Εργαζομένων Κύπρου, SEK).

It is noteworthy that the ministry’s mediation proposal for renewal of the SSE was also approved unanimously by the rank and file members of the industry’s trade union movement, in the framework of the meetings of local committees and construction workers’ workplace unions held on 28 June 2006.

Main provisions of agreement

Pay increase

The pay increases stipulated under the new SSE are clearly closer to the unions’ demands and represent an average across-the-board increase of about 2.6% for 2006. Increases for 2007 are to be estimated at more or less the same levels, depending on the allowance for the cost of living, which is calculated on the basis of the average weekly pay. The increase will be applied to the basic pay of all categories of workers in the industry – skilled workers, semi-skilled workers, general duty workers and apprentices – and will adhere to the cost-of-living index, as calculated up to 31 December 2005.

Of particular importance for workers is the provision according to which the total increase (basic increase plus cost-of-living increase) will, in effect, double the minimum wage. The provision concerning the apprentices’ category is also important: increases for this category will be provided on 1 January and on 1 July of each year; however, apprentices’ minimum pay will not be affected.

Non-pay elements

In relation to non-pay elements, the new SSE does not contain any important changes compared with the previous agreement (CY0404101N). This is due to the fact that the positions of the employer and employee sides were diametrically opposed on the most important non-pay issues. In this context, the framework agreement, signed on 6 July 2006, is viewed as being significant.

According to the framework agreement, each side is committed to discussing at length, substantively and in good faith – under the auspices of the MLSI – the issues raised by both sides and referred to during the bargaining process leading to the renewal of the SSE. Specifically, these issues will involve the following areas of concern:

• increasing the level of on-call work;

• illegal employment;

• implementation of the SSE.

According to the framework agreement, in the event that a conclusion is not reached on the aforementioned issues within a reasonable amount of time, the ministry stipulates that the provisions of the Industrial Relations Code will be followed. However, under no circumstances will such a discussion and its conclusion affect the implementation of the new SSE’s provisions.

Failure to reach agreement on the abovementioned issues, both at the direct bargaining stage and at mediation stage, was the main reason why the bargaining round came to a deadlock. When a bargaining deadlock was declared, in accordance with the provisions of the Industrial Relations Code, the executive councils of PEO and SEK in the construction sector called for a 24-hour strike: on 20 June 2006, approximately 95% of all workers in the industry took part in the strike, including 30% of non-unionised workers.

Commentary

In relation to the pay provisions of the new SSE, the stipulated increase is clearly closer to the workers’ demands. Despite the fact that the new agreement fails to completely satisfy either the employer or employee side, in principle the basic terms of the agreement are considered to be important and may even reduce tensions in the industry, albeit temporarily. Furthermore, the construction sector is very important both for employment and for the national economy: according to the annual macroeconomic database (AMECO) for 2005 of the European Commission’s Directorate General for Economic and Financial Affairs, the sector accounts for 9.6% of gross domestic product (GDP). Overall, therefore, some benefits should be derived from the new agreement, at least in the short term, both socially and on the pay front.

Evangelia Soumeli, Cyprus Labour Institute (INEK/PEO)