Social dialogue in the candidate countries
Social dialogue and EMU in Cyprus, Czech Republic, Latvia, Lithuania and Slovakia - Workshop
Vienna, 26-28 May 2003
Discussion paper - abstract - Elias Mallis and Orestis Messios
Ministry of Finance, Cyprus; and Ministry of Labour and Social Insurance, Cyprus
Social dialogue and EMU in Cyprus
This report examines whether Cyprus would be able to maintain full employment conditions, macroeconomic stability and industrial peace while the economy adjusts to a new economic environment by adopting the euro and participating in the EMU.
Cyprus has committed itself to adjusting to the EMU framework and adopting the euro by 1 May 2006.
Participation in the EMU implies that the Government of Cyprus should follow a specific economic policy to anticipate the reduction of fiscal and monetary policy instruments.
As a result, it is very important, for socioeconomic reasons, to address the implications arising from the new socioeconomic environment and furthermore to assess whether the industrial relations system in Cyprus is efficient enough to support the economy in its process in adopting the euro.
uring the last decades the Cyprus economy has proven itself capable of confronting both external and internal shocks. The Cyprus economy has been diversifying in favour of financial and other business services, which now hold an increasing share in GDP. The economy has shown high growth rates during the last few years, internal and external stability, and near full employment conditions.
The adoption of the euro, being a gradual process, needs a clear and specific policy plan, in which the economy is currently well prepared to absorb the benefits and effectively face any challenges.
The ten new member states have to fulfil the Maastricht criteria in order to adopt the euro but, at the same time, they should create more flexible mechanisms in wage determination, bearing in mind that social policy will have to follow fiscal restraint.
Although Cyprus will fully satisfy the acquis communautaire regarding EMU by accession, it has already made significant progress in modernising its institutional capacity, necessary to successfully implement EMU and to adopt the euro.
In spite of the fact that Cyprus will surrender its monetary sovereignty and necessarily follow a strict fiscal policy to fulfill the Maastricht criteria, the Government is willing to implement an ambitious social agenda in the coming years. The agenda is based on measures of social inclusion of groups in society, i.e. older persons, women, youth and the disabled.
In parallel, the report will focus on the existing potential of Cyprus to successfully complete the EMU convergence process, through the mechanisms and structures developed over the years in the area of social dialogue / industrial relations.
Social dialogue has played an instrumental role in shaping and forming the industrial relations scene on the island since Cyprus's independence in 1960. The prominence of social dialogue and tripartite cooperation has its roots in the existence of strong employers' and workers' organisations, a fact that creates the necessary balance of power within the functioning of the industrial relations process (consultation and social dialogue, consultation, mediation).
Trade union coverage is among the highest throughout Western Europe, while at the same time the two employers' organisations, between them, represent close to the entirety of the Cyprus business / entrepreneurial community.
The fostering of this bipartite balance of power has been the government's main strategy for ensuring the maintenance of industrial peace, while the voluntary system that was drawn up, and agreed upon in 1977 in the form of the Industrial Relations Code, has ensured that all partners behave in exactly that way, i.e. being partners and not 'enemies'. Even though, undoubtedly, employers' and employees' views and positions can very often be in the exact opposite direction, the abidance to the Industrial Relations Code has laid down the mechanisms and procedures required to ensure that, once the Code is followed, very few cases of labour disputes or possible industrial unrest lead to industrial action, i.e. strikes.
Industrial peace is further achieved by the fact that the provisions of collective agreements, whether these are national, sectoral or company level, cover a large percentage of employees nationwide. It is also important to note that the long duration of these agreements (2-3 years), is another reason why industrial peace prevails to the extent it does.
The report will provide details about the procedure followed by the social partners for dealing with issues/problems. Cyprus for this reason has a large number of tripartite committees and bodies that operate on a regular and ongoing basis, with the Labour Advisory Board being the most important of these tripartite committees. Furthermore, it will be stressed that even though bodies like the Labour Advisory Board are voluntary structures, which in essence have no legal power to enforce their opinions or decisions, they are respected as if they have legal powers.
In conclusion, this report will stress that Cyprus has a long history of a successful industrial relations system that has provided the social partners with decades of experience in collaborative social partnership resulting in the effective dealing of socio-economic problems and crises. Consequently, it is believed that, as in the past, the near future of the EMU convergence process will successfully be achieved by utilising the existing voluntary social dialogue mechanisms.
Elias Mallis holds a bachelors degree in economic theory and policy. After the completition of his studies in the Aristotelian University in Greece, he continued his studies in England where he received his postgraduate (MSc) degree in Economics and Philosophy from the London School of Economics and Political Science in 1995. He worked for three years as a college tutor in private education, teaching economics. He was the head of the financial papers of the daily political newspaper Politis. He worked in the press for two years and during that period of time he was mainly interested in reports regarding the Cyprus economy. He is Economic Officer at the Ministry of Finance of the Republic of Cyprus since 2001. He is involved with issues related to social policy such as employment, economics of health and education as well as the economics of a plausible solution of the Cyprus problem. He also participates in the social insurance committee and represents the Government in the Euro-Mediterranean partnership.
Orestis Messios is Officer of the Industrial Relations Service, at the Ministry of Labour and Social Insurance of Cyprus. After completing his studies, receiving a bachelors degree in economics, and a masters degree in organisational analysis and behaviour, both from Lancaster University in the UK, he worked for the Cyprus Institute of Technology, coordinating and overseeing management consultancy projects for local manufacturing units.
He then worked for the Industrial Relations department of the Cyprus Chamber of Commerce and Industry, actively promoting and assisting employers' interests, both in direct negotiations with the trade unions, as well as in the various tripartite bodies and technical committees that make up the industrial relations scene in Cyprus. At the Ministry of Labour and Social Insurance he mediates in industrial disputes; actively participates in the process of harmonising Cyprus's labour legislation with the acquis; is responsible for the compliance of labour law with ILO conventions; monitors the implementation of the labour legislation; and actively assists in the promotion of social dialogue.