Minimum wage to increase for certain occupational groups

In April 2008, the Labour Advisory Board decided to further increase minimum wages for the five occupational groups covered by the Minimum Wages Law. The decision was made despite opposition from employer organisations. Meanwhile, apart from minimum wage levels, the trade unions again raised the issue of which occupational categories the legislation should cover, as well as the need to regulate working hours for the occupations already covered.

On 7 April 2008, in the framework of Chapter 183 of the Minimum Wages Law, the Labour Advisory Board within the Ministry of Labour and Social Insurance (Υπουργείου Εργασίας και Κοινωνικών Ασφαλίσεων, MLSI), and under the presidency of the new Minister of Labour and Social Insurance, Sotiroula Charalambous, decided to increase the minimum monthly wage for new labour market entrants (hiring wage) by 6.35%. At the same time, the advisory board agreed to raise the minimum wage by about 6.4% for workers who have worked for the same employer for six consecutive months. The existing legislation sets minimum levels of salaries and wages for only five occupational categories: namely, sales staff, clerical workers, auxiliary healthcare staff and auxiliary staff in nursery schools, crèches and schools.

Details of minimum wage increases

Although no ministerial decree putting in place the newly agreed minimum wages has yet been issued, the increases foreseen will be effective retroactively from 1 April 2008. In this context, compared with the previous Decree No. 275 issued on 29 June 2007 but which was effective retroactively from 1 April 2007, the monthly minimum wage for new labour market entrants in the five occupational categories covered by the law has increased from CYP 409 (about €699 as at 8 May 2008) to CYP 435 (€743). For people who have worked for the same employer for six consecutive months, the respective monthly minimum wage has risen from CYP 434 (€742) to CYP 462 (€789).

According to the MLSI, in a view which is shared by the trade unions, until recently the minimum wage levels provided for were unjustifiably low, making a corrective increase imperative. Minimum wages have been set at current levels based on a ministerial decision issued in 2002, according to which the goal was to gradually increase minimum wage levels to reach 50% of the national average wage before the end of 2008 (CY0704049I, CY0405101N; see also the 2005 EIRO comparative study on Minimum wages in Europe, as well as the Cypriot national contribution (54.5Kb MS Word doc)). This goal has already been reached through the 2007 decree. The respective levels set in the 2002 decree were CYP 294 (€502) for new entrants and CYP 318 (€543) for other workers.

Reactions of social partners

Both the Cyprus Chamber of Commerce and Industry (Κυπριακό Εμπορικό και Βιομηχανικό Επιμελητήριο, ΚΕΒΕ) and the Employers and Industrialists Federation (Ομοσπονδία Εργοδοτών και Βιομηχάνων, ΟΕΒ) disagreed with the new increases in minimum pay, reiterating their position that the modernisation of the labour market necessitates the abolition of relevant state interventions (CY0405101N). In this context, the two employer organisations are demanding that either the system be abolished or the ministerial decree frozen at its present levels.

In contrast, the Democratic Labour Federation of Cyprus (Δημοκρατική Εργατική Ομοσπονδία Κύπρου, DΕΟΚ), the Pancyprian Federation of Labour (Παγκύπρια Εργατική Ομοσπονδία, PΕΟ) and the Cyprus Workers’ Confederation (Συνομοσπονδία Εργαζομένων Κύπρου, SΕΚ) have repeated their former demand that, in addition to increasing minimum pay on the basis of constant updates to the decree, the system should be extended to include other occupational categories. They are also calling for the regulation of working hours in occupations already covered by the decree. In particular, they have expressed concerns that if minimum wages are raised, some employers may increase working hours, thus cancelling out the increases provided for, since hourly pay will be reduced rather than increased.

With regard to the field of application of the existing legislation, beginning in July 2008 – following a decision of the previous government and a demand from the trade union movement – the decree will also cover the occupations of guards and caretakers working in clinics, private hospitals and nursing homes.

Commentary

As minimum wages have gradually been raised over the past six years up to 50% of the national average wage, the current picture is clearly an improvement compared with previous years. Nevertheless, it is obvious that the desired result has not been directed, in effect, at low-paid workers, but at the category of ‘very low-paid workers’ – that is, people who receive wages below 50% of the average wage. This means that the level defined as a threshold, under which a worker is considered to be low paid, is currently in the region of CYP 522 (€891). Thus, the threshold continues to deviate significantly from the present minimum monthly wage of €742 or €789. In this context, based on the initial position stated by the new Minister of Labour, Ms Charalambous, beginning in 2009 minimum wage increases may well take into account the implementation of pay indexation on the one hand, and the wage increases agreed on at sectoral level on the other. In this context, DEOK considers it necessary to redefine the national target level, increasing minimum wage levels to 60% of the average wage, rather than 50% as has been the case thus far.

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