Cyprus: latest working life developments Q2 2018

An agreement to restore wider public sector salaries and mass redundancies at CCB bank are the main topics of interest in this article. This country update reports on the latest developments in working life in Cyprus in the second quarter of 2018.

Agreement to restore public sector salaries

Following intensive negotiations in the wider public sector, an agreement between trade unions – the Pancyprian Federation of Labour (PEO) and the Cyprus Employees Confederation (SEK) – and the government successfully brought an end to workers’ pay cuts (these had been implemented in 2012 via Laws 168(I)/2012 and 31(I)/2013 as part of the economic adjustment programme). This agreement followed on from the Framework Agreement on the State Payroll (4 January 2017) and addressed the salaries of workers in local administration and state-owned companies, hourly paid workers and school committees.

The agreement, signed on 3 July 2018, introduced a five-year implementation period and the gradual rolling back of all cuts to wages and pensions introduced since 2012. Additionally, it provided for the renewal of all collective agreements in the sector up to 31 July 2018 and launched a consultation about the introduction of a pensions fund for new entrants hired after 1 October 2011.

The trade unions were happy to sign the agreement. However, employers’ organisations the Cyprus Chamber of Commerce and Industry (CCCI) and the Employers and Industrialists Federation (OEB) stated that the agreement is heading in the wrong direction; they pointed out that pay cuts had been agreed with the European troika as a permanent measure because the state could not afford the unsustainable public payroll. OEB added that the pay cuts represented an important pillar for a good fiscal policy, which remains very high and above the EU median rate and therefore the agreement is a step back for a country still facing asymmetric threats. OEB argued that pay issues will be regulated after the government’s public administration overhaul, which includes the digitalisation of data, the application of e-governance in delivering governmental services and the reorganisation of human resources.

Up to 900 employees laid off at CCB bank

The bankruptcy of the Central Cooperative Bank (CCB) – a state owned company – and the deal achieved for the partial takeover of its services by the Hellenic Bank paved the way for the exit of 800–900 employees. CCB employed 2,657 people and the deal meant that 1,100 employees would be transferred to the Hellenic Bank, around 800 would remain in CCB under its new service terms and the remainder would join a voluntary exit scheme. The compensatory exit scheme was negotiated among stakeholders and was expected to be implemented within two months.

However, there was disagreement about the terms of the exit scheme among the sectoral trade unions – PEO, SEK, the Union of Cyprus Banking Employees (ETYK) and the Pancyprian Union of Public Servants (PASYDY) – and CCB. On 19 June 2018, CCB submitted a preliminary proposal that foresaw a maximum compensation of €150,000 for each employee, but this was rejected by the unions as not attractive to employees in the lower pay scales. The unions made counter-proposals which were accepted by CCB. These included a minimum compensation of five annual salaries, or €100,000, per person, increasing to a maximum of €200,000 depending on years of experience, the age of the employee and the years remaining for retirement. ETYK also brought up the issue of CCB employees’ status once they have transferred to the Hellenic Bank; they supported the idea that collective agreements signed between the Union and Hellenic bank should also be implemented for CCB employees. This would mean an immediate salary increase of about 30%.

Commentary

The CCB bankruptcy elicited some strong reactions, as the Government’s deal with Hellenic Bank is perceived as being a bit of a mixed bag. Society in general, and the workforce in particular, are confronted with an influx of contradictory information about the situation, with some outlets reporting concerns about fraud, corruption and mismanagement. One of the apparent consequences of this situation has been the clash between trade unions and employers’ organisations about the union’s demands for the employees’ exit scheme.

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