Cyprus: Role of social dialogue in industrial policies

  • Observatory: EurWORK
  • Topic:
  • Published on: 02 Rugsėjis 2014



About
Country:
Cyprus
Author:
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

The development of a new industrial policy is still at an early stage and largely includes programmes and initiatives falling within the framework of the 2014-2020 programming period, undertaken unilaterally by the government and following recommendations and development at EU level. In this context, the Policy for Innovative Entrepreneurship is considered as the first integrated example of social dialogue in industrial policy. However, taking part in the consultation held on the initiative of the Ministry of Energy, Commerce, Industry and Tourism were mainly representatives of the business sector (i.e. businesses, employer organisations, professional associations, research centres, etc.) but no representatives of the trade unions.

Part 1: Overall role and involvement of social partners in industrial policy in the national context

Industrial policy is in this context used in its broader sense as…

those policies that have an impact on the cost, price and innovative competitiveness of industry and individual sectors, such as standardisation or innovation policies, or sectoral policies targeting e.g. the innovation performance of individual sectors.

The policy instruments are then defined as the method or mechanism used by government, political parties, business or individuals to achieve a desired effect, through legal or economic means.

Industrial policy initiatives are often undertaken unilaterally by the government but other forms may include social partners in different constellations, including:

  • bipartite initiative (a common approach by the social partners);
  • tripartite initiative (the social partners in tandem with the public authorities);
  • tripartite+ initiative (the three stakeholders in combination sometimes with other civil society players such as NGOs, research centres or qualified figures);
  • public-private partnership initiatives (one social partner and the public authorities); and
  • unilateral initiatives by a single social partner

In the absence of any relevant bibliography, it was only possible to fill in the questionnaire with the assistance of the Ministry of Energy, Commerce, Industry and Tourism (MCIT), which is the competent national authority on industrial policy issues in Cyprus. On behalf of the social partners, the Cyprus Employers and Industrialists Federation (OEB) took part in the study. Trade unions reported that they do not generally deal with industrial policy issues. In this context and given the nature of the present questionnaire, they were excluded from the particular study.

1. Is there in your country currently a policy framework to stimulate investments that both create economic growth and employment? Tick Yes/No

In relation to table 1, it is important to say that according to the MCIT, the creation of a new industrial policy is still in the planning stage. In this context, all programmes and initiatives currently being developed are undertaken unilaterally by the government, either as an integral part of Cyprus’s contractual obligations as a Member State of the EU or within the context of EU recommendations and guidelines. Specifically, existing policies, mainly in the form of measures aimed at boosting competitiveness and employment, as well as promoting growth, are contained in detail in the National Reform Programme for the years 2012 and 2013. In brief, the most important measures are the following:

  • National Guarantee Fund for SMEs as part of the 2012 Annual Growth Survey Priority.
  • JEREMIE Initiative as part of the 2012 Annual Growth Survey Priority.
  • Schemes for grants to strengthen the competitiveness of SMEs in the manufacturing sector.
  • Schemes for the enhancement of women and youth entrepreneurship as part of inclusive growth/ employment and skills.
  • Promotion of innovation as part of smart growth/innovation (i.e. Scheme for the Promotion of Innovation and Policy for Innovative Entrepreneurship).
  • Subsidy scheme to facilitate the shift from low productivity jobs to high productivity jobs as part of inclusive growth/ employment and skills.
  • Grant scheme for the modernisation of units for the manufacturing and trading of agricultural and forestry products.
Table 1

Policy framework

Yes

No

Economic growth

 

Employment

 

Both economic growth and employment

 

Competitiveness

 

2. Is there evidence in your country of involvement of social partners in the process of formulating industrial policy interventions? If yes, please indicate which types of involvement:

In most of the questions of table 2, answers coming either from the MCIT or OEB were not straightforward. As a result, it was not possible to fill in table 2 simply with yes or no. For this reason, we include any additional information provided by the two organisations either in the form of an explanatory note or of a comment. However, no specific examples of social partner involvement were reported.

Table 2

Type of social partner involvement:

… in the formulation of horizontal (cross-sector) interventions

… in the formulation of vertical (sector-, industry- or company-specific) interventions

Sector-specific involvement

Yes/no:

Yes

The MCIT has stated that many professional associations (e.g. the Union of Furniture Makers and Carpenters) have approached the Ministry, usually with specific proposals/demands.

Yes/no:

Yes

Cross-sector involvement

Yes/no:

Yes

The MCIT has stated that efforts are also being made towards cross-industry cooperation (e.g. creation of a platform for cross-industry cooperation).

.

Bipartite, tripartite, tripartite+, unilateral, public/private partnership?

Please indicate which, if any, of these types apply:

The MCIT has stated that all programmes and initiatives currently being developed are undertaken unilaterally by the government, either as an integral part of Cyprus’s contractual obligations as a member state of the EU or within the context of EU recommendations and guidelines.

Although it was stated that there have been few unilateral initiatives by a single social partner, mainly in the form of a special request to the MCIT, no specific examples were reported.

Please indicate which, if any, of these types apply:

3. How have social partners been involved in the industrial policy formulation process?

Table 3
 

Please indicate (X) the extent to which the different types of involvement are used, including whether this involvement is statutory:

Level of government?

Sector focus?

Specific form of social partner involvement:

Statutory/mandatory

Very common/ used in most policy processes but not statutory

Fairly common but not consistently used

Rarely used

Not used at all

National or regional?

Sectoral or cross-sectoral?

Tripartite standing committee

             

Tripartite ad hoc committees

             

High-level groups or other multi-stakeholder committees involving other stakeholders in addition to social partners

 

X

         

If multi-stakeholder committees:

Please indicate which types of other stakeholders are (typically) involved:

There are no relevant statutory procedures for social dialogue in Cyprus. Instead there are ad hoc multi-stakeholder working groups or technical committees, and various means such as hearings, consultation, seminars, etc. are used. In relation to the types of stakeholders usually involved, these are mainly representatives of the business sector (i.e. businesses, employer organisations, professional associations, research centres, etc.) but no representatives of the trade unions. According to both the MCTI and OEB, although the relevant public dialogue processes are open to all stakeholders, trade unions do not participate.

Hearings

             

Consultations

             

Conferences

             

Other - please specify below:

             
               

4. Is there evidence in your country of initiatives that follows recommendations and development at EU-level? If yes, please indicate in which sectors:

According to the MCIT, all programmes and initiatives currently being developed are undertaken unilaterally by the government, either as an integral part of Cyprus’s contractual obligations as a member state of the EU or within the context of EU recommendations and guidelines.

5. Which types of industrial policy instruments/interventions at different government levels have social partners been involved in? Please indicate degree of involvement

3 = high degree of involvement,

2 = involvement to some extent,

1 = low degree of involvement,

0 = no involvement.

In relation to the table below, the MCIT has stated that most policy instruments are undertaken unilaterally by the government, mainly at national level with no involvement or very low degree of involvement by the social partners (i.e. business or employer organisations). The MCIT however was not in a position to indicate the degree of involvement based on the scale 3-0 for all policy instruments. Instead, the MCIT indicated the areas of industrial policy government intervention by ticking Yes or No.

Table 4

Policy instruments:

National level

Regional level

Local level

Public investment programmes:

     

infrastructure

Yes

 

Yes

On the local level, reference was made to the participation of municipalities and local communities in the framework of creation of a favourable industrial environment.

construction

No

   

building renovation

Yes

   

other

     

Innovation programmes

Yes

2

(i.e. Policy for Innovative Entrepreneurship)

   

Support for R&D

Yes

   

Cluster promotion

In relation to cluster promotion, the MCIT has stated that there was a proposal to promote traditional agricultural products, which however has not been successful.

   

Export promotion

Yes

   

Internationalisation of SMEs

Yes

   

Improvement of access to finance:

     

loan

As far as loans and loan guarantee programmes are concerned, MCIT has stated that essentially is left of them. Lending has stopped due to the financial crisis.

   

loan guarantee programmes

Loan guarantee programmes were halted shortly before Cyprus joined the EU in 2004. Such programmes (e.g. interest subsidisation) were implemented mainly in the 1990s and up to 2003.

Micro lending is facilitated through the Lending Organisation.

   

venture capital funding

No

   

other

     

Public procurement policies

Yes

   

Tax and duty policies

Tax and duty policies are under consideration.

   

Adapting the skills base

The system of Post-Secondary Vocational Training Institutes which is funded by the Ministry of Education, the EU including Structural Funding is reported to be the only policy instrument regarding adaptation of the workforce’s skills, the difference being that it involves new entrants and not people already in the labour market.

OEB in its own initiative, provides vocational training to welders (i.e. high pressure vessels) leading to the acquisition of formal qualifications to work in the energy sector (i.e. natural gas).

   

Subsidies for restructuring/ bail-out of companies in crisis

In order to be eligible for support to companies in crisis, businesses had to make an application to the Council of Ministers. This practice is no longer implemented, however, due to the financial crisis.

   

Social plans in case of restructuring. Training/re-training

Social plans in case of restructuring are under consideration.

   

Investment incentives

No

OEB has stated that since 2002 represents Investors in People in Cyprus, and host regular events to support organisations already working with Investors in People, and promote it to the wider business community in the country.

   

Energy efficiency/ energy shift

Yes

   

Energy supply security

Yes

   

Access to raw materials

No

   

Prices of energy and raw materials

Efforts to obtain from the Electricity Authority of Cyprus (EAC) competitive business rates.

   

Others, please specify below:

     
       

6. Which, if any, positive effect(s) can be related to the involvement of social partners in the industrial policy process in your country?

Table 5

Positive effects

Tick (X) where applicable

Please comment briefly: How did effect manifest itself?

Speed of policy process

   

Robustness of policy initiatives

   

Relevance of policy initiatives

   

Dynamism in the policy process

X

The MCIT has stated that although experience is very limited, it has shown, however, that participation of the business world lends dynamism to the procedures, as a result of special personal interest on behalf of the enterprises.

European coordination

X

According to the MCIT positive results have been achieved by EU-level coordination, mainly because this sets a specific framework for the procedures, which is particularly important for the purposes of monitoring and evaluation.

Ownership of policy initiatives

   

Coherence and coordination of labour market, education, and economic policies

   

Stimulating public-private partnerships

   

Others, please specify below:

   
   

7. Which, if any, problems or challenges related to involvement of social partners in the industrial policy process have been encountered in your country?

Table 6

Problems/challenges:

Tick (X) where applicable

Please comment briefly: How did the problem manifest itself?

Increased bureaucracy

   

Lengthy policy processes

X

The MCIT pointed out that public consultation may prove to be time-consuming, especially when experience and know-how are lacking. For example, it is reported that the Policy for Innovative Entrepreneurship took 10 months to complete (planning began in December 2011 and the programme was announced in August 2012).

OEB pointed out that lengthy policy processes was the result of lack of experience and misgovernment on behalf of the MCIT.

Lengthy bargaining processes

   

Dilution (circumvention) of parliamentary democracy

X

In the opinion of the MCIT, certain instances have come to light where parliamentary democracy has been diluted (e.g. due to personal interests, members of parliament have been persuaded to support proposals or initiatives that have actually been to the advantage of individual companies).

Problems of establishing accountability

   

Lack of dynamism in the policy process

   

Lack of culture to involve social partners

   

Others, please specify below:

   

.

   

8. What, if anything, has been done to address these challenges/problems listed in questions 7? What was the outcome?

Table 7

Problems/challenges:

Measures undertaken

Effect positive/negative

Lengthy policy processes

No

In the opinion of the MCIT, the Policy for Innovative Entrepreneurship is in effect the first integrated example of public consultation. In this context, problems of this type are expected to be dealt with through the acquisition of experience and knowledge with regard to the relevant procedures.

No

Dilution (circumvention) of parliamentary democracy

No

No

Part 2: Description of relevant sector examples of social partner involvement

This section aims to identify examples of policies targeting specific sectors and involving social dialogue. Among the industrial policies treated in the previous section in question 5, please select 2-3 examples which represent significant industrial policies in your country and describe the policy instruments used and the contribution of social partners to the shaping of the policy and the outcome of their involvement.

The selection of examples should be guided by the following criteria:

  • importance of the sector to the national economy;
  • level of government support to the industry; and
  • best practice of social dialogue in the country.

Please provide references to key sources.

From the relevant meetings both with representatives of the MCIT and with OEB, it emerged that the concept of social dialogue in matters of industrial policy has more to do with processes of broadly participatory public consultation, but without the participation of the unions. In this context, initiatives that are the result of participation of the social partners in the classical sense of the term (i.e. employer organisations and unions) are not recorded. Additionally, any examples, mainly that of the Policy for Innovative Entrepreneurship , are initiatives undertaken by the government relatively recently; they constitute an initial effort to involve broader social forces (e.g. employer organisations, business associations, professional associations, research organisations, etc.). In this context, the MCIT pointed out that the Policy for Innovative Entrepreneurship is in effect the first integrated example of social dialogue in industrial policy. However, in the context of this initiative, although public consultation addressed all major stakeholders, including the social partners, taking part in the consultation held on the initiative of the Ministry were mainly representatives of the business sector (i.e. businesses, employer organisations, professional associations, research centres, etc.) but no representatives of the trade unions. In the opinion of OEB, there is a lack of culture on behalf of the trade unions to be involved in matters of industrial policy.

Example 1

Name of the instrument:

Σχέδιο Στήριξης Επιχειρηματικής Καινοτομίας

Policy for Innovative Entrepreneurship

Sector:

ICT sector, and more generally the sector of high technology/ high specialisation, such as biotechnology, engineering and pharmaceuticals (generics)

Type of instrument applied:

(use categories from question 5. Some sector policies may apply more than one instrument

Innovation programme

Timing:

(Period of implementation of instrument)

August 2012 to October 2012

Operational level

National

Regional

Local

Please tick the government level and/or provide details of geographical implementation area if relevant:

   

Funding:

(Please describe the size of the instrument and detail the source(s) of funding, e.g. EU, state budget, levies, stakeholder contributions, etc.).

Subsidised aid scheme covering the 65% of the total investment

Amount of subsidisation: EUR4 million (national resources, EU, Structural Funds, participation of businesses)

Target group(s):

(please describe target group in terms of sector/industry, type of company, geographical criteria and/or other relevant characteristics)

ICT sector, and more generally the sector of high technology/ high specialisation, such as biotechnology, engineering and pharmaceuticals (generics)

Rationale/motivation for the instrument:

(please describe the problem that the instrument should address – for instance: market failure, need to increase sector competitiveness, crisis intervention, etc.)

Boost competitiveness, utilise human resources on the national level

Policy stage

Please describe stage of involvement of the social actors i.e.

policy preparation (consultation),

policy decision (co-determination? and

policy implementation (fx. by involvement in agencies)

Consultation

Objectives of the instrument:

(please describe the objectives and any quantitative targets set for the instrument– e.g.

increased employment by X% in sector Y by 20xx

increase in sector exports by X%

increase in FDI by X%

A total of 85 applications

Main objective: utilise human resources on the national level

Activities and implementation:

(Please give details on the implementation of the intervention)

No available information

Social partner involvement

 

Type of social partner involvement:

(Bipartite, tripartite, tripartite+, unilateral, public/private partnership? – cf. qu. 1)

Public/ private partnership

Level of involvement of social partners involvement:

European, National, regional, local

Sectoral

National

Specific form of social partner involvement:

(tripartite standing or ad hoc committee, high-level group, hearing, consultation, conferences, etc.? – cf. qu. 2)

Hearing, consultation, presentation, working groups

Timing and nature of social partner involvement:

(Please provide more details on the processes that social partners were involved in, their input, the timing, etc.)

No available information

Impact of social partner involvement on design and implementation of instrument:

(Please describe how/if the design and/or implementation was affected through the involvement of social partners)

No available information

Other stakeholders involved, if any:

(please name stakeholders and briefly describe their roles)

In relation to the types of stakeholders that were involved, these were mainly representatives of the business sector (i.e. businesses, employer organisations, professional associations, research centres, etc.) but no representatives of the trade unions

Results and outcomes

In terms of results and outcomes, the MCIT has stated that the instrument is still being developed, the evaluation procedure has not been completed and the beneficiaries have not yet received the relevant funding.

As regards implementation, the MCIT stated that it is not possible to perform an evaluation in measurable terms.

Outputs/results:

(Please give details of the outputs/results of the intervention; e.g number of jobs created/retained, number of workers upskilled; wage increases, investment increases, increased co-operation between social partners, etc.)

Acquisition of know-how through collaboration with the private sector (e.g. research institutes).

Assessment of effectiveness:

(Please provide an assessment of the effectiveness of the intervention - were the objectives reached? If possible, base the assessment on evaluation reports or similar)

No available information

Possible explanations for the effectiveness of the instrument:

(Please provide possible explanations for the degree of effectiveness achieved, including the contribution of the social partner involvement; e.g. improved bargaining process? Increased dynamism in the policy process? Other explanations?)

No available information

Assessment of efficiency:

Did the outputs/results measure up to the effort/resources invested? If possible, base the assessment on evaluation reports or similar)

No available information

Possible explanations for the efficiency of the instrument:

(Please provide possible explanations for the degree of efficiency, including the contribution of the social partner involvement)

No available information

Eva Soumeli, Cyprus Labour Institute (INEK)-PEO

COM(2010) 614 An Integrated Industrial Policy for the Globalisation Era Putting Competitiveness and Sustainability at Centre Stage. EC 2010

Useful? Interesting? Tell us what you think. Hide comments

Komentuoti