EMCC European Monitoring Centre on Change

Perceptions of globalisation: attitudes and responses in the EU — Cyprus

  • Observatory: EMCC
  • Topic:
  • Published on: 02 March 2008



About
Country:
Cyprus
Author:
Yannis Evstathopoulos
Institution:

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

In contrast with other countries, the phenomenon of globalisation in Cyprus does not appear to have caused radical changes in the qualitative and quantitative aspects of employment or in industrial relations. The small size of the Cyprus economy, the relocations carried out in the manufacturing industry in the 1990s, the quality of social dialogue and the country’s insular nature are estimated to have made a decisive contribution to this evolution. But in recent years there has been a tendency towards creation of new conditions in industrial relations, beginning when multinational companies began actively doing business in the country and Cyprus joined the European Union.

Institutional responses to globalisation

Government action to prevent or reduce the extent of off shoring/relocation

Are there any recent examples in your country (i.e. over the past 3-4 years) of the government intervening to prevent particular activities from being relocated abroad or to reduce the scale of this?

Yes/No

If so, please give summary details and indicate the activities concerned

No.

In the past few years, no relocation phenomena have been observed in Cyprus whose magnitude would justify state intervention. Even when the mass relocations in the clothing and footwear industry took place during the 1990s, the intervention of the state was to a large extent restricted to managing the impacts on employment (e.g. finding work for employees who were made redundant).

Social partner attitudes towards off-shoring/relocation

Have there been cases over the past 3-4 years where the possibility – or threat – of relocation of production has featured as a factor in collective bargaining?

Yes/No

If so, please indicate the cases concerned, how the possibility has been used and whether its use has become a more frequent occurrence.

Reference to the possibility or threat of relocation is not a usual phenomenon in Cyprus. As a whole, Cypriot industry consists of small enterprises basically oriented towards the domestic market. That is why in effect there is no question of relocation of activities of the Cyprus economy to other countries. In the case of British American Tobacco (BAT), however, the company had already noted the issue of increased labour costs in the past; associating it with the possibility of transferring production activities abroad (a possibility that finally became reality in 2006). By and large, in the view of the social partners, reference to the possibility of relocation is more likely to be seen in the context of collective bargaining in multinational companies rather than small and medium-sized enterprises of domestic industry. This view is attributed to the fact that the geographical structure of the production processes of the multinational companies is formed on a global scale, thus allowing relocation of activities from one country to another.

Are there any cases over the past 3-4 years where trade unions have successfully resisted plans to relocate production abroad or have managed to reduce the extent of this?

Yes/No

No.

In the case of BAT, the workers’ intervention focused on managing the impacts on employment (looking for new jobs, amount of compensation, etc.).

If so, please indicate the cases concerned and outline their main features Are there any cases where trade unions have accepted the need for the relocation of production – or part of it – abroad as a means of maintaining or improving the viability of companies and so of preserving some jobs and even ultimately expanding them?

Yes/No

If so, please briefly describe the cases concerned

No.

Government policy on foreign-owned firms controlling significant sections of the economy

Does the Government in your country have an explicit policy on restricting the acquisition of domestic companies in certain sectors by foreign-owned firms?

Yes/No

If so, please give summary details and indicate which sectors this applies to as well as whether any distinction is made between companies according to their nationality (e.g. whether non-European companies are treated differently from European ones)

No.

The Competition Commission is responsible for controlling mergers and acquisitions with a view to controlling industrial groupings and ensuring healthy competition. In no case does this action refer to the companies’ countries of origin.

Are there any restrictions on foreign-owned companies setting up branches or subsidiaries in your country either generally or in specific sectors?

Yes/No

Please indicate the sectors concerned and the stated reasons for the restrictions. Please also indicate whether the restriction apply to companies from other parts of the EU as well as from outside

No.

Are there any sectors of the economy in which the acquisition of a domestic company has not been allowed over the past 3-4 years?

Yes/No

If so, please indicate the sectors concerned and the nationality of the foreign companies involved as well as the reasons given for the decision

No.

Social partner responses to the take-over of domestic firms by foreign-owned ones

Have there been any recent cases (i.e. over the past 3-4 years) where trade unions have resisted foreign acquisition of domestic companies explicitly because of the nationality of the company concerned?

Yes/No

If so, please give summary details, indicating whether there is any evidence of different attitudes being shown towards European firms as opposed to companies from outside Europe

No.

Have there been any recent cases (i.e. over the past 3-4 years) where domestic companies have resisted acquisition by a foreign-owned firm on the grounds of its nationality?

Yes/No

If so, please give summary details, indicating the nationality of the company concerned and whether there is any evidence of European and non-European companies being regarded differently in this regard.

Yes.

One of the arguments put forward against the acquisition of the Bank of Cyprus Group by Marfin Popular Bank refers to the adverse effects the transfer of this company’s capital to foreign investors would have had on the Cyprus economy. Marfin Popular Bank belongs to the Marfin Financial Group, which is listed on the Athens Stock Exchange. It is interesting to note that in 2006 the Dubai Investment Group acquired 35% of the company’s shares. Overall, the strategy of the Board of Directors of the Bank of Cyprus referring to an issue of economic patriotism is thought to have contributed to the rejection of the acquisition bid. It should be noted, however, that this is most likely an isolated incident, since in the past no acquisitions of Cypriot companies by foreign-owned firms were accompanied by similar reactions (e.g. acquisition of the companies Charalambides Dairies Ltd. and Christies Dairies Ltd. in the dairy industry sector by Vivartia S.A.).

Attitudes to globalisation

Have employers’ associations in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?

Yes/No

If so, please give summary details, indicating whether or not the position varies across sectors of the economy

No.

However, we can cite the views registered in the context of the meeting with a representative of the Employers and Industrialists Federation, OEB (Ομοσπονδία Εργοδοτών και Βιομηχάνων, ΟΕΒ) on the issue of mergers and acquisitions. More specifically, OEB views the attraction of foreign-owned companies and acquisitions as a positive development for the Cyprus economy, and for industry in particular, whose share of GDP has now fallen to 19.5% from 33.6% in 1980. Overall, market liberalization and Cyprus’s EU membership have helped increase investment inflows into Cyprus, and this in turn is expected to help increase employment and productivity.

Have trade unions in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?

Yes/No*

If so, please give summary details, indicating whether or not the position varies across sectors of the economy

Yes.

In the estimation of the Cyprus Workers' Confederation SEK, (Συνομοσπονδία Εργαζομένων Κύπρου, ΣΕΚ), social dialogue in Cyprus serves as an important safety valve to counter the risks inherent in rampant economic globalisation. In this context, SEK wants to maintain an open position vis-à-vis the phenomenon of globalisation, but with the necessary precondition that any changes in employment would be the product of consultation and agreement with the trade union organisations. In SEK’s view, the phenomenon of mass relocations in the clothing industry in the late 1990s resulted on the one hand from a deficit in the corporate culture of Cypriot businesspeople, and on the other from the state’s inability to implement an integrated, effective industrial policy aimed at increasing the competitiveness of the Cyprus economy. In addition, it is estimated that the activity and importance acquired by multinational companies in Cyprus, as a result of the liberalization of the Cyprus economy, involve risks for industrial relations, since these companies attempt to impose their own terms and conditions of employment, mainly by concluding individual employment contracts with workers. In SEK’s view, this development, in conjunction with the increased presence of economic migrants who for various reasons are not integrated in the trade union movement, give the picture of a new working culture which has adverse effects on employment. For its part, the Pancyprian Federation of Labour, PEO (Παγκύπρια Εργατική Ομοσπονδία, ΠΕΟ) rejects the existing version of globalisation. In particular, it views globalisation as producing a series of adverse developments such as a weakening of the welfare state, deregulation of industrial relations and diminution of workers’ rights and acquis. All in all, the neoliberal version of globalisation sees it as a factor that increases inequalities, on the one hand among the economically developed and developing states, and on the other among various population groups within the industrialized states. Thanks to their economic predominance, the multinational bring serious pressure to bear aimed at implementation of the above-mentioned changes. Finally, in PEO’s estimation, the phenomenon of globalisation converges to a great extent with that of European integration.

*A Eurobarometer survey on globalisation was carried out in 2003 in the EU-15 Member States. This might serve as a useful point of reference for the countries concerned, to see, for example, whether or not national attitudes expressed in the survey are in line with similar surveys which have been conducted nationally. The survey findings are available at:

http://ec.europa.eu/public_opinion/flash/FL151bGlobalisationREPORT.pdf

Have there been any surveys of public opinion in your country over the past 3-4 years on attitudes towards globalisation or on the various dimensions of this (as listed above)?

Yes/No

If so, please summarise the main findings of these. Please give a breakdown, where possible, in terms of the characteristics of respondents (e.g. by sex, age, socio-economic group, education level, occupation, sector of employment or region).

No.

Have these surveys made a distinction between the different dimensions of globalisation (as listed above) or have separate surveys been carried out on these dimensions?

Yes/No

If so, please summarise the main findings of these as regards:

off-shoring(or the relocation of production abroad;

the take-over of domestic companies by foreign-owned ones and/or the growing extent of control by foreign companies of parts of the domestic economy

the establishment of new plants and offices by foreign-owned companies

Where possible, please give a breakdown in each case in terms of the characteristics of respondents (e.g. by sex, age, socio-economic group, education level, occupation, sector of employment or region)

No.

Have these surveys made an explicit distinction between globalisation and the process of European integration, by, for example, distinguishing between relocation of production to other EU Member States and relocation to countries outside the EU or between the take-over of domestic companies by EU-owned firms and take-over by a non-EU companies?

Yes/No

If so, please give summary details of the differences in response to EU integration as opposed to globalisation.

No.

Yannis Eustathopoulos, INEK/PEO

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