New agreement signed in banking sector

In July 2008, after at least six months of bargaining, an agreement was reached on the renewal of the collective agreement for the banking sector. In terms of pay, the new agreement provides for significantly higher pay increases compared with the preceding three years. This development reflects a move away from the moderate position held before Cyprus joined the eurozone. On the non-pay front, the most important change is the further expansion of the system of outsourcing.

On 16 July 2008, a majority of 99% of bank employees who are members of the Cyprus Union of Bank Employees (Ένωση Τραπεζοϋπαλλήλων Κύπρου, ΕΤΥΚ) voted to ratify the collective agreement reached between ETYK and the Cyprus Bankers Employers’ Association (Κυπριακός Εργοδοτικός Σύνδεσμος, ΚΕSΤ). The new agreement, which followed months of difficult bargaining, covers about 9,000 employees in the sector and will be effective retroactively from 1 January 2008 until 31 December 2010.

Pay issues

With regard to the pay-related part of the agreement, substantially higher pay increases are provided for at sectoral level, compared with the preceding three years 2005–2007 (CY0509103F). However, at national level, the pay increases provided for are only marginally higher than those granted on the basis of the framework agreement in the broader public sector (CY0804019I) – increases which were nevertheless regarded as quite generous. More specifically, the new agreement provides for a total increase of 6% in basic pay as it stood on 31 December 2007, to be granted in three equal instalments of about 2% each year, with a minimum total increase in basic monthly pay of €90, or €30 each year.

In ETYK’s view, the pay increases will improve the financial situation of low-paid bank employees. In particular, the earnings of people falling within the scales of office assistant and clerk, along with the special scale, will be substantially improved. A further provision of the agreement transfers telephone operators, heretofore the lowest paid scale, to the scale of clerk.

Apart from the pay rises across the board, the amount of housing loans is to be increased, along with loans for students inside and outside of Cyprus; a range of pay supplements are also to be significantly increased.

Non-pay issues

On the non-pay front, the new agreement does not make any provisions which are notably different from those of the previous agreement. Perhaps the most significant change in this context is the further increase in the extent of the system of outsourcing. More specifically, according to Article 8 of the new agreement, the list of existing services which may be outsourced is to be extended to areas including scanning, blue-collar work, research at the Registrar of Companies, the safekeeping of files and introduction of new technology. A further important provision is the completion of the codification process of the agreements that have been concluded between ETYK and KEST, in order to facilitate their implementation.

Commentary

In terms of the overall content of the new collective agreement for the banking sector, the outcome of the bargaining appears to be satisfactory to both sides, which refer to it as a rather balanced agreement. On the pay front, the increases provided for are directly comparable to the increments granted in other key sectors of the economy, such as the broader public sector and the construction industry (CY0807039I). The high increases achieved confirm the trade union movement’s intention to abandon its moderate position of the last few years (CY0712019I). It should be noted that, over the last five years, in the framework of achieving the macroeconomic convergence criteria for Cyprus’s successful inclusion in the European Economic and Monetary Union (EMU) on 1 January 2008, collective bargaining on pay setting has been characterised by pay moderation.

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