EIRO 2005 ANNUAL REVIEW

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Political data

The present Cyprus’s government, headed by President of the Republic Tassos Papadopoulos, with the support of four parties, the Progressive Party of the Working People of Cyprus (AKEL), the Cyprus Democratic Party (DIKO), the Social Democratic Party -United Democratic Union of the Centre (KS-EDEK) and the Ecologists/Environmentalists, continued its third successive five-year term in 2005. The next parliamentary elections are due on 21 May 2006, while the next presidential elections are scheduled for the February of 2008.

Collective bargaining update

As in 2003 and 2004 ( CY0401102F, CY0501101F), during 2005 collective bargaining remained largely decentralised. However, although there is knowledge that the majority of collective labour agreements (SSEs) concluded at the enterprise level, there are no data available on the precise number of the agreements concluded. As in previous years, the lack of evidence on the precise number of agreements signed each year is due to the unwillingness of both employers’ organisations and trade unions to fulfil their obligation under the Industrial Relations Code and submit the relevant data to the Ministry of Labour and Social Insurance. According to provisional data collected and provided by the unions affiliated to the Pancyprian Federation of Labour (PEO), during 2005 99 agreements were concluded, covering a total of 14, 776 workers. From these agreements, two were concluded at sectoral level and 97 at enterprise level.

As far as labour disputes are concerned, according to official data provided by the Department of Labour Relations of the Ministry of Labour and Social Insurance, in 2005 220 labour disputes were referred to mediation, involving a total of 44,745 workers. However, at the time of writing, there are no available data on the nature of the labour disputes and the sector of economic activity.

Pay

In terms of pay, 2005 is rather characterised by wage moderation a trend that will probably be continued in the next two years. A characteristic example is the framework agreement signed in semi-public sector that provides for no increases during the years 2004 and 2005 and for a 3% increase for the year 2006 (CY0502104F). Similarly, the new agreement reached for the banking sector, provides for a total increase of around 2% in three years, 2005 (backdated), 2006 and 2007, an increase which differs in important respects from Cyprus Union Bank Employees’ s (ETYK) initial demands ( CY0509103F, CY0503101F).

Working time

No substantial changes were noted in relation to working time arrangements in 2005, with the current average collectively agreed normal weekly working time remaining to 38 hours. At a sectoral level, according to the new agreement reached for the banking sector, daily banking hours were extended up 13.30, that is, a half hour longer than previously, while evening work (from 15.00 to 18.00) was abolished every Monday during September and the 12 hours that are saved will be allocated to staff training (CY0509103f).

Job security

An important agreement in the area of job security during 2005, refers to the agreement reached in November 2005, between Arab Bank and ETYK that recalls the former’ s decision to cease operations in Cyprus and dismiss its 176 employees ( CY0512102N, CY0510101N).

Equal opportunities and diversity issues

In June 2005, on the basis of Article 8(1) of Law 177(I) 2002 on equal pay for men and women for similar work or work of equal value, the Ministry of Labour and Social Insurance communicated to the social partners a circular on the furtherance and immediate implementation of the provisions on the specific legislation (CY0508101N).

In May 2005, the Equality Authority of the Ombudsman’s Office noted discrimination against female casual employees in the public sector, regarding current regulations on maternity leave. Since however the Ombudsman does not have the power to circumvent or the competence to abolish the provisions of legislation, the relevant report prepared by the Ombudsman was submitted to the Minister of Labour, in order to expedite the elimination of the existing discrimination, either by preparing a relevant proposal to the Council of Ministers or by promoting a relevant legislative regulation (CY0507101N).

Training and skills developments

The only significant development refers to the new agreement reached for the banking sector, which places particular emphasis on training and life long learning issues (CY0509103f).

Legislative developments

The most important law that it was introduced during the course of 2005 is the law on establishing a general framework for informing and consulting employees, 78(I) / 2001, (see below under employee participation). In December 2005, it was also approved and passed into law the draft bill entitled (Ratifying) (Amending) law of 2005 concerning the Workers’ Representatives Convention, which however it is not published yet in the Official Gazette of the Republic (see below under employee participation).

Additionally, within the scope of application of the Conventions of the International Labour Organisation (ILO) which Cyprus has ratified, and on the basis of the observations of the Committee of Experts of the ILO, the Ministry of Labour and Social Insurance has prepared a draft bill entitled the 2005 Law on the Protection of Wages, aimed at implementing the provisions of Convention No. 95 of the ILO on the Protection of Wages. The purpose of the draft bill is to ensure payment of wages to employees and prevent the imposition of any limitations on the manner in which wages are disposed of, and also regulate matters such as the place, time and frequency of payment of wages and determine permissible deductions.

The organisation and role of the social partners

There were no significant developments during 2005 regarding the organisation and the role of the social partners.

Industrial action

According to official data from the Department of Labour Relations of the Ministry of Labour and Social Insurance, the total number of strikes during 2005 was almost double the number that took place in 2004. In particular, in 2004 there were 13 cases of industrial action, resulting in 9,053 working hours lost and involving 6,479 workers, while in 2005 there were 25 cases of industrial action, resulting in 15,339 hours lost and involving 14,637 workers. This high and rather sharp increase is largely due to the high number of work stoppages (action lasting longer than two hours) in Cyprus Airways and Duty Free Shops ( CY0501103F, CY0410102F).

Employee participation

After a rather long process (CY0501101F), in July 2005 Law 78(I) /2005 on Establishing a General Framework for Informing and Consulting Employees was finally passed, for the purposes of harmonization with Directive 2002/14/EC. With regard to its scope of application, according to Article 3 the law applies to undertakings employing at least 30 employees but does not apply to the crews of vessels plying the high seas. Furthermore, Article 3 states that the provisions of the law have no effect on:

  • The special information and consultation procedures described in Article 4 of Law 28(I)/2001 on Collective Redundancies and Article 8 of Laws 104(I)/2000 and 39(I)/2003 on safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses, or on
  • The special provisions adopted in accordance with Law 68(I)/2002 on the establishment of a European Works Council for the purpose of safeguarding employees’ rights for information and consultation in Community-scale undertakings and groups of undertakings.

It should be noted that according to Article 4.1, the minimum number of employees employed by an undertaking is set on the basis of the average number of employees with fixed-term or open-ended employment contracts or part-time employees who have been employed in the undertaking during the last two years. According to the provisions of paragraph 2, expired fixed-term or part-time employment contracts shall be converted into full-time annual employment in calculating the number of workers employed by an undertaking.

Article 12.1 provides that any person who contravenes the provisions of this Law shall be guilty of an offence and shall be liable, on conviction, to a fine not exceeding CYP2, 000. If the offence is committed by a corporate body or organisation… provision is made solely for monetary penalties not exceeding CYP5, 000 (Article 12.2). This law is due to enter into force as follows:

  • On the date it was published in the Official Gazette of the Republic, i.e. on 8 July 2005, for undertakings employing at least 100 employees,
  • On 23 March 2007, for undertakings employing at least 50 employees, and
  • On 23 March 2008, for undertakings employing at least 30 employees.

Another worth mentioned development in the area of employee participation is the implementation of the ILO Convention 135 on Workers’ Representatives. Particularly, in a session held on 8 December 2005, the House of Representatives approved and passed into law the draft bill entitled (Ratifying) (Amending) Law of 2005 concerning the Workers’ Representatives Convention.

The above-mentioned legislation protects, as the case may be, both union representatives and also the workers’ elected representatives in each undertaking against any act which may be prejudicial to them, while employers are obliged to afford to workers’ representatives the necessary facilities to enable them to carry out their functions promptly and efficiently. Additionally, the legislation makes it clear that where there exist in the same undertaking both union representatives and elected representatives, all necessary measures will be taken to ensure that the existence of elected representatives is not used to undermine the position of the trade unions concerned.

From the practical implementation of the provisions of the above-mentioned legislation, however, it became apparent that measures needed to be taken to ensure its more efficient implementation. For that reason, the Ministry of Labour and Social Insurance went forward, in consultation with the social partners, to prepare an amending draft bill that included provisions:

  • Introducing offences and penalties for employers who fail to meet their obligations.
  • Specifying the Workers’ Disputes Court as the competent court to settle disputes of a civil nature arising from the implementation of the provisions of the Convention and the Law.
  • Defining employers’ obligations.

Labour migration

Labour migration is increasingly becoming an issue of public debate; mainly however as the way to tackle the problem of labour shortages and qualitative imbalances on the Cypriot labour market. As it’s stated in the National Lisbon Reform Programme for the period 2005-2008, the ensuing pressing demand for labour has been tackled by the employment, on a temporary basis, of foreign workers, who constituted 12,2% (excluding EU nationals) of the gainfully employed population in 2004. Despite however the high percentage of immigrant workers, overall, immigrants’ employment policy for non EU citizens continues to be characterised by impermanence and elasticity. In this context, the entry and residence of immigrants in Cyprus is still regulated by the Aliens and Immigration Law, the content of which, though it has been repeatedly amended, it’s widely regarded as outdated. In this framework, labour migration is dealt with as a temporary phenomenon, and no efforts are made towards the active participation and full integration of immigrants in the country’s labour market and social life (CY0311103F). As a result, immigrant workers are employed in manual, unskilled, low paid and low-prestige jobs in which Cypriots show no interest, while a significant number of immigrants perform undeclared work, often under extremely adverse conditions (CY0406104T). As far as the employment of EU citizens is concerned the principle of the free movement of workers within Europe is applied in Cyprus since 1st May 2004, covering the citizens of all member states of the EU, including the citizens of Norway, Iceland and Liechtenstein, which belong to the European Economic Area, as well as the citizens of Switzerland. Specifically, the employment of European citizens is regulated by Law no. 92(I) of 2003 Law on Free Movement and Residence of Nationals of the Member States of the European Union and their Families, according to which, the freedom of free movement and residence in the Republic can be restricted only on the grounds of reasonable threat of public order, safety or health. According to the 2004 Annual report of the Ministry of Labour, 5,292 applications for a residence permit for the exercise of employed activity have been submitted, mainly by Greeks (1,796), Polish (1,131) and British (806), and mainly in the sectors of Tourism (2,173), Construction (1,047) and Commerce (488). People seeking information about the living and working conditions in Cyprus can address the EURES job Mobility Portal.

As far as labour emigration is concerned, according to the Demographic Report for the year 2004, the total number of emigrants from Cyprus to the old Member States, was 993 people.

During 2005, the employment of foreign labour was one of the central issues on the agenda of OEB. In particular, according to OEB, there is still a need to employ foreign workers due to the serious shortages of domestic labour in almost all sectors of the economy, in some cases greater than in the past (CY0505101F).

In comparison to other European countries, the debate on the proposed EU services Directive (the Bolkestein Directive) was rather limited in Cyprus. There has been however widespread criticism among trade unions, while PEO staged a protest demonstration in November 2005.

Corporate social responsibility

The issue of corporate social responsibility does not appear to have been a topic for discussion amongst the social partners during 2005. In this framework, no developments were noted during the year, either on the legislative level or on the collective bargaining level, and the same lack of developments was also noted in the area of studies and research.

In describing the current situation in Cyprus, the Department of Labour Relations of the Ministry of Labour and Social Insurance states that Corporate Social Responsibility (CSR) is currently used on a very limited basis and possibly by a very small number of enterprises. Even if such practices do exist, they are not the result of defined corporate plans or strategies to incorporate CSR in company operations. Furthermore, it is stressed that implementing well defined CSR strategies in Cyprus will most probably be of considerably limited application, due to the very small size of the majority of companies in Cyprus. According to the opinion of the Ministry of Labour, since CSR is a multifaceted, interactive process, with a diversity of approaches, motives and stakeholders, the main target should be to provide social partners, as well as other organised groups with the necessary information to assist them in the implementation of CSR strategies. In particular, the Ministry has to provide extensive information to all interested parties, before actual social dialogue takes place, while social dialogue should result in the development of a well defined action plan, possibly accompanied by guidelines for the implementation of CSR policies. Furthermore, on the basis of the progress of the structured social dialogue, the Ministry will also bring together representatives of government departments and local authorities who can contribute towards assisting enterprises in implementing CSR strategies. However, given the difficulties envisaged for meeting the above targets, it is estimated that progress, especially with reference to the conclusion of social dialogue with the social partners, will be concluded within 2007.

New forms of work

No important developments are reported in the area of new forms of work during 2005. Compared with 2003, there has been a small decrease in part-time employment, while temporary employment showed a slight increase. According to official data from the Statistical Service of Cyprus, taken from the Labour Force Survey with 2004 as the reference year (2005 data are in the process of being published), part-time employment decreased by 0.4 percentage points and temporary employment increased by 0.4 points compared with 2003. In other words, from 8.9% of total employment, part-time employment fall to 8.5% (males 4.7% and females 13.4%), while temporary employment increased from 12.5% to 12.9%.

With regard to the new legislative framework on part-time employment, OEB has noted serious delays on the part of the Ministry of Labour. In OEB’s view, although Law 76(I) 2002 (CY0401102F) has been in force for a long time, two actions very basic to its implementation are still outstanding, actions which fall within the purview of the Ministry of Labour (CY0505101F).

Other relevant developments

An important development during 2005 was the Government’s proposal to rise the retirement age for employees in public and educational services and semi-governmental organisations from 60 to 63 (CY0506101F).

Outlook

In the framework of the renewal of approximately 226 collective agreements that were expired during 2005, including some very important sectoral agreements which are about to expire in Spring 2006, the determination of wage increases is expected to be a point of friction between the social partners during 2006. Given the government’s declared intention to reduce the public deficit with a view to securing entry to the EMU, the resulting extension of wage moderation for the years to come, may create a climate of industrial unrest in the private, as well as the public and the semi public sectors. A substantial divergence of opinion between the social partners may also be brought by restructuring activities and their employment consequences in certain sectors of economic activity.

(Eva Soumeli, INEK/PEO)

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