PEO adopts moderate wage policy

In the context of the global economic and financial crisis and its effects on the Cyprus economy, and on employment in particular, the Pancyprian Federation of Labour (PEO) decided to adopt a moderate policy regarding demands for pay increases during the new round of collective bargaining expected to begin in early 2010. The Cyprus Workers’ Confederation supports PEO’s wage policy, albeit highlighting that the income of low-wage earners should be boosted.

On 28 November 2009, the General Council of the Pancyprian Federation of Labour (Παγκύπρια Εργατική Ομοσπονδία, PEO) publicised the policy that it is going to pursue with a view to renewing the collective labour agreements expiring at the end of 2009 or the beginning of 2010.

Collective agreements affected

As far as the exact number of agreements is concerned, based on the available data provided by PEO itself, 178 collective agreements are concluded at sectoral and company level. These agreements cover 43,855 workers, the vast majority of whom are employed in economic sectors and enterprises that operate on a national scale. The most important of these agreements involve the hourly wages of state, municipal and semi-state employees; others include sectoral agreements in the metalworking industry (CY0706029I), the collective agreement for recreation centres and the agreements in soft drinks companies and citrus fruit processing plants.

Union’s policy change

In contrast with the policy over the past two years, in which trade unions’ pay demands exceeded the productivity rate (CY0712019I), PEO assessed the course of the Cyprus economy as a whole and decided to return to a more moderate position. When highlighting the reasons for adopting a responsibly restrained policy, as PEO states in its announcement, it cited:

  • specific conditions created by the global financial crisis and more particularly the reduced rate of economic growth, with an estimated growth of -0.5% for 2009;
  • an unemployment rate which skyrocketed to almost 6% in September 2009 (CY0912019I);
  • the sudden reduction in state revenues;
  • a higher fiscal deficit and public debt.

In this context, although PEO’s priorities include protecting jobs as well as ensuring that collective agreements and labour legislation are enforced, it points out that the renewal of collective agreements should be achieved in a fair and reasonable manner so that workers are not left to bear the entire burden of the economic and financial crisis.

New policy targets

As far as the basic characteristics of the new policy are concerned, apart from the fundamental guideline for demanding basic increases in line with the average productivity rate over the past three years, PEO decided to pursue the following targets:

  • set minimum starting wages of new labour market entrants according to an evaluation of the various professions and occupations;
  • increase minimum starting wages so that they do not lag behind across-the-board pay increases;
  • promote across-the-board wage increases for the purpose of supporting people on low pay;
  • eliminate inequalities between men and women.

Addressing low pay

The positions of the Cyprus Workers’ Confederation (Συνομοσπονδία Εργαζομένων Κύπρου, SEK) made public on 10 December 2009 appear to be part of the same framework. More specifically, apart from setting basic wage increases at the national rate of productivity over the past three years, which according to SEK’s estimates has fluctuated at about 1.5%, SEK agrees that particular importance should be attached to boosting the incomes of people on low pay rates. Rejecting all scenarios for zero wage increases, SEK emphasises that the workers’ demands are fair and reasonable. Furthermore, the confederation considers that these demands do not threaten the robustness of the economy or public finances, particularly in light of the fact that during the second half of 2009 important increases took place in the prices of essential goods, workers received lower cost of living increases and paid higher contributions to the Social Insurance Fund.

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

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