Tension in hotel trade over renewal of pay agreement

In June 2010, after 18 months of hard bargaining, trade unions representing Cyprus hotel workers agreed to accept a proposal by mediators to renew their collective agreement. The Ministry of Labour and Social Insurance believes that the proposal, effective retrospectively from January 2009 to December 2011 and mainly covering pay issues, will balance the various demands and needs of both sides of industry. However, the employers voiced concerns about the content of the agreement.

Sector proposals

The labour agreement for the hotel trade covers over 16,000 skilled and unskilled workers. There have been increasing delays in the agreement’s renewal over the past 10 years, due to the two sides being able to reach agreement only after mediation. The previous agreement, which officially expired on 31 December 2008 (CY0609019I), has been one of the hardest to renegotiate because of the sides’ diametrically opposed views, and because of the adverse economic circumstances in tourism and catering generally. After 18 months of failed talks, a proposal therefore by the Department of Labour Relations of the Ministry of Labour and Social Insurance is thought to be crucial to the success of this sector. Ministry officials believe their proposal balances the demands and needs of the two sides.

The ministry proposes a three-year agreement, effective retrospectively from 1 January 2009 to 31 December 2011, mainly covering pay issues. Specifically, there are no pay rises for the first year, apart from a €150 lump sum for every worker in employment on 31 December 2010. For the next two years, marginal increases in wages will be granted, with both sides’ contributions to the health fund not exceeding 1.5% or the rate of average productivity over the past three years.

Social partner reactions

On 1 June 2010, the Federation of Hotel Industry Employees (ΟUXEB), affiliated to the Cyprus Workers’ Confederation (SΕΚ), and the Union of Hotel and Recreational Establishment Employees (SYXKA), affiliated to the Pancyprian Federation of Labour (PΕΟ), wrote to the ministry jointly accepting its proposal. The unions said they made only moderate pay demands because of the effect of the global financial crisis on Cyprus. This was in line with the attitude of the trade unions nationally (CY0912039I). Leaders of the two unions have criticised the Association of Cyprus Tourist Enterprises (SΤΕΚ) for rejecting the mediation proposal without even examining it, as well as the negative position taken by the Pancyprian Association of Hoteliers (PASYXE) which has been talking about submitting a unilateral proposal.

In a press release on 3 June, PASYXE expressed disappointment with the procedures followed by the Department of Labour Relations, as well as with the proposal. The association added that the proposal had been foisted on its members and contained provisions that had not been tabled for discussion. This action, PASYXE argued, is in violation of existing labour standards and practices. The association believes the contents of the mediation proposal to be unfair and completely divorced from the problems faced by the tourism industry as a result of the global financial crisis, such as soaring unemployment, over-borrowing by hotel enterprises and the sharp drop in tourism income. The final decision of PASYXE was expected in late June 2010.

Commentary

The Ministry of Labour believes reaching an agreement will have positive knock-on effects for the economy and will help stimulate employment in the sector. However, declaration of a deadlock in the hotel industry appears to be unavoidable, following the rejection by SΤΕΚ of the mediation proposal, as well as the recent negative attitude of PASYXE. If PASYXE too rejects the proposal, the unions have made it clear they cannot rule out the possibility of industrial action.

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

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