Cyprus: Latest working life developments – Q4 2016

The rapid increase in income inequality, the continuation of work stoppages in primary schools and a new framework agreement covering public sector collective agreements are the are the main topics of interest in this article. This country update reports on the latest developments in working life in Cyprus in the fourth quarter of 2016.

Rapid increase in income inequality

The 2016 annual report on the economy and employment from the Cyprus Labour Institute (INEK-PEO) recorded a rapid increase in income inequality during the past three years. The report points out that the economic recession (2012–2014) had a negative impact on the distribution of gross national product (GNP), affecting economically disadvantaged groups the most.

As a consequence, Cyprus experienced one of the most rapid increases of income inequality in the EU. Before the recession, Cyprus had the lowest level of income inequality of all EU Member States. Within the past three years, it has switched from the lowest to a median position. Additionally, the poverty rate increased during the recession years and during the first year of economic recovery (2015). The risk of poverty or social exclusion in 2015 was 30%.

The rate of people categorised as ‘working poor’ also increased. For every two ‘working poor’ in 2011, one more was added in the years 2012 to 2014. Finally, the percentage of the population experiencing severe material deprivation has also increased, from one-tenth of the population in 2008–2009 to one-sixth in 2015.

Ongoing dispute in primary education

The primary teachers’ union, the Pancyprian Organisation of Greek Teachers (POED), took the decision on 3 November 2016 to suspend work stoppages in primary schools. Two weeks later, however, it decided to continue stoppages. Three new one-hour work stoppages have now taken place, concluding the announced round of stoppages. The first work stoppage took place on 30 November  2016 in all primary schools in the district of Larnaca. The second and third stoppages took place on 7 December 2016 in the districts of Nicosia and Paphos.

The dispute between POED and the Minister of Education, Costas Kadis, continues and the work stoppages did not produce the expected results. The day after the last stoppage, the president of POED stated that the union was still waiting for the Minister’s invitation to a comprehensive dialogue. The Minister stated that the work stoppages and other measures had caused an unnecessary disturbance in schools. He stated that POED raised different issues on every occasion, despite the two parties having already agreed the framework of the dialogue. He requested POED to list all the issues that it wanted to discuss at the negotiations in order to move forward with the process.

Framework agreement between trade unions and government

A framework agreement between the Minister of Finance and the trade unions, the  Pancyprian Federation of Labour (PEO) and the Cyprus Workers’ Confederation (SEK), was signed on 4 January 2017. The agreement authorises the boards of directors in the broader public sector to negotiate directly with the trade unions over the renewal of collective agreements within the framework of the industrial relations code. Trade unions welcomed the agreement because it validates the strength both of collective agreements and of the industrial relations code.

The basic provision of the agreement is the introduction of a mechanism through which the rate of the public sector payroll increase in 2017 and 2018 will not exceed nominal gross domestic product (GDP). The parties also agreed that any arising, additional issues in the process will be resolved within the framework of the industrial relations code. Finally, they agreed that the broader restructuring of the provident fund issue will be discussed and resolved by the end of May 2017.

Commentary

The significance of the new framework agreement is twofold. First, it reverses the government’s plan to regulate the state payroll through legislation and contrary to the industrial relations code. The power of collective bargaining as a means towards the regulation of working conditions has therefore been retained. Second, the agreement is considered a trigger for the gradual restoration of public sector wages to pre-crisis levels. It is expected that the workers will receive their annual rise for 2017 plus a wage increase that will emerge from the negotiations of each organisation in the broader public sector.

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