Living and working in Cyprus

The most pressing dispute the new minister dealt with was the cost-of-living allowance (COLA), which became a major issue in the second half of 2022 and beginning of 2023. Trade unions organised a three-hour general strike in January 2023 over the COLA and threatened to escalate their action after the presidential elections in February. In May, Mr Panayiotou brokered a revision to the 2017 COLA agreement between the trade unions and employer organisations, increasing the COLA payment from 50% of the annual increase in the Consumer Price Indexto 66.67%. Similar to the 2017 COLA agreement, it is a provisional measure and will expire at the end of June 2025. That means the minister has a year and a half left to broker a permanent agreement, which he considers to be one of his hardest challenges in 2024.

The new government updated the minimum wage decree without changing certain disputed features of the statutory wage regime introduced on 1 January 2023; for example, the minimum wage rates are still defined only in monthly terms. The hourly definition, which was one of the main demands of trade unions, was left to be addressed within the process of national harmonisation with the EU’s Minimum Wage Directive, anticipated to be completed by the end of 2024. The government updated the two minimum wage rates: the entry rate was increased by 1.7% to €900 and the six-months seniority rate by 6.4% to €1,000. With these increases, the government parted from a tradition of uniform evolution of the two minimum wage rates in which the entry rate and the six-months seniority rate evolved evenly for certain professional groups. The new rates took effect on 1 January 2024 and remain valid until the end of 2025.

Under the new minimum wage regime and for the first time in the history of the minimum wage in Cyprus, a tripartite expert committee was formed in October 2023 and submitted its report for the readjustment of minimum wage rates in December 2023. The Ministry of Labour and Social Insurance extended the committee’s work into 2024 with the tasks of developing a formula to facilitate the calculation of the readjustment criteria and setting out the research and studies needed to be commissioned to support the work of the committee.

No breakthrough was reached in 2023 on the other two pressing issues: the new employment strategy for third-country nationals and the reconsideration of 12% actuarial cut to pensions for those who retire before the age of 65. Two separate tripartite technical committees were tasked with examining these issues again, but according to media reports, negotiations stalled. Most probably the issues will return to the minister’s office in the coming months for further consideration.

Finally, the negotiations for the renewal of the country’s most important sectoral collective agreements are expected to be extremely controversial in 2024. The collective agreement in the construction industry expired in May 2022 and has not been renewed since, while the agreement in the accommodation industry expired at the end of 2023. Besides pay increases, further controversial issues include the introduction of extension mechanisms for the whole agreement in the accommodation industry and the major provisions of the construction industry agreement (including pay).