Cyprus: Annual Review 2011

  • Observatory: EurWORK
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  • Published on: 28 November 2012


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This annual review, compiled in February 2012, looks at industrial relations developments in Cyprus during the course of 2011.

1. Political and economic developments (200 words)

Please give very brief details of:

  • The government (s) in office during 2011
  • Any general or significant regional/local elections held in 2011
  • Any other significant political events which took place in 2011
  • Any forthcoming national or important regional/local elections or significant political events
  • Any major economic developments which are likely to impact upon employment and industrial relations.

If a new government took office during the year, briefly summarise the implications for policy on employment and industrial relations.

During 2011, Cyprus’s government headed by the President of the Republic Demetris Christofias continued its fourth five-year term. Following however a large-scale accident at the military basis in Mari in July 2011, which caused an extensive damage to the main energy generating units (CY1202029Q), the Cyprus Democratic Party (DIKO) resigned from the cabinet leaving the government coalition more fragile than ever. As a result, out of the five political parties that initially supported the present government, only two are currently left in the coalition, in specific the Progressive Party of the Working People of Cyprus (AKEL) and the United Democrats (EDI). It is worth mentioning that the Movement of Social Democrats (EDEK) resigned from the cabinet in February 2010, because of the party’s total disagreement with President Demetris Christofias’ national strategy (CY1004019Q). In the above context, it is not surprising that the results of both the parliamentary and the municipal elections show a shift to the right. During the parliamentary elections that were held on 22 May 2011, the Democratic Rally of Cyprus (DISY) has narrowly won the elections with 34.27%, increasing its share of the vote by 3.75% compared with the last poll in 2006. The ruling party AKEL, although it managed to also increase its share of the vote by 1.36%, was trailed behind DISY with 32.67%. Similarly, during the municipal elections that were held on 18 December 2011, 26 out of the 38 candidates supported by DISY gained their positions compared to nine candidates supported by AKEL. Various analysts agree that of decisive importance for the shift to the right, is the economic crisis and the unprecedented rise of unemployment, as well as the government’s decision to narrow the privileges enjoyed by civil servants.

2. Legislative developments (300 words)

Please give brief details of important legislative developments with implications for industrial relations and working conditions, where these are not covered in other sections of your response. For example, this might include new or amended legislation on issues such as employment rights, working time, pay and conditions of employment, termination of contract, equality, social security (with implications for the employment relationship), training, new forms of work, the labour market, health and safety etc.

The most important legislative development during 2011 refers to the introduction of a series of amendments for the purpose of harmonising national legislation with European legislation. In particular, Law 106(I)/2011 was passed for the purpose of harmonising national legislation with European Directive 2009/38/EC on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees. Given that the relevant law entered into force on 29 July 2011, the date of its publication in the Official Gazette of the Republic, an assessment of its effectiveness is not yet possible. However, experience relating to the establishment and operation of EWCs so far, generates questions on the extent to which undertakings will respond not merely in going forward to set up EWCs but also in meeting their obligations on the basis of the provisions of the legislation.

During 2011, the Department of Labour Relations of the Ministry of Labour and Social Insurance (MLSI) prepared amending legislation in line with the provisions of the new Council Directive 2010/18/EU implementing the revised Framework Agreement on parental leave. The main amendments relate to the increase of the length of parental leave from 13 to 18 weeks for each child in total, as well as employees’ protection against less favourable treatment. Draft legislation that is currently in the House of Representatives for approval, it is expected to enter into force by the mid of April 2012, almost one month later of the final adoption date as set by the Directive.

On 9 May 2011, in the framework of Chapter 183 of the Minimum Wages Law, minimum wages were readjusted. Specifically, according to the most recent Order (No. 172/2011) that is effective retroactively from 1 April 2011, the minimum monthly salary for the new job entrants in seven of the nine occupational categories - excepting that of cleaners and security guards - is set at Euro855 from Euro835 in 2010, while for employees who have worked for the same employer for six consecutive months, the minimum wage is set at Euro909 from Euro887 in 2010. For the occupational category of cleaners the minimum hourly rate is set at Euro4.48 and Euro4.76 for employees who have worked for the same employer for six consecutive months, while the minimum hourly rate for the occupational category of security guards is set at Euro4.81 and Euro5.12 accordingly. In the government’s view, the decree on increasing the minimum wage protects the most vulnerable groups, the majority of whom are young men and women employed in jobs not covered by collective labour agreements (CY1105029I).

It is worth mentioning that the enactment of the new legislation on modernising industrial relations (CY1105049Q) is still pending.

3. Organisation and role of the social partners (300 words)

Please provide brief details of any major changes in the organisation and role of the social partners in your country during 2011. This might include trade union or employers’ organisation mergers, changes to social dialogue structures, or changes in membership levels and representativeness.

There were no notable developments during 2011 regarding the organisation and the role of the social partners. At organisational level, according to data provided by the Trade Union Registrar, among the three trade unions that were established in 2011, only one had more than 50 members, the Union of Academic Staff of the Cyprus University of Technology with 107 members. As far as the employers’ organisation is concerned, the Pancyprian Association of Small Businesses (PASYME) was established with 600 registered members. It is worth mentioning that PASYME is the second employer organisation in Cyprus which provides a mixed representation of business interests. The largest such organisation is the Pancyprian Professional Small Shopkeepers Federation (POVEK) which has around 8,000 members, of which about 60% are employers, who are active in the technical occupations, clothing, recreation centers and petrol stations. In the above context, PASYME aims at challenging POVEK within its traditional sphere of influence and claim a more active role in the industrial relations.

In terms of union density, according to data provided by the Trade Union Registrar, since 1990 there has been a gradual decline of over 25 percentage points, reducing the rate of union density from 76% in 1990 to less than 50% in 2011.

It is worth mentioning that the amendment of the legislation on trade unions that was introduced to the House of Representatives in October 2009 is still pending (CY0912049I , CY1004019Q).

4. Developments in collective bargaining and social dialogue (350 words)

Please give details of the number of collective agreements negotiated in 2011 by level (eg. national, sectoral, company), compared with numbers of agreements negotiated in 2010. Outline any trends/shifts between levels of bargaining, or changes in bargaining coverage.

  • To what extent are there derogations from collective agreements? Describe any trends in terms of derogations.
  • If there have been any major bipartite or tripartite initiatives at national level, please provide details. (Do not include initiatives which deal specifically with the economic situation as these should be covered in question 5)
  • Other conditions of employment (these might include training and skills, job security, occupational pensions, equal opportunities and diversity issues)

Information on developments in pay and working time in the course of 2011 is being collected in the Annual Updates on working time and pay, and therefore does not need to be reported here.

The concept of collective bargaining at central national level, setting minimum terms and conditions of a binding nature for all employees, does not exist in Cyprus. In this context, collective bargaining is considered to be decentralised, with most agreements concluded at enterprise level. However, despite the numerical strength of enterprise level agreements, the sectoral level is considered to be just as important, if not more important as far as coverage is concerned. As in previous years, there are no data available on the precise number of agreements signed in 2011 as both employers’ organisations and trade unions failed to submit the relevant data to the Ministry of Labour and Social Insurance (MLSI) as provided under the Industrial Relations Code. In the same context, reports by social partners are full of obscurities, as most agreements both at the sectoral and the enterprise levels have either put on hold or reached a deadlock both at the stage of direct negotiations and the stage of mediation, as a result of the financial crisis.

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 for the year 2011, 299 labour disputes were referred to mediation, involving a total of 73,495 workers, compared to 255 labour disputes in 2010, involving a total of 31,677 workers (according to the revised data for the year 2010). Given however those 169 more cases that were still pending from 2010, the Department of Labour Relations had in total 468 cases to handle. As regards the distribution of labour disputes by sector of economic activity, out of the 299 labour disputes, 121 took place in services, 41 in the transport and communication sector, 35 in commerce and the hotel industry and 35 in manufacturing, 32 in the construction industry, 28 in financial organisations, four in electricity, two in agriculture and one in mining.

5. Responses to the economic situation (200 words)

With regard to the current economic situation, please give brief details of:

  • cross-sectoral and sectoral level initiatives, the responses of the social partners in your country, with a focus on any bipartite or tripartite initiatives to tackle any economic problems;
  • government responses to the economic situation with an impact on industrial relations and on labour law;
  • and any significant effects of the economic situation on the industrial relations system.

If initiatives have been reported in an earlier Annual Review, please provide an update.

During 2011, responses to economic downturn refer almost entirely to the continuation of a number of measures undertaken by the government in 2010 and 2009 aiming at both stimulating the economy and at protecting employment (CY1105049Q, CY1101019Q, CY1004019Q, CY0912019I). However, with unemployment rate reaching 9.3% in December 2011, its highest level since 1974 and unemployment rate among young people under 25 years old exceeding 25%, the Government is examining a new package of measures to support unemployed people, as well as restrain the upward trend in unemployment. The new package of measures that is expected to be finalised in early April 2012, will essentially include measures to help unemployed people re-enter the labour market, with the focus on the groups that are most affected, specifically young people under 29 who have been unemployed from three to six months, and long-term unemployed who have been out of a job for over seven months (CY1202029I).

Together with the measures to boost employment and reduce unemployment, the government has designed a strategy that aims to safeguard the correction in public finances, thus allowing for an improvement in long term fiscal sustainability, as required by the Stability and Growth Pact. According to the Stability Programme for the period 2010-2014, the improvement in public finances is attributed mainly to revenue enhancing measures, including to some extent, measures of one-off nature. As far as 2011 is concerned, the government’s main priority was the reduction of the budget deficit. To this end, the government introduced a number of measures of permanent nature, among which is also the reduction in the overall number of employees in the broad public sector (target 1,000 persons per annum) through inter alia minimal creation of new posts in the civil service and termination of the practice of employing temporary personnel, a measure that covers both permanent, as well as, hourly paid positions. In the pay front, a pay freeze, also including the cost of living allowance increases, applied to the civil service that was in effect for two years, from 1 January 2010 until 31 December 2011, leading to extensive industrial action (CY1204019Q, CY1204039Q). Further measures planned but not yet adopted include various public sector reforms, such as the introduction of a medium-term budgetary framework and a reform of the public pensions and the health care system.

On their part, trade unions still keep a moderate policy regarding demands for pay increases. As a result, most of the collective agreements negotiated in 2011 provide for no or moderate increases, while many agreements have been put on hold.

6. Developments in working conditions (550 words)

Please report the most important developments in the field of working conditions and quality of work and employment during 2011 in your country. The following topics should be taken into consideration:

  • career and employment security – including job security, income, information, consultation and participation and equal opportunities;
  • health and well-being of workers – including health problems, risk exposure, impact of changes in work organisation, and violence, harassment and discriminations;
  • developing skills and competences – including qualifications, skills and competences, career prospects and training opportunities
  • work-life balance – including issues such as working time, time management at work and social infrastructures.

For answering this question, please make use of all national sources of data on working conditions such as national surveys, quantitative and qualitative research and administrative reports (for example, from the labour inspectorate or health and safety authorities). Please report also on policies, programmes or initiatives implemented at national and regional/local levels by public institutions and social partners. Please make sure you are not reporting the information already provided in question 2.

There were no notable developments during 2011 regarding working conditions, while at the time of writing Labour Force Data or other statistical data on employment rates, considering also fixed term employment and part-time employment for 2011 were not available.

A particularly worrying aspect of the economic recession has been a further increase of youth unemployment rate. In particular, the unemployment rate for young people under 25 has risen rapidly from 15.3% in December 2010 to 25.8% in December 2011. Against this background, a number of measures have been promoted with beneficial effects on youth employment as well, which in their majority however, refer to the continuation of previous measures that were undertaken by the Government during 2010 and 2009 (CY1101019Q).

7. Industrial action (200 words)

Please give brief details of strikes and other industrial action during 2011, including:

  • statistics on the number of strikes, workers involved and working days lost (absolute number and per 1,000 workers) for as much of 2011 as is available (please indicate briefly what types of action are or are not included in these figures – eg. are only strikes with a minimum number of workers or days lost included, or is only “official” action included?), and how this compares with previous years; and
  • any particularly large or significant strikes/lockouts or other disputes;

Compared to 2010, 2011 reports a dramatic increase in the number of industrial actions, a phenomenon that is expected to continue also in 2012. According to official data provided by the Department of Labour Relations of the Ministry of Labour and Social Insurance, in 2011 the number of strikes increased to 14, from 4 in 2010 (according to the revised data provided by the same source for the year 2010). The number of workers involved was also increased from 200 employees in 2010 to 1,499 employees in 2011, while the number of working days lost to strike action increased from 200 days lost in 2010 to 4,712 days lost in 2011. As regards the distribution of strikes by sector of economic activity, the same source reports that out of the 14 strikes, six took place in services, four in the construction industry, one in the hotels industry, one in the commerce sector, one in manufacturing, and one in mines. Although there are no data available on the reasons for industrial action, the experience from various sectors of economic activity shows that most industrial actions concern either the failure to reach a collective agreement, or the violation of collective agreements.

Figures on strike activity during 2011 reveal a changing pattern in terms of the relationship between strike action and the economic crisis. In this context although during the first years of the crisis there was a drop in strike activity, probably as a result of rising unemployment, the rates were significantly increased during 2011. Given that austerity measures are especially affecting the public employees; this rise, at least for the time being, is attributed to a large extent to the public sector. Specifically, In December 2011, thousands of Cypriot public servants participated in a number of strikes that were called by the Pancyprian Public Employees Trade Union (PASYDY) as a way to protest against a proposed two-year salary freeze and new austerity measures to be imposed. Specifically, PASYDY called for a three hour warning strike on 13 December 2011, a three hour strike on 14 December 2011 and a 12 hour strike on 15 December 2011. As commented by press and media, it was the first time during the last 10 years that all the unions in the public and semi public sector - state offices, schools, hospitals, telecommunications, electricity, etc - went out on strike. In this context, it is estimated that the number of strikes will rise dramatically in 2012, while the strikes in the public and broader public sector, whose motives are political as well as financial and mainly regard the impending changes in relation to the rights of workers in these sectors, are expected to be followed by strikes in the private sector.

8. Restructuring (250 words)

Please give brief details of major and significant incidences of company restructuring and workforce reductions in 2011 and how they were dealt with, especially where these led to important industrial disputes or collective agreements, or had other notable industrial relations implications.

Despite the pronounced effects of the economic crisis on the Cypriot labour market that mainly expressed through a historic rise in unemployment that reached 9.3% at the end of 2011, as well as an unprecedented wave of dismissals that reached a peak in the last three months of 2011, only two cases of large-scale company restructuring were reported in 2011.

The first case of restructuring is reported by the Cypriot national carrier Cyprus Airways, where 140 workers out of the 1,280 employed were made redundant. The 140 redundancies were part of a rescue plan that was submitted by company management in February 2011, the basic provisions of which were defined in the framework of a special agreement between the company and the five trade unions affected. Apart from the job reductions, the plan also envisaged pay cuts, the rationalisation of flight schedules and scrapping of loss-making flights, reductions in over time and a freeze in new hires (CY1102019I).

The second case of restructuring is reported by the Cyprus Wine Company (KEO), one of the oldest and largest companies in the drinks industry sector in Cyprus. Although initially staff cuts were estimated to affect the 5% of the company’s employees, in April 2011 the company announced its intention to dismiss 150 workers out of a total of around 580, from all departments except the water bottling plant. In 2003 the company employed around 800 workers.

According to a representative of the Cyprus Employers and Industrialists Federation (OEB), the company’s decision to carry out dismissals was made imperative by the financial troubles it has been experiencing for the last two years. It had to act to remain viable as a business and retain a significant number of jobs. The company announced €3.7 million in losses for 2009, and €3.4 million for 2010. As the positions of the two sides are diametrically opposed, with regard both to the question of the number of dismissals, and also to the terms for implementing the redundancy measures, the issue of dismissals has been at mediation stage since April 2011 (CY1105039I). At any case, the number of dismissals planned by KEO is one of the highest recorded in recent years.

9. Other relevant developments (150 words)

If there been any other significant developments affecting employment relations in 2011 that have not been mentioned above, please give brief details.

No further significant developments affecting employment relations are reported during 2011.

Eva Soumeli, INEK

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