New agreement signed in hotel sector

In September 2006, an agreement was finally reached to renew the collective agreement for the hotel sector in Cyprus. The agreement provides for a total pay increase of about 2% of wages, while the minimum starting wages of new labour market entrants are to be raised incrementally. Healthcare contributions will also increase. Due to the intransigence of both the employers and trade unions, the government-mediated agreement has stipulated that certain non-pay issues would be deferred for further consultation. Although both sides accepted the agreement, tensions remain high in the sector.

On 12 September 2006, following a difficult round of bargaining – both during the direct talks and at the subsequent mediation stage – the social partners in the hotel sector accepted the mediation proposal put forward by the Ministry of Labour and Social Insurance (Υπουργείου Εργασίας και Κοινωνικών Ασφαλίσεων, MLSI), and signed a new collective agreement. The three-year agreement, which is effective retroactively from 1 April 2006 until 31 December 2008, covers around 16,000 workers in the hotel sector. However, 4,000 of these workers are immigrants who in practice may not be covered by the agreement, judging by previous violations of collective agreements on the part of the employers in this regard.

Signatories to the new agreement – apart from the MLSI – were, on the employee side, the Union of Hotel and Recreational Establishment Employees of Cyprus (Συντεχνία Υπαλλήλων Ξενοδοχείων και Κέντρων Αναψυχής Κύπρου, SΥXΚΑ), affiliated to the Pancyprian Federation of Labour (Παγκύπρια Εργατική Ομοσπονδία, PΕΟ), and the Federation of Hotel Industry Employees (Ομοσπονδία Υπαλλήλων Ξενοδοχειακής Βιομηχανίας, ΟUXΕΒ), affiliated to the Cyprus Workers’ Confederation (Συνομοσπονδία Εργαζομένων Κύπρου, SΕΚ). The signatories representing the employers were the Pancyprian Association of Hoteliers (Παγκύπριος Σύνδεσμος Ξενοδόχων, PASYXΕ) and the Association of Cyprus Tourist Enterprises (Σύνδεσμος Τουριστικών Επιχειρήσεων Κύπρου, SΤΕΚ).

Pay issues

The pay-related part of the agreement provides for a total increase of about 2% of basic wages, as they stood on 31 March 2006, to be paid retroactively from 1 April 2006. The increase in minimum starting wages of new labour market entrants will be split over the duration of the agreement, with 50% of the total increase coming into effect on 1 January 2007, and a further 25% of the total increase being granted on 1 January 2008.

Contributions from both employers and employees to the healthcare funds of PEO and SEK are to be increased by CYP 1.50 (€2.63), to be spread over three equal instalments of CYP 0.50 per month, the first beginning on 1 August 2006, the second on 1 January 2007 and the third on 1 January 2008.

Non-pay issues

In relation to non-pay matters, the new agreement is not significantly different from the previous one (CY0410101N). In essence, most of the non-pay issues – as presented in the framework of demands submitted by the trade unions on 23 February 2006 and belatedly by the employer organisations on 13 April 2006 (CY0605019I) – were deferred for further discussion. Principally, under Article 8 of the new agreement, the two sides must do the following:

  • hold consultations, if necessary under the aegis of the Ministry of Labour and Social Insurance, on the issues raised during the bargaining with regard to the manner in which employees will be compensated for work done on Sundays and holidays that coincide with a day off or a weekend, and also with regard to the period required for payment of the Easter bonus;
  • hold consultations on the problems faced by the hotel industry, including issues that will contribute to the implementation of the collective agreement in the sector.

Codification of agreement

Perhaps the most important non-pay regulation concerns the codification of the sectoral collective agreement. On the basis of Article 5 of the new agreement, the two sides must carry out intensive consultations for the purposes of codifying the agreement. Such consultations must be completed by 31 December 2006. Article 5 stipulates that, if no agreement is reached between the two sides, the codification will be referred to the Department of Industrial Relations within the Ministry of Labour and Social Insurance, which will make a specific recommendation.

Views of social partners

The two sides accepted the ministry’s mediation proposal – which cannot be considered satisfactory to either side – in conditions of heightened tension and confrontation. Moreover, the intransigence of the two sides was apparent from the beginning of the bargaining on 3 May 2006, since the employer organisations and trade unions alike ruled out any substantive dialogue on the other side’s proposals (CY0605019I). When the bargaining was declared deadlocked, PEO and SEK called a 48-hour token strike for 21 and 22 August 2006; however, this protest action was averted at the last moment.

In an announcement issued by ΟUXΕΒ on 18 August 2006, just one day before the final submission of the mediation proposal by the ministry, the hoteliers abandoned almost all of their claims in order to maintain industrial peace, breaking the deadlock and averting strike action which would have hit the Cypriot economy at the height of the tourist season.

However, the trade unions noted the provocative, unjustified insistence of the employer side to constantly cut back workers’ rights in the sector: in the employees’ view, this makes jobs in the hotel industry unattractive. Likewise, the unions believe that, in the past, the substantial benefits they were granted worked to the benefit of the industry as a whole.

Eva Soumeli, Cyprus Labour Institute (INEK/PEO)

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