The issue of redundancies at the Cyprus Wine Company has been at the mediation stage since April 2011, following deadlock in talks between KEO and the trade unions. Although the findings of the mediation committee are not expected before the end of May 2011, the most likely scenario is that a deadlock will be officially announced and that unions may then take strike action. The two sides hold diametrically opposed views on the proposed number of dismissals and redundancy terms.
Brief background
On 10 February 2011, the Cyprus Wine Company (KEO), one of the oldest and largest companies in the drinks industry sector in Cyprus, cited the financial crisis and a decrease in volume of work as reasons for its intention to carry out staff cuts. Initially it was estimated that the dismissals would affect 5% of the company’s employees, but on 12 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.
Following 265 direct dismissals at Cypriot airline Eurocypria, after the company entered a creditor liquidation process in November 2010 (CY1010029i), the number of dismissals planned by KEO is one of the highest recorded in recent years.
The employees’ view
Unions say that the gap between the positions of the employees and KEO has widened since talks began.
The Pancyprian Federation of Labour (PEO) and the Cyprus Workers' Confederation (SEK) say the difference of opinion was based around the company’s initial refusal to pay compensation to the employees about to be dismissed, and then by a dispute over the amount of compensation.
The two sides expressed their positions to the mediation committee of the Ministry of Labour and Social Insurance.
According to a PEO representative, the company reversed its initial refusal to pay compensation and said it would pay €200,000 compensation for all 150 employees. This is a particularly low figure compared to the employees’ initial demand for €3 million. This demand was based on rough calculations since it is not yet known which employees are going to be dismissed and thus how many years of prior service they have accumulated.
An SEK representative reports that another serious issue for the employees’ side is the total number of planned dismissals, which in the unions’ view is particularly high. The unions had set two basic preconditions from the beginning of talks for the outcome of the dialogue. These referred to the amount of compensation and to the creation of a voluntary redundancy scheme, on the basis of which the company would choose which employees it would dismiss.
If the Ministry of Labour and Social Insurance announces an official deadlock, unions do not rule out the possibility of strike action.
Eva Soumeli, INEK/PEO