The curtain rose at 09:30 this morning on the start of the social dialogue regarding the Cost of Living Allowance (ATA). No major developments are expected, nor do the participating social partners anticipate any.

As previously reported by Brief last week, all parties involved are managing expectations, particularly regarding the timeline set by the government to reach a conclusion by the end of June.

The key issue that will dominate today’s first meeting between the social partners is a request for the Minister of Labour, Yannis Panayiotou, to clarify how the government interprets the “modernization of the ATA.”

This crucial question will not only come from trade union leadership but also from both employer organizations—OEB and the Cyprus Chamber of Commerce and Industry (CCCI).

A major challenge recognized by all sides is that the positions of the two negotiating camps on the ATA issue have always been diametrically opposed.

On one hand, employers demand the abolition of the scheme, while trade unions insist on its full payment at 100%.

Under these conditions, the government is forced to play a dual role.

On one side, it must mediate as the Ministry of Labour is the guardian of labor peace. On the other, the government is an employer itself, since all state employees receive ATA and regard it as a “sacred entitlement.”

It is worth noting that in April 2023, when the current administration decided to raise ATA coverage from 50% to 66.7%, the Ministry of Finance (MoF) did not participate in the social dialogue—even though it is the state’s largest employer.

However, according to Brief, there were appeals made directly to President Christodoulides regarding Finance Minister Makis Keravnos’ absence from ATA negotiations.

As of yesterday, it was still unclear whether a Finance Ministry representative would attend today’s meeting at the Ministry of Labour, or whether an informal agreement had been reached between the Ministers of Finance and Labour that any preliminary agreement within the framework of the social dialogue would also be subject to MoF approval.

When a relevant agreement was reached in 2023, the Ministry of Finance estimated the total cost of ATA to the public coffers through the end of 2025. The data projected that continued ATA payments would cost taxpayers close to €1.2 billion.

Despite the backlash this generated, the government has never officially denied the projected fiscal impact.

It should also be noted that President Christodoulides’ political program explicitly states that ATA will continue to be granted.

Employer organizations view ATA as an outdated mechanism that, in their view, fuels inflation.

According to OEB and CCCI, ATA widens the wage gap between high- and low-income earners, disproportionately increases production costs, undermines business competitiveness, hampers exports, and erodes the overall economy.

Trade unions, on the other hand, not only demand full payment of ATA at 100% but also regard the scheme as an acquired right. They argue that ATA helps restore the purchasing power of wages and ensures labor peace.