The government of Cyprus is preparing new initiatives to unlock the long-standing impasse over the Automatic Cost-of-Living Allowance (ATA), as tensions rise between trade unions and employer organisations.

While unions insist that discussions on ATA have been exhausted after six months of talks, the Cyprus Chamber of Commerce and Industry (CCCI) and the Employers and Industrialists Federation (OEB) are calling for a “modernised and fairer framework” with a graduated application of the allowance, focusing on low-income earners.

Union representatives have made clear that they consider the dialogue concluded. PASYDY Secretary General Stratis Matthaiou said the unions “expect initiatives from the government and the President himself,” adding that restarting discussions “from scratch” is not an option.

Unions are also preparing internal consultations, with a joint meeting of PASYDY, SEK, PEO, and DEOK scheduled, followed by a broader all-union conference to assess the situation and decide on further action.

Matthaiou expressed surprise at CCCI’s recent announcement, accusing the chamber of “essentially reviving the debate over abolishing ATA” by referring to recommendations from the International Monetary Fund (IMF) and the European Central Bank (ECB).

In a joint stance, CCCI and OEB rejected the government’s ATA proposal in its entirety during an emergency session of CCCI’s Executive Committee, despite acknowledging areas of convergence.

CCCI Secretary General Philokypros Rousounides reiterated that any new agreement must protect public finances and national competitiveness, while ensuring benefits are directed primarily at low-paid workers.

“We remain available to the state and our social partners for further dialogue,” Rousounides said, calling for “a constructive approach based on IMF and ECB recommendations.”

Despite reports of heated debate within CCCI’s leadership, President Stavros Stavrou later issued a statement stressing unity: “CCCI remains united and strong, committed to advancing the interests of our members and the Cypriot economy.”

President Nikos Christodoulides sought to calm the escalating dispute, expressing optimism that “very soon we will have positive results” on ATA. He emphasised that his government is determined to tackle “difficult issues that must be changed” as part of broader state reforms.

Finance Minister Makis Keravnos confirmed the government’s intention to continue dialogue with both sides, noting that “even the employers have left the door open.” He also pointed to tax incentives as part of a “comprehensive solution” designed to expand the reach of ATA among workers.

Government insiders indicate that Christodoulides is prepared to assume a mediating role once more, exploring the possibility of a compromise aligned with employer requests—particularly regarding the “ATA for all” clause that sparked opposition.

However, union leaders warned against reopening settled matters. SEK’s Andreas Matsas said it was vital to “clarify the exact points of disagreement” and avoid rehashing past debates.

Despite divisions, both sides appear willing to stay at the table—raising hopes that an agreement on the future of ATA could finally emerge after months of uncertainty.