The Pan-Union Conference has unanimously decided to accept the framework proposed by the Ministers of Finance and Labour, which aims to resolve the long-standing industrial dispute over the Cost of Living Allowance (ATA).

A formal announcement from the Pan-Union Conference is expected shortly.

At the same time, the executive committees of the Employers and Industrialists Federation (OEB) and the Cyprus Chamber of Commerce and Industry (CCCI) are meeting in a joint session.

On the employers’ side, opinions are divided. While some members support accepting the Ministers’ Framework, others strongly oppose the provision referring to the automatic indexation of the National Minimum Wage to the ATA.

It is noted that a small but influential group within both employer organizations—representing businesses that employ a large number of private-sector workers—are directly affected, as most of their employees are recipients of the National Minimum Wage.

President Nikos Christodoulides, who became directly involved in the final phase of the social dialogue—previously led and mediated by the Ministers of Finance and Labour until last Sunday—appears to have received positive signals from both sides. These indications suggest that, despite some resistance, the Ministers’ Framework is likely to move forward.

As previously revealed by Brief, the government’s proposal brought trade unions closer to agreement but failed to fully unite the employers’ front.

The proposed framework includes the following provisions:

• Full restoration of ATA to 100% within an 18-month period, implemented in three phases: from 66.7% to 80%, then 90%, and finally 100%.

• A 4% ceiling (“cap”) on ATA adjustments. This means that if inflation reaches, for example, 5%, the ATA will only be applied at 4%.

• Once ATA is fully restored to 100%, if inflation stands at 2%, the adjustment will also be 2%. In the case of exceptionally high inflation rates (such as 8–10% in 2023), ATA will still be capped at 4%.

• A precondition is set: the ATA will only apply if the previous year recorded positive economic growth.

• ATA payments will henceforth be applied from July 1st rather than January 1st each year.

In addition to the tax incentives already included in the ongoing tax reform, Brief’s information suggests that the President and the two Ministers are considering an additional compensatory measure—specifically, an extra tax deduction linked to the ATA, as a concession to the employer side.