Cyprus’ social partners (trade union and employers) on Friday signed, in the presence of the Minister of Labour and Social Insurance Yiannis Panayiotou, a new transitional agreement on of the Cost-Of-Living Adjustment (COLA) stipulating an increased allowance of 66.7% of last year’s inflation from the previous 50%.

Under the agreement, signed following a compromise proposal submitted by Panayiotou, the increased COLA rate will apply as of June, while the social partners undertake to begin a dialogue aiming at “a comprehensive and permanent agreement by June 2025.”

Representatives of both trade unions and employers praised the Ministry’s mediation efforts and stated that the agreement safeguards labour peace allowing for the discussion of the other issues facing the labour market in Cyprus.

“This success belongs to all as we strived together and together we were able to conclude and agree,” Panayiotou said after the signing of the agreement at the Labour Ministry, in Nicosia.

He also thanked the social partners for the constructive stance evaluating the situation “rationally and responsibly.”

“Our country is faced with great challenges which our government can tackle effectively with unity and collectiveness, advancing with steady steps and finding solutions to difficult problems,” he concluded.

The President of the Republic Nikos Christodoulides expressed his content over the agreement, thanking the social partners for their responsible stance, as well as the Minister of Labour.

“You can understand how important is labour peace in our country and especially at the present juncture,” he said invited to comment on the agreement before attending as separate event, in Nicosia. He also noted that “there are many other labour issues that we will focus on in the coming period, within the context of our people-centred approach.”

Cyprus froze CoLA during the financial crisis in 2013 while a 2017 transitional agreement provided that CoLA would be given once a year provided the economy shows growth in the second and third quarters of the previous year. Under the agreement the CoLA indexation would be incorporated into basic salaries at 50% of the annual increase in the Consumer Price Index. The agreement was extended until the end of 2021. Before the 2013 crisis CoLA was calculated every six months.

In 2022 inflation in Cyprus peaked at 8.4% mainly driven by the increased international oil prices due to the war in Ukraine.