cost of — The cost of living allowance (CoLA) has received a significant boost following the Cyprus Worker’s Federation (PEO) granting its formal approval in principle. This decision, made during a meeting on Wednesday, marks a pivotal moment for the social security framework in Cyprus.
The approval comes after months of intense negotiations and a nationwide strike on September 11, which highlighted workers’ determination to uphold the CoLA system. PEO has consistently underscored the importance of this allowance as a means to protect purchasing power, amidst ongoing attempts by employers’ organisations to weaken or abolish it.
In its statement, PEO reiterated the critical nature of CoLA, especially in light of the proposals put forth during recent negotiations that sought to undermine its fundamental principles. Under the newly approved agreement, which builds on an initial signing from November 13, CoLA will see a phased restoration: 80 per cent by January 2026, 90 per cent by July 2026, and full restoration set for July 2027.
Moreover, the agreement introduces a 4 per cent inflation ceiling, a figure PEO argues is reasonable given the historical context—inflation has exceeded this limit only four times in the past thirty years. This ceiling aims to provide a more stable framework for workers’ financial planning amidst fluctuating economic conditions.
A key aspect of the negotiations has been the demand for the extension of CoLA coverage to all workers as an essential part of collective agreements. PEO, along with other unions, has tabled proposals for legal or regulatory measures that would broaden the applicability of CoLA, ensuring that it serves as a universal safety net for all employees.
Additionally, PEO advocates for minimum wage adjustments to include annual CoLA-based increases. The cumulative application of this adjustment is scheduled to start in 2026, with a review anticipated in 2028. This change is seen as crucial for enhancing labour protections across the board.
PEO has described the approval of the CoLA agreement as a vital step in bolstering workers’ rights and protections. The federation remains committed to advocating for the universal implementation of collective agreements across all sectors, emphasising that solidarity and collective action are essential to defend and advance workers’ rights.
