Negotiations between banks and employees have reached a dead end with employers facing the possibility of having to increase salaries following the expiry of collective agreements to freeze pay rises.
Bank employers association KEST has rejected workers’ demands to extend retirement until the age of 65 and donate the equivalent of 4% of the payroll to the solidarity fund for unemployed bank employees.
According to the director of working relations at the Cyprus Employers and Industrialists Federation (OEB) Michalis Antoniou, the banks have referred the issue to the Labour Ministry’s mediation services after five unsuccessful meetings with bank employees union ETYK.
Employers have said that paying 4% to the solidarity fund is ‘a red line’ as there is no precedent for such practice in the banking sector and unemployment benefits are paid by Social Security.
They also maintain the position that retirement age cannot be expanded due to a relevant agreement with the transitional board of Bank of Cyprus in July 2013, as well as the provisions of the bailout agreement which state that such extensions can only take place after 2016.
Instead, banks are calling on the union to accept and adopt the percentage of scaled pay cuts agreed last summer for the employees of BoC which reached an average of 15%.
Antoniou pointed out that working hours are another point of disagreement between the two sides as ETYK is lobbying in favour of changes to make banks more productive and efficient, while it has also raised the possibility of part-time employment which has been turned down by employers.
Collective agreements expired on December 31 and therefore the freezing of automatic indexing (ATA) and pay rises has been lifted, leaving employers with a potentially dramatic rise in the working cost of banks.
Meanwhile, ETYK has accused the banks of rejecting its proposal to reduce salaries five months ago and of paying higher salaries due to their disagreement over the retirement age.
Bank staff levels have been reduced by 23% over the past year, while the majority of former employees left on an early retirement scheme offered by almost all banks.