Bank of Cyprus employees authorised their union Etyk to take industrial action including strikes over the dispute regarding pay structures. Some 95 per cent of workers voted in favour of action at a meeting last Monday, although what form this will eventually take is not clear. The union is vehemently opposed to management plans to overhaul its pay structure, which would involve drastically modifying pay scales and incremental annual pay rises, as well as scrapping automatic promotions unrelated to performance.
The board wants to reduce its wage bill by reforming its pay structure that has ensured bank employees are by far the best-rewarded employees in the private sector. This remained the case even when the banking sector was on the verge of collapse in 2013 and the Bank of Cyprus was obliged to bail in close to 50 per cent of uninsured deposits and wipe out is shareholders. Temporary pay cuts were agreed, promotions were frozen and generous voluntary redundancy schemes were introduced to help the bank through a very difficult period, but Etyk considers the situation to have been normalised now and is seeking a return to the old pay regime.
For the top management of the Bank of Cyprus, however, reduction of the payroll is a necessity for the full recovery of the bank which last year posted losses in excess of half a billion euros and is still faced with NPLs amounting to more than €8 billion. This is not a business that can afford to keep in place the old pay regime, agreed long before the collapse of the banking sector by weak management, which invariably gave in to Etyk’s threats and blackmail. The banks, quite absurdly, picked up the bill for full healthcare cover offered by Etyk to its members as a way of keeping them paying their annual membership fees. This weakness by the banks fed the union’s militancy and uncompromising approach that is displayed now.
The big question now is whether the Bank of Cyprus will go for an all-out confrontation or back down. Etyk is still in a position of strength as it has a powerful blackmail tool – control of the bank’s IT and data department and all the codes for it. It could cause millions of losses to the bank and major disruption by ordering its members to turn everything off as part of strike action. Unless the bank has a contingency plan for dealing with such sabotage it will have great difficulty winning a showdown with a union that routinely resorts to blackmail to get its way.
Then again, the Bank of Cyprus board may have finally realised that it cannot avoid a confrontation, which has to be pursued, regardless of the costly consequences, if Etyk is to stop calling the shots.