The Cost of Living allowance (CoLA) must be modernised so that it responds to society’s needs, Labour Minister Yiannis Panayiotou said on Tuesday, as the island braces for a nationwide strike on Thursday.

Final talks on Monday afternoon between unions, employers and the minister failed to find a solution to cancel the strike.

Speaking on CyBC radio, Panayiotou said the government’s plan is to create a CoLA system that is fair, permanent and applies to all workers so “we do not have workers of different speeds”. He stressed that the government’s framework seeks to expand coverage and ensure CoLA is paid in a fairer way, with safeguards to prevent inflation being pushed higher.

Asked whether the government would move forward with legislation on CoLA, he said any final agreement would have to be followed by regulations in law.

“When we have a final agreement on the CoLA, obviously legislative regulations will also have to be made so that it can be implemented,” he explained.

He underlined that the allowance must be modernised so that it operates in a way that strengthens social cohesion and supports economic growth.

“We do not want to rush ahead,” he said, pointing to the framework presented in Monday’s meeting, which outlined the basic parameters of reform.

Panayiotou said he believed universal, permanent and comprehensive regulation was possible and would receive a positive response. He added that while a commonly accepted agreement can be reached through dialogue, strikes would only harm the effort.

“The implementation of strike measures is not in the right direction because it will negatively affect the effort being made for a final agreement,” he warned.

The government has faced criticism for suggesting reforms to the system, but Panayiotou argued that some reactions “did not correspond to reality”.

He said the latest meeting allowed the government to present its position on modernisation while calling for dialogue to continue.

But while unions’ initial response was positive, they said the strike from 11am to 2pm on Thursday would go ahead, warning of further action if demands were not met.

Peo said the stoppage was unavoidable, stressing that CoLA had been applied fairly for decades and must continue for everyone, including minimum wage earners.

Sek’s general secretary Andreas Matsas said measures would only be suspended if a “serious proposal consistent with the CoLA system” was put forward.

“No one should play with the dignity of workers,” he added.

Employers took a different position.

The Federation of Employers and Industrialists (Oev) said it remained committed to dialogue for a permanent and comprehensive agreement and overhaul of CoLA, but criticised unions for ignoring calls to avoid mobilisation.

General director Michalis Antoniou said “nothing new had emerged” from Monday’s meeting, but repeated Oev’s support for modernisation “in a way that will also avoid strikes.”

Oev also reminded employers that participation in a strike is a constitutional right, but the days or hours lost are unpaid. Non-participation is also a constitutional right, and staff who wish to work must be given the means to do so without obstruction.

Special rules apply to essential services, including electricity, water, telecommunications, airports, air traffic control, hospitals, prisons and emergency services. Administrations must ensure “minimum service” to cover basic population needs while still allowing strikes to exert pressure.

Political parties offered mixed reactions.

Left-wing Akel demanded full restoration of CoLA, while Edek supported the strike as a last effort to preserve it, while the Greens said reforms were needed to protect low earners.

Business leaders warned of economic consequences, with Oev President Giorgos Pantelides calling the strike premature and the Chamber of Commerce describing the situation as a “deadlock dangerous for the future of the Cypriot economy”.

President Nikos Christodoulides appealed for calm, saying the strike would “not contribute anything to the basic goal.”

But Panayiotou repeated that if unions and employers show “collective responsibility”, it is possible to secure an agreement that expands CoLA fairly to all workers and ensures it operates sustainably in the years ahead.