Cyprus Mail

Talks on collective agreements in banking sector stalled

Loizos Hadjicostos (c) leader of the bank employees union ETYK

By Angelos Anastasiou

Talks with the bank employees’ union ETYK on a new collective agreement have reached a deadlock, according to Michalis Antoniou, head of labour relations at the Employers and Industrialists Federation (OEV).

The impasse comes at a time when commercial banks find themselves under heavy public pressure to cut interest rates and lower the cost of borrowing.

The disagreement was deemed irreconcilable following the fifth – and final – meeting between the two parties on December 15.

As a result of the stalemate, for the first time in Cyprus banking history the banks’ association KEST has opted to employ the ministry of Labour’s mediation procedure in order to facilitate an agreement.

Antoniou, head of labour relations at OEV, cited the union’s insistence on its original positions of extending the retirement age to 65 and diverting 4.0 per cent (from a total of 14 per cent contributed by commercial banks to the staff provident fund), to a ‘solidarity fund’ for its unemployed members, as reasons for the breakdown.

The banks’ side rejects the proposal of diverting provident fund money to unemployed ETYK members, claiming it reflects an unprecedented banking practice as unemployment benefits are paid out of the social insurance fund.

The employers’ association also rejects the proposal to extend the retirement age to 65 as it claims that the terms of the MoU with the troika allow implementation of this measure only after 2016.

On the other hand ETYK cites a similar agreement reached with the Bank of Cyprus’s transition board in July.

The banks call for the union to accept the tiered wage cut scheme applied at the BoC over the summer (averaging wage cuts to the tune of 15 per cent) for all other banks operating in Cyprus as well.

Antoniou said that other bank proposals considered unacceptable by ETYK include the revision of working hours to enhance productivity and efficiency, as well as allowing part-time employment in the banking sector.

The previous collective agreement between bank employers and employees, capping wage indexation and salary increments, expired on 31 December 2013. The failure to reach a new agreement is cause for alarm for commercial banks as wage indexation and salary increments could drive operating costs up at a time when cost-cutting is at the forefront.

ETYK claims that it proposed a salary cut scheme five months ago and insists on its consideration, while accusing employers of inflicting wage hikes upon themselves due to their intransigence on the issue of extending the retirement age.

Over the last year the number of bank employees has shrunk by 23 percent, mainly via voluntary resignation schemes offered by almost all commercial banks.

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