Cyprus Mail

Bank pay talks hit deadlock

Pay cuts similar to those working at the Co-ops central bank have not been dismissed outright

By Elias Hazou

Collective bargaining talks in the commercial banking sector are deadlocked, with the employers side appealing to the labour ministry for mediation.

The previous collective agreement expired on December 31, but the banks were keen to clinch a deal for the next period – most likely 2014 through 2016 – as soon as possible, enabling them to factor in pay cuts for the month of January.

The main points of contention in the talks revolve around retirement age, and each side’s contributions to a special ‘solidarity fund’ for redundant employees.

ETYK, the main bank employees union, wants retirement age to be extended to 65; it is currently 60. They argue that, until a few years ago pension age was 63 years, then it was decreased to 60.

It is understood that the bankers are opposed, which would entail concessions on their part to other demands put forward by ETYK.

But citing the bailout deal between Cyprus and international creditors, the employers have indicated that they’re willing to agree to raising retirement age to 65 from the year 2016.

On their part, ETYK are open to pay reductions for employees of all commercial banks. As of July 2013, Bank of Cyprus (BoC) workers have on average conceded around 15 per cent of their income, but employees in other banks have seen virtually no salary reduction. The employers, who want similar cuts across the board, would have to give ETYK something in return.

But what broke the camel’s back, leading to a halt in the talks, was ETYK’s demand that employers contribute an amount equal to 4 per cent of the payroll to a ‘solidarity fund’ for out-of-job workers.

Banks already pay 14 per cent into bank employees’ provident fund, and counter that an additional 4 per cent payout would drive up labour costs.

Unless collective agreements are renewed before the next pay cheque, the banks will be forced to resume paying Cost of Living Allowance (CoLA) as well as salary increments. These had been suspended following an agreement reached during the previous collective agreement, but would presumably resume by default if matters remain in limbo.

Employers had wanted to slash their payroll as soon as possible, preferably before January pay cheques are written.

Another open front remains in the cooperative financial sector. Following a deal clinched recently, workers at cooperative credit institutions took a 3.0 per cent cut on salaries across the board. Their unions also agreed to additional tiered salary cuts ranging from 8.0 per cent (for salaries between €1,001 and €1,500) to 25 per cent (salaries between €4,000 and €5,000).

The reductions have reduced payroll costs, the largest item at 55 per cent of co-ops total operating budget, by 15 per cent.

But the agreement does not apply to some 300 employees of the Co-Operative Central Bank (CCB) who are all members of ETYK.

By contrast, the vast majority of workers in cooperative credit institutions belong to other trade unions, such as PEO and SEK.

According to ETYK’s Christos Konomis, while they don’t dismiss outright the prospect of pay cuts for these 300 employees at the CCB, there’s room for manoeuvre.

He said ETYK members at the CCB had given up CoLA and salary increments for the years 2012 and 2013, contrary to the rest of the employees in the broader cooperative sector.

“We feel this concession should be taken into account now when discussing salary cuts for these 300 employees,” Konomis told the Mail.

It’s understood also that the employers had been pushing for extended working hours, to which ETYK is fiercely opposed.

Finance minister Harris Georgiades became embroiled in the dispute on Monday when, speaking to reporters, he said: “We cannot be the only country in the EU where banks stop servicing the public at 1.30pm.”

But following gripes by ETYK officials yesterday, the minister was quickly forced to backpedal, clarifying that he was only expressing a personal opinion.

Meanwhile a story appearing in Kathimerini over the weekend revealed that, as part of collective bargaining, ETYK members are entitled to extremely low interest rates – in some cases zero rates – on a range of loans. In certain cases the lending rate was lower than the rate of inflation, the report said. That in turn meant the cost of these loans was subsidised by the banks, who passed the cost onto other borrowers.

The report had prompted the finance minister to speak of “super-privileges at the banks.”

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