Unions and employers on Friday signed the return of the cost of living allowance (Cola) after being frozen for several years as part of austerity measures introduced as the island sought a bailout.
Cola will be reintroduced on January 1, 2018 for a three-year transition period pending a permanent arrangement.
Labour Minister Zeta Emilianidou thanked all the parties for their responsible attitude, highlighting the importance of social dialogue.
“Labour peace is ensured, which is very important for our country at this time,” she said following the signing.
SEK trade union boss Andreas Matsas said they had managed to reintroduce Cola amid broad agreement.
Matsas said the parties would now continue discussion to find a permanent arrangement.
Employers union OEV described the deal as difficult but fair and balanced.
General secretary Michalis Antoniou said it allowed them to turn the page at a time when the economy began to stabilise “and view the future with optimism.”
“Labour and social peace have a cost. For as long as it participates in the administration of social and labour matters, OEV will always be ready to assume this cost taking into account the social impact of its decisions,” he said.
The deal provides that Cola will be added to the salary once a year, provided the economy showed growth in the second and third quarters of the previous year.
The allowance will represent 50 per cent of the annual rise in the consumer price index, and it would be incorporated into basic salaries.
Salaries will not be reduced in the event of deflation and if conditions for its payment were not met it will be frozen and resume later from that point.