Trade unions on Thursday gave a thumbs-down to a mediation proposal by the government for a new deal on the cost of living allowance (CoLA), while employers grudgingly agreed to the proposal so as to maintain calm in the labour market.

Following the scheduled powwow of 13 trade unions to discuss the matter, a joint statement said the syndicates cannot accept the pitch made by Labour Minister Yiannis Panayiotou.

The unions said any new deal “must come within the context set out in the 2017 transitional agreement on CoLA, and under no circumstances do we accept elements that distort or degrade the philosophy governing CoLA.”

Also on Thursday evening, the Employers and Industrialists Federation (OEV) announced that after much consideration they accepted the minister’s mediation proposal.

The separate announcements came a day ahead of Friday’s crunch meeting between the minister, the unions and employers.

In a bid to break the deadlock between unions and employers, the minister has proposed renewing the 2017 interim agreement for another three years and increasing CoLA to two-thirds of the Consumer Price Index. This would mean CoLA would go up to a 66.67 per cent share from the current 50 per cent.

In their statement, OEV said they were agreeing with the proposed interim deal, provided the minister makes good on his pledge to find a definitive resolution to the CoLA issue before 2025.

The federation said it is willing to compromise as it likes to “look at the big picture” and not disrupt peace in the labour market.

But it also described the minister’s proposal as ‘Take it or leave it’.

The federation reiterated that it disagrees in principle with payment of CoLA, which it sees as “an obsolete system that feeds into inflation, widens the wage gap between high earners and low earners, disproportionately affects production costs, undermines businesses’ competitiveness, harms exports and erodes the economy as a whole.”