Minimum wage increased to €1,000 a month (Updated)

The minimum wage will go up from €940 to €1,000 a month, Labour Minister Yiannis Panayiotou announced on Wednesday after the cabinet meeting, in a move that has left the island’s largest trade union dissatisfied.

“The government, evaluating all the data… decided to issue the decree… which provides that the monthly minimum wage for full-time employment after completing six months of continuous employment, increases from €940 to €1,000,” the minister said.

Panayiotou said around 25,000 low-paid workers would benefit, those who are most vulnerable because they are not covered by collective bargaining.

And, in order to make sure that workers are not forced to work longer hours for the new monthly wage, there will be better regulation of the framework on hours and the strengthening of technological infrastructure that will allow the application of minimum wage to be monitored.

“The ultimate goal is to limit the exposure of vulnerable workers to the risk of poverty and social exclusion,” Panayiotou said.

At the same time, to minimise the impact on employers, the government will support the business sector and continue to strengthen investment prospects along with continuing with its fiscal discipline.

“We are optimistic that the results will be positive for everyone,” he added.

Employers were against an increase, arguing it would raise operating costs. But despite their initial opposition, they later proposed €970. Unions wanted €1,020.

The island’s largest trade union Peo, in a written statement on Wednesday said it was not satisfied, despite the improvement.

“It does not fully restore purchasing power. The erosion of the minimum wage by inflation is over 14 per cent,” the union said. “This element is particularly important considering that the minimum wage is used entirely to meet the basic, minimum needs of an employee. The amount determined does not reflect the large increase in the cost of living,” it added.

The union was also unhappy that the minimum wage was not fixed by the hour instead of by the month. When it was hiked at the beginning of the year, some employers made staff work longer hours for the increased monthly salary as they were not being paid on an hourly rate. Peo said neither the previous nor the current government “dared to proceed with regulation of the issue”. “As long as there is no hourly minimum wage, its effectiveness is being eroded,” it added.

The minister was asked about the hourly rate after the cabinet meeting and ruled it out. He said the next decree on the national minimum wage is scheduled to be issued after two years and another one four years after that.

Peo said it would continue the fight to improve the framework and have it supplemented with the cost of living allowance, and also to eliminate sectoral exceptions to the minimum wage. The decree does not cover domestic workers, people working in agriculture and livestock, persons employed in the shipping industry, and hotel workers who are covered by a different decree.

The union said it expected the government to take actions to encourage the increase in the percentage of workers covered by employment contracts “as is its obligation under the relevant European directive”.

At the cabinet meeting on Wednesday, Panayiotou also submitted the findings of an advisory committee that addressed the needs of the self-employed. He spoke about a bill, which was approved, according to which the benefits for the self-employed workers will be extended to parental leave as well as an allowance for work injuries.