Hotel industry employees and trade unions on Tuesday rejected Labour Minister Yiannis Panayiotou’s mediation proposal for collective agreements, crushing hopes for a resolution to the ongoing dispute – a day after employers accepted it.

“After taking into account all of the problematic elements of the ministry’s proposal, the board has concluded it cannot be accepted by the workers, and as such has unanimously rejected it,” Peo said.

The hotel faction of trade union Peo said its board met last Monday to dissect and discuss the mediation proposal.

Speaking to Cybc radio on Monday, Panayiotou had expressed the hope that after several meetings with him and the employers, the unions would also accept the proposal which he described as “fair and balanced”. The deadline for their response was Monday.

However, the union decided to reject the deal.

On Tuesday Panayiotou remained upbeat. “I expect that within the next few days, any reservations expressed will be discussed and the necessary clarifications given so that we can manage to preserve the normality and stability necessary at a time when the external environment is particularly transient,” he responded.

He also emphasised the importance of being on the same page, “so that we can continue on our path towards development and prosperity with stability”.

Peo general secretary Sotiroula Charalambous told CyBC radio that the proposal is very far from employees’ expectations.

The union also said it has informed the minister of its decision in writing and will be announcing its next steps in the following days.

The minister suggested “we keep our cool as we manage the challenges that arise in the context of social dialogue”.

Panayiotou said he remains optimistic that “both sides will again show responsibility and that we will collectively manage to ensure labour peace”.

The deal was met more favourably by employers, who accepted it on Monday.

Speaking on Cybc radio, hoteliers’ association (Pasyxe) head Philokypros Roussounides said that the decision was made during an extraordinary meeting on Saturday, adding that the final decision was a very close call.

“It was not an easy equation, I must say, but in the end it passed. The difference between yes and no was very marginal,” he added.

President of the Association of Cyprus Tourist Enterprises (Stek) Akis Vavlitis said that despite the proposal being to the benefit of the trade union side, his association also accepted it.

“The issue is for the tourism industry to continue calmly to contribute to the country’s economy,” Vavlitis told CyBC.

He said a rejection of the proposal by unions would lead the sector into uncharted waters.

He said Stek is not willing to engage in a further negotiations.

The proposal provides for the immediate payment of a two per cent increase and additional benefits from April 2025, which brings the increase to 3.25 per cent. By 2027, the increase will cumulatively amount to seven per cent.

The minister said the proposal also provides for the guarantee of the 13th salary, which is currently not enjoyed by about ten thousand workers in the hotel industry.

He also said those on the minimum wage are set for a further 3.5 per cent increase.

He added that in combination with the 7.2 per cent already given, in less than two years people in the sector who are not covered by a collective agreement will receive a total increase of 10.7 per cent.