The cost-of-living allowance (CoLA) is directly linked to tax reforms and one cannot exist without the other, Sek union general secretary Andreas Matsas said on Thursday, just hours after the trade unions accepted the government’s proposal on CoLA, while the employers threw it out.

Matsas said the two issues were “communicating vessels” and pointed out that the employers could not dismiss proposals that were in the interests of the workers but at the same time demand that the trade unions only approve those in the interest of the employers.

Finance Minister Makis Keravnos expressed disappointment over the employers’ reaction, saying that all sides had made significant concessions and an agreement could have been reached.

Keravnos said the government would now be evaluating the situation and decide what to do next.

The trade unions will be meeting before the weekend to assess the situation.

Meanwhile, OEV director general Michalis Antoniou said the employers were “in limbo”, after having accepted all demands only to find clauses in the proposal that had not previously been discussed.

Matsas said that if there is something that can lead to an agreement, “we will examine it”.

On Friday, the House finance committee launches discussions on tax reform bills.

Keravnos said there was consensus for cooperation with the finance committee MPs and said he was optimistic that all six tax reform bills would be approved.

“Tax reforms will significantly benefit individuals, families with children and students, and of course our businesses,” he pointed out.

The trade unions are expected to make their position clear that they would not be conceding to the reforms going ahead if there was nothing in it for the workers.

“We will be clear,” Matsas said, explaining that the employers could not throw out proposals they didn’t like and expect the trade unions to agree to reforms that would be giving incentives to those same employers.

“They are communicating vessels. The decision has other implications too and makes the handling of the issues before us more difficult. This is not a threat, it is common sense,” Matsas pointed out.

In statements to the Cyprus News Agency, Matsas said the trade unions were “trying to decipher” the employers’ press release and their abhorrence to the word “measures”.

Matsas explained that the employers’ organisations OEV and Keve had objected to the call by the ministers of finance and labour to authorise the ministries to “implement measures to extend CoLA to more beneficiaries”.

He expressed concern over the fact that Wednesday’s developments puts labour relations at risk.

The Sek general secretary said the trade unions were waiting to see the real reason behind the employers’ rejection of the proposal and a first reaction by the government.

Following Wednesday’s rejection, Antoniou said on Thursday that the employers’ side had made moves to reach consensus, adding that the full implementation of CoLA to cover all workers was “the last fig leaf” for the bosses.

Antoniou said the employers had accepted all demands put forward by the trade unions, however the provision in the proposal for measures to be taken by the government towards the universal application of CoLA acted as a “fuse” for the rejection of the proposal.

This clause, Antoniou said, had not previously been discussed.

“The time has come for us to speak, because for so long we had kept quite for the sake of the process. The people should know that from day one all our proposals were for 100 per cent CoLA for the beneficiaries with low salaries, with a scale and a ceiling regarding salaries, so that neither the state payroll nor the private sector would face viability issues due to CoLA,” he said.

What happens next is not known. “We are in limbo,” Antoniou explained.

The government is expected to discuss the matter on Thursday and look into its options, however it considers that the dialogue has finished and it was now up to the social partners to decide.

As things stand, the government has two options: either to resume the dialogue until an agreement is reached or regulate the issue of CoLA through legislation.