The labour ministry will hold one final meeting with representatives of unions and employers organisations and will subsequently issue a decree setting the national minimum wage. Labour minister Kyriakos Koushos has repeatedly made it clear that the government would make the decision if there was no agreement between the two sides, something looking increasingly likely at present.
The effort was for the positions of the two sides to “converge as much as was possible, because there can be no agreement,” said Koushos. What would be the point of having another meeting on August 31 if the minister sees no possibility of agreement? And why would there be any convergence when each side, according to the minister is entrenched in its position, unwilling to budge?
Minimum wage should never have been the subject of negotiations between unions and employers. Although the late Zeta Emilianidou, as labour minister, had brokered an agreement, it was very close to the demands of the unions, with which she invariably sided. Once she was gone, President Anastasiades, who had pledged to see the minimum wage through, decided a different method of calculating it, making it lower than what had been originally agreed and incurring the wrath of unions.
Even what had been agreed was of questionable value as the national minimum wage would not apply to all sectors of the economy, a concession by unions that there would be workers being paid below the minimum. In effect, it would be applied to sectors which had, union-negotiated, collective agreements. There would still be unskilled workers being paid less than the minimum because this was the only way for them to secure a weekly or monthly wage.
In a market economy, whether we like it or not, it is demand and supply that determine wages, at least in the private sector, with the exception of the banking sector which has been held to ransom by a powerful union that dictates pay and benefits. Elsewhere in the private sector, wages obey the law of demand and supply and will continue to do so even after the government finalises the national minimum.
Setting of a minimum wage that is considered too high by businesses will lead them to hiring workers from poorer EU member-states on lower pay. This is what happened in Cyprus before the pandemic when estimates had put the number of foreign workers at 100,000. With the lockdown era over, foreign workers will start returning and businesses will most probably find ways round the minimum wage the government will announce in September. In the end the market sets wages and not the government.