A marathon meeting at the labour ministry over the Cost of Living Allowance (CoLA), as unions had declared they would strike if it was not reinstated, ended in deadlock, it was reported on Saturday.

After four hours of talks, the gap between unions and employers remained wide. Unions demand a full return to 100 per cent of CoLA, with flexibility only on gradual application. Employers reject this, arguing it was not part of earlier transitional agreements.

The government tabled three scenarios for discussion: linking Cola to the pace of economic growth, fixing the percentage of payment, and setting clear rules for how and when it is applied.

But unions said employers refused to move beyond their position that will not see labour costs rising.

OEB and Keve, the two main employer organisations, say dialogue must go on. They want a permanent, modern solution that preserves CoLA’s philosophy but also safeguards business competitiveness and state finances.

General secretary of civil servants union Pasydy, Stratis Mattheou told the Cyprus News Agency that employers only accept to keep CoLA at its current 66.7 per cent, which unions reject. He said unions still aim for 100 per cent, though gradual steps could be considered to end the impasse.

Mattheou also argued that inflation is low, so the cost of full restoration would not be large, while warning that employers “want to change the philosophy of CoLA”.

Deok president Stelios Christodoulou stressed that CoLA’s role is to protect purchasing power. He said attempts to weaken it set a “bad precedent” and harm labour relations.

Christodoulou called on the labour ministry to submit a proposal restoring CoLA fully or creating a timetable to reach it.

He argued the impact on costs would be small, estimating a rise of only 1.5-2 per cent if the rate moved from 66.7 per cent to 80 per cent and later 100 per cent.

He also noted that less than half of workers in Cyprus currently benefit from CoLA, and reminded that an EU directive calls for collective agreements to cover 80 per cent of employees.

Last week unions warned of strikes if the labour ministry did not put forward an acceptable proposal. They will meet on Monday to decide the next steps.

Employers also expressed dissatisfaction with the outcome of the meeting.

OEV director general Michalis Antoniou said it had helped clarify positions even if no solution was found but stressed that earlier agreements in 2017 and 2023 never set CoLA at 100 per cent.

Antoniou opposed another transitional deal, warning that continued uncertainty “poisons” labour relations.

He said the aim must be a permanent settlement lasting 20-30 years, removing the issue from the agenda.

On the prospect of strikes, he expressed hope that any action would be short and not block dialogue.

Keve secretary general Philokypros Rousounides also described a wide gap in positions.

He said the minister repeated parameters already raised by Keve, linking Cola to growth, setting clear rules, and agreeing a percentage.

He said these help modernise the system, which dates back to 1944, but warned that strike threats risk creating an impasse.

Rousounides said Keve is ready to use every chance to reach a common solution. He argued that a reformed Cola must preserve workers’ purchasing power while also protecting competitiveness and financial stability.