The Cyprus Worker’s Federation (PEO) has formally approved in principle the agreement on the cost of living allowance (CoLA), marking a major development for Cyprus’ social security framework.

The approval, granted during Wednesday’s meeting, follows months of negotiations and a nationwide strike held on September 11 that underscored workers’ determination to protect the institution.

In its statement, Peo emphasised the long-standing importance of CoLA as a mechanism for safeguarding purchasing power, noting that employers’ organisations had repeatedly attempted to weaken or abolish the system.

During the latest negotiations, employer representatives again pushed proposals that would have dismantled the core philosophy of CoLA.

Under the approved agreement, initially signed on November 13, CoLA will be fully restored in stages: 80 per cent by January 2026, 90 per cent by July 2026, followed by full restoration from July 2027 onwards.

The agreement introduces a 4 per cent inflation ceiling, which PEO said is reasonable given that inflation has surpassed this threshold only four times in the last three decades.

A key union demand remains the extension of CoLA coverage to all workers as a basic component of collective agreements.

Peo and other unions have submitted proposals for legal or regulatory measures to ensure broader applicability.

The organisation also calls for the minimum wage to include annual CoLA based adjustments, with cumulative application scheduled to begin in 2026 and reviewed again in 2028.

Peo described the agreement as a crucial step toward strengthening labour protections and reaffirmed its commitment to fighting for universal implementation of collective agreements across all sectors.

The union reiterated their position that collective struggle and unity remain essential tools for defending and expanding workers’ rights.