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Cyprus Internet Directory [ Bosses angry over minimum wage hike ]

Bosses angry over minimum wage hike

Elias Hazou

BUSINESSMEN and trade unionists affiliated to the AKEL party traded barbs yesterday over government intentions to raise the minimum wage by 2.5 per cent in the midst of a financial crisis.

A proposal by the Labour Ministry would see entry-level salaries increased from €835 to €855, and the minimum wage from €887 to €909 (+2.48 per cent) after six months of service under the same employer.

The readjustment applies to certain professions that are not governed by collective agreements or with little or no trade union protection.

According to the Labour Ministry, the increase is based on a formula agreed by the state and trade unions, whereby the minimum wage is equivalent to at least 50 per cent of the mean national wage.

Pending the Cabinet’s approval, the increase will be enforced by ministerial decree.

But the Democratic Labour Federation of Cyprus (DEOK), said the measure did not go far enough. The trade union called for a ministerial decree to cover all professions that are not governed by collective bargaining agreements, and in addition to a wage increase it wants the inclusion of Cost of Living Allowance (CoLA), 13th salary, sick leave, medical coverage, and participation in a provident fund.

Michalis Pilikos, director of the Employers and Industrialists Federation (OEV), said the 2.5 per cent increase came at the worst possible and questioned the wisdom of raising salaries during a slump.

“In our view, the increase is too high, especially in a time of [economic] crisis and rising unemployment. This will act as a disincentive to employers, already hard-pressed, to hire people with the new higher wages,” he said.

“It is a question of whether a business in the present circumstances will be able to hire people. At a time like this, the objective should be to curb unemployment.”

Pilikos warned that the 2.5 per cent increase would inevitably lead to wage pressures, as employees with longer service would be asking for a higher salary than the €900 that would given to novices.

And he predicted that, with trade union meddling, the minimum wage would eventually be bumped up to €1000 instead of €900.

Another reason why OEV disapproves is that the extra money would go to waste as it would not boost productivity.

This, Pilikos explained, was because the increase would benefit people “with limited qualifications, who at best have a high school education.”

Pambis Kiritsis, head of left-leaning trade union PEO, in turn accused the employers of knee-jerk reflexes.

“As usual, OEV is overreacting,” he said. “The formula governing the minimum wage was decided many years ago and is therefore not some arbitrary number. And to be honest, perhaps the trade unions should have pushed for an even greater increase, since the 2.5 per cent is even lower than the rate of inflation.”

Kiritsis went on to dismiss OEV’s fears of across-the-board wage pressures on employers.

“The increase regards to people like saleswomen, cleaning ladies and security guards. These are professions where salaries remain stationary for years, where you can’t really speak of wage brackets.”

(Source: Cyprus Mail)
Copyright © Cyprus Mail 2008 Please contact Cyprus Mail for the copyright terms of this article.

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