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unemployment - 2 2007f Mar 2007

Unemployment has become a way of life for tens of millions of peoples all over the world. For some decades now, this phenomenon continues be one of the must serious problems of the World Economy.










  1. Although the initial attempts for the creation of Trade Unions in Cyprus goes back to 1915, yet serious efforts to establish Trade Union Organisations in Cyprus are observed in the years 1920-1930. The pioneers, the leaders and the instructors were a team of communists who espoused the ideals of socialism and the creation of a more fair society.


  1. The first Trade Unions were established in 1918, developing from workmen’s associations and labour clubs.


  1. Economic and social conditions were not initially favourable for the development of trade unionism. The British colonial authorities vigorously repressed the underground trade union movement in the 1930’s, primarily because of its associations with nationalist and communist policies.


  1. In the decade 1930-1940 an arduous struggle is carried out focussing on the establishment and the recognition of the Trade Unions.


  1. In the beginning of the decade 1929-1934 the capitalistic system is shocked by a serious economic crisis, which dominates throughout Europe and the U.S.A. This crisis had its negative repercussions on the underdeveloped economy of the British Colony of Cyprus. This situation forced thousands of farmers to rush to the towns and the areas of mines seeking employment.


From 1932-1938 the mining and the building industries are rapidly expanded in Cyprus as well as the alcohol, tobacco and tanning industries. Thus, until 1938 the labour force was estimated to 8.000 workers.


In 1931 the Nicosia Footwear Trade Union has been established. This Trade Union enjoyed its official recognition in 1932 immediately after the enactment of the Trade Unions Law. Until the end of 1940, 62 additional Trade Unions have been established and were legally recognised having in their strength 3.389 members.


The young trade union movement had to solve many and serious problems, such as the reduction of hours of work (the workers offered their services for 15 hours per day), the improvement of the wages (which did not exceed 2 shillings per day), and the strengthening of the organisation of the trade unions.


Besides, the trade union movement realised that it should struggle for the abolition of all the dictatorial laws and orders of the colonial authorities preventing the people of Cyprus, and particularly the working population, to acquire the right of assembly, organisation, speech, as well as the right to elect their local and communal authorities.


For the achievement of the above targets, the unity of the working class and generally of all the small trade unions had to be maintained. The unification of the Trade Unions had been achieved in November 1941, where a Trade Union Conference took place and a Pancyprian Trade Union Committee was elected. This Committee was an administrative body, which united all the trade unions that participated in the Conference.


The Pancyprian Trade Union Committee (PSE) began to submit a series of claims, such as the 8-hour work, wage increases, improvement of the conditions of work, social security, cost of living allowance etc.


The Pancyprian Trade Union Committee leads the trade union struggles of the Cypriot workers until the beginning of 1946, when it was declared illegal by the British Colonial government on the accusation that it was advancing anti British propaganda. Its leaders were arrested and sentenced to imprisonment of duration of one to one and half years.





Succession of PSE

(Pancyprian Trade Union Committee)

by the Pancyprian Federation of Labour (PEO)


In January 1946, the remaining Trade Union leaders of PSE, in replacement of the unlawful PSE, have established the Pancyprian Federaration of Labour (PEO). PEO continued the work of PSE, leading the Cyprus trade union movement and becoming the inspirer of its struggles. Thus, in 1948 PEO leads the most hard struggles of the Cypriot working class for the official recognition of the Trade Unions, the increase of wages, the 44 hours weekly work, the improvement of conditions of work and other rights. The year 1948 is considered as a corner stone in the history of the Cyprus labour movement, because it has succeeded in establishing the respect of the labour movement and has also won its recognition even from the employers.


At this point it is worthwhile to mention that in 1944, the first non class labour-oriented trade unions make their appearance, in contrast with PEO which had been established in November, 1941. The «new» Trade Unions, under the guidance of the then leadership of SEK, followed an anti-strike policy serving the interests of the employers who, in their turn, were the supporters of SEK.


From 1946, on the initiative of PEO, the struggle for social security starts. In 1948 the first Trade union Social Security Fund, as well as the first Trade Union Medical Centre, were established. The wages, under the continuous pressure of PEO, were improved, the hours of work were reduced and the working conditions, as well as the standard of living, gradually were upgraded.


The Cyprus Trade Union Movement after

the Independence


After the Cyprus independence, the Cyprus Trade Union movement appears to be more organised and massive.


The white and blue collar labour force increases spectacularly due to the development of the industry, commerce and services. Apart form PEO and SEK, many other Trade Unions and occupational, organisations are activated, such as PASYDY, POED, OELMEK, OLTEK, ETYK, POAS, DEOK and others.


PEO continues to remain the leader of the Cyprus Trade Union movement being the most organised, massive and labour oriented Trade Union. On its own initiative, which started well prior to the Independence of Cyprus, PEO managed to succeed in its efforts to unite the workers in all the working places. This unity became the principal cause in succeeding to establish unity action among the leadership or PEO and SEK and among all the above occupational organisations. Under this spirit of unity action, PEO and SEK summit jointly claims and undertake, with other trade unions, common struggles. This unitary policy makes the position of the Trade Union movement stronger to stand opposite the employers, forcing them to modify their stand and satisfy, up to a certain extent, the workers’ demands.


With the constant, sensible and vigorous labour policy of PEO, a new era of improvements in the conditions and terms of employment has been initiated.


Indicative of the improving situation is the enactment of various laws regulating and safeguarding social rights of the workers and protecting their safety and health.


It is worth  quoting the introduction and implementation of the State Social Security Scheme, the Termination of Employment Law, the Holidays with Pay Law and other important pieces of labour legislation.


Unfortunately these auspicious prospects of success vanished due to the immense devastation created by the coup d’ etat and the Turkish invasion in Cyprus.


Conditions Immediately after the

Turkish Invasion to Cyprus


The size of the refugee problem and the devastation created by the Turkish invasion were immense. Driven from their homes and stripped of all their possessions, the refugees streamed into the Government-controlled area, seeking refuge in fields, derelict houses, schools or unfinished buildings. The social upheaval was indeed enormous.


The displacement of such a large number of people and the seizure of their property and the country’s assets inevitably shattered the economy. The towns of Famagusta, Morphou and Kyrenia and 197 villages (all making a vital contribution to the economy) were captured by the invading forces.


Moreover, the area under occupation was the most productive and developed part of Cyprus, accounting for about 70% of the economic potential.

This area – by far the most fertile-produced the bulk of the country’s agricultural production before the invasion. It is also rich in mineral and quarrying materials.


The tourist industry was heavily concentrated in this area with more than 65% of tourist accommodation capacity and 87% of the new capacity under construction, while a considerable part of industrial output was produced in the occupied areas. The loss of Famagusta port, which handled 83% of general cargo, and the closure of Nicosia International Airport in the buffer zone were additional blows. Furthermore, the lack of natural resources and the scarcity of water in the Government-controlled area hampered economic recovery.


One of the most serious problems created by the invasion was unemployment. Following a decade of continuous full employment conditions, the estimated number of unemployed (registered and unregistered) at the end of 1974 was 51.600 representing 24,5% of the economically active population. All these people were suddenly out of work and had to depend on the State for their means of subsistence at a time when State revenues declined sharply. By contrast in 1973 registered unemployment amounted to 1.2%.


Achievements in the Economic Sphere


In the economic sphere Cyprus has been able, with well-coordinated and collective action to overcome the destabilising effects of the Turkish invasion.


The Success was assisted by a number of favourable exogenous factors such as the booming Arab markets, favourable weather and good international market prices for some of the major Cypriot agricultural products. Foreign aid provided some of the impetus that lifted the economy. An additional element has been the availability of credit facilities, which helped bridge the financing gap. The tragic events in Lebanon have also been a factor in lifting the economy in a number of ways.


Internally the continued reliance on the concept and the machinery of indicative planning, the aggressive and expansionary fiscal and monetary policies, the acceptance by Trade Unions of a substantial cut on wage levels, the entrepreneurial ability, which exploited the export opportunities that came along, the diligence, perseverance, self sacrifice and hard work of the people provided the foundations for recovery. The willingness to undertake large investments was also a contributory factor. In addition the policy to encourage the temporary employment of Cypriots abroad helped reduce the unemployment and provided valuable foreign exchange.


The success in the economic fields is attested by the high rate of real growth, which over the period 1975-84 averaged about 8% per annum. This growth was led by exports of both goods and services, which grew on average and at current prices by 19% and 22% respectively. To achieve he above the country invested regularly more than 30% of its Gross Domestic Product in order to replace lost productive capacity, social and economic infrastructure as well as to provide the necessary additional capacity. Infrastructural projects implemented in this period include two new airports, a number of dams, the first major motorway, an earth satellite station, underwater international telecommunication cables, new industrial estates, major expansion of ports, and a major extension of the road network in the free part of Cyprus.


Attainment of Pre-Invasion levels of

Labour Achievements


In 1978-1979, when the Cyprus economy attained its pre-invasion levels of development, PEO, together with the remaining trade union movement, comes back to the trade union struggles and manages, by 1980-1981, to succeed and secure increases in the wages and the reintroduction as from 1978 of the cost of living allowance.


From 1980 and onwards the energetic activities, the sensible and responsible policy of PEO as well as its continuous and full participation in all the Government labour and social policy-making bodies have produced satisfactory beneficial results for the working population.










































PEO is the Coordinating Federation of its eight affiliated trade Unions. At the same time PEO participates in the various Tripartite Committees and bodies established by the Government.


PEO also operates the following specialised Departments:


(a)              Research and Studies Department

(b)             Educational Department

(c)              Womens’ Department

(d)              Pensioners’ Department

(e)              Youth Department

(f)              International Department


Detailed information concerning these Departments can be found at the following web address:


The highest decision and policy making body of PEO is the Pancyprian Congress. It  convenes, every four years. Participants at this Congress are the elected representatives of the eight Trade Unions of PEO. The Pancyprian Congress elects the General Council (100 persons). Then the General Council elects the General Secretary, a Deputy General treasurer, the Executive Council (23 persons), the Executive Bureau (7 persons) as well as the officials in charge of the Department of Research, Education, International Relations Department, Womens’ Department and Youth Department.


The eight Trade Unions of PEO are autonomous and elect their General Secretaries and Bodies at separate Pancyprian Conferences.


District Labour Councils


The District Labour Council represents PEO at the District level. The Heads of the District Councils are the following:


-         Nicosia – Kyrenia District

-         Limassol District

-         Paphos District

-         Larnaca District

-         Famagusta District


Membership Fees


PEO operates a check-off system at the rate of 1% on gross earnings.



The eight Federations of PEO represent workers from all sectors of the economy in every District and they are autonomous. However, they are represented at all levels of PEO, and participating in all PEO activities.
























AS AT 2003

1.   Cyprus Building, Wood, Mine and General

      Workers Trade Union


2.  Cyprus, Industrial, Commercial, Press-Printing

     Clothing and Footwear Trade Union



3. Cyprus Trade Union for Employees in Services


4.  Cyprus Agricultural, Forestry, Transport, Port,

     Seamen and Allied Occupations Trade Union


5.   Cyprus Hotels and Catering Establishment

      Employees Trade Union


6. Cyprus Metal Eorkers, Mechanics and

   Electricians Trade Union


7.  Pancyprian Trade Union of Government, Military

     And Social Institutions Servants


8. Semigovernment, Municipal and Local Authority

    Workers and Employees Trade Union






In addition to the eight Trade Unions affiliated with PEO, we also have in the Federation the Union of the Cypriot Pensioners (E.KY.SY) with a total number of membership for 2004, 12881 members. Taking into consideration the total number of the organised labour force, we may conclude that the organisational level of the working class of Cyprus is very satisfactory and it can favourably be compared with the organisational level of the working class of many capitalistic countries.


The high level of organisation observed in Cyprus, significantly contributed to the development and stability of the unity of the working class and its organisations.


Although the organisation of the working class in Cyprus is rated at high levels, PEO believes that still there are margins and possibilities for increasing this level and that the role, the duties and the commitments of the trade Union Movement on this aspect have not yet been accomplished.


On the contrary, there are thousands of unorganised employees and thousands of young persons joining the production process every year.


PEO believes that the working class with its high level of organisation, managed to improve considerably the conditions of work and its standard of living. This, however, does not mean that the problems of the working class have been solved. Instead, the working class has the duty and responsibility to safeguard its achievements. The dangers threatening these achievements are always visible. During the recent years PEO has given hard struggles for the protection of A.T.A. (Automatic Cost of Living Allowance Review). The issue of A.T.A. is still pending, because O.E.V. (Employers & Industrialists Organisation) has come back with a more vigorous counter-attack. At the same time the working class has the duty for the extension of its economic and social achievements so that its standard of living is continuously and steadily improved on the basis of the wages’ increases principle: «substantially higher rates of wage increases than the productivity rate».


As it is well known, PEO is the oldest and the most massive Trade Union in Cyprus. It is the only Trade Union, which has to its credit the most difficult struggles ever carried out by the working class of Cyprus. For all the labour achievements of the working class, PEO has played a leading and decisive role. Furthermore, there is no other Trade Union in Cyprus except PEO, which offered such significant services for the protection of the general interests of the working class.


The above ascertainment is also valid for the organisational level of the working class. If the struggles of PEO, which started five decades ago, were absent, and if within PEO there was no systematic planning and united effort, the organisational structure of the Cyprus working class would have not reached the existing enviable levels.
















Social Insurance Scheme



The first Social Insurance Scheme in Cyprus was introduced in January 1957. It covered compulsorily the employed persons, with the exception of certain categories of agricultural workers. The self-employed persons and those workers excepted from compulsory insurance were given the right to be insured voluntarily.


In October 1964, substantial changes were effected to the 1957 Scheme, as regards both its personal and material scope. Thus, compulsory insurance was extended to every person gainfully occupied in Cyprus including the self-employed, while the material scope expanded to include maternity allowance and benefits for industrial accidents and occupational diseases.


In January 1973 invalidity pension was introduced for persons permanently incapable of work irrespective of cause, sickness benefit was extended to self-employed and unemployment and sickness  benefits to married women.


Along with the above improvements, benefit rates were increased and by July 1974, their level was by 292% higher than in 1957.


The invasion of Cyprus by Turkey in July 1974 and the occupation of 40% of the island’s territory by the Turkish army, not only frustrated any further  improvements to the Scheme, but made necessary certain restrictive measures for  safeguarding the Scheme against the risk of bankruptcy. Such measures included the reduction of pension rates and the suspension of the rights to unemployment and certain other benefits. The July 1974 levels were restored in 1977. Thereafter, the rates of benefits were increased in 1978, 1979 and 1980 and a new benefit was introduced, the missing persons’ allowance, for the families of persons missing as a result of the Turkish invasion.

The current Social Insurance Scheme


The current Social Insurance Scheme, which was put into operation on 6.10.1980, has incorporated the previous flat-rate scheme in a modified structure and in addition provides supplementary earnings-related benefits. Thus the Scheme is divided into two parts: the basic part, corresponding to the repealed flat-rate scheme, and the earnings-related part.


A brief description of the Scheme as it stands now with the improvements effected to it since its introduction is given below.



Compulsory Insurance


The Scheme covers compulsorily every person gainfully occupied in Cyprus, either as an employed person or as a self-employed person.


Employed persons: Employed persons are those working for an employer under an employer-employee relationship and include employees of the Government and apprentices.


Self-employed persons: Self employed persons are those who are gainfully occupied in Cyprus otherwise than as employed persons, that is persons working on their own account.





Employed persons: Liability for the payment of contributions in respect of any employed person arises when he receives remuneration from his employer of not less than C£1 in a contribution week or not less than C£4 in the calendar month if he is a salaried employee.


Self-employed persons: A Self-employed person is liable to pay contributions for each contribution week in which he has worked as a self-employed person.


Persons with mixed employment. A person who works concurrently or successively as an employed person and as a self-employed person in the same contribution week is liable to pay contributions for both employments. At the end of each contribution year any contributions paid by the insured person for his self-employment in excess of the ceiling of insurable earnings are refunded to him.


Rate of contribution

The rate of contribution for employed persons is 12,6% of their «insurable earnings»  shared equally between the employer and the employee.


The rate of contribution of self-employed persons is 11,6% of the «insurable income» of the person concerned.


State’s Contribution: The State’s contribution for employed persons and self-employed is 4%.



Kinds of benefits


The Scheme provides the following benefits:


(a)              Marriage grant

(b)             Maternity grant

(c)              Funeral grant

(d)              Maternity allowance

(e)              Sickness benefit

(f)              Unemployment benefit

(g)              Invalidity pension

(h)              Old age pension

(i)                Widow’s pension

(j)               Orphan’s benefit

(k)              Missing person’s allowance

(l)                Employment injury benefit, which includes-

(i)   Temporary incapacity (injury benefit);

(ii) Disablement benefit and

(iii)                       Death benefit


Employed persons are entitled to all the above benefits. Self-employed are not entitled to unemployment benefit and benefits for employment injuries.


All the benefits mentioned above are paid to the insured persons or to their dependents provided certain contribution conditions are satisfied.


Benefit Structure


All periodical benefits, that is benefits excluding grants, are composed of

(i) the basic benefit and (ii) the supplementary benefit.


Basic benefit: The basic benefit, which includes increases for dependents, is related to the insurable earnings of the insured person concerned in the «lower band».


Supplementary benefit: the supplementary benefit is related to the insurable earnings of the person concerned in the «upper band». Íï increases for dependents are payable on the supplementary benefit.


Annual holiday with pay


Prior the introductrion, in 1967, of the Annual Holidays with Pay legislation, PEO played a leading part in the establishment and operation of Trade Union Holiday Funds. These funds were subsidised by the employers’ contributions and were operated by the Trade Unions for the benefit of their members. These arrangements lasted until the enactment of the above Law. For the final introduction of this Law PEO and the remaining Trade Union movement struggled very hard.











The purpose of this Law is:


-         to secure entitlement of annual paid holiday to employed persons who did not enjoy such a benefit through the system of collective negotiations, which is the basic mean for fixing the conditions of employment for the employed persons.

-         To provide the means for a better utilisation by the employed persons of their annual holiday, particularly by the low wage earners.


As a result of Cyprus accession to the E.U. the Parliament adopted the Directive on the Organization of Working Time. According to the Directive every employee is entitled to Annual Holiday with Pay for at least four weeks.


Employers are obliged to pay contributions into the Central Holiday Fund established under the above Law, unless they have been granted exception from that obligation. Employees for whom contributions are paid receive that annual leave payment from the Fund.


On the basis of the existing arrangements the employees and their dependents are entitled to make use of the provisions of the special scheme for the subsidization of the holidays of employed persons at mountain and seaside hotels during the summer period.


Since 1980 rest houses operated by Trade Unions, have been subsidized by the fund, thus giving the chance for a wider coverage and at the same time encouraging the Trade Unions to extend and improve their rest house facilities for the benefit of their members.


PEO has, since 1993, established and operates its own modern rest houses at Pervolia, Larnaca and since 2004 the rest houses at Pelendri, Limassol.


Termination of Employment


Redundancy Payments


The Termination of Employment Law, which was enacted in February 1968, protects all employed persons against arbitrary dismissals and redundancy and provides for a minimum period of notice in cases of termination of employment.


An employee who becomes redundant is entitled to compensation from the Redundancy Fund. The amount of redundancy payment depends on the duration of employment and the earnings of the redundant employee and is calculated as follows:




Up to 4 years’ service

2 weeks’ wages for every year of service

 5 -10 years of service

2 weeks’ wages for every year of service

11-15 years of service

3 weeks’ wages for every year of service

16-20 years of service

3.5 weeks’ wages for every year of service

21-25 years of service

4 weeks’ wages for every year of service


The compensation for arbitrary dismissal is paid by the employer to the extent that it does not exceed the annual salary of the employed person. If the compensation is higher than the difference is paid from the Redundancy Fund. The total compensation cannot be more than the salary of two years.


The minimum period of notice that an employer shall give to an employee is as follows:




26-52 weeks

1 week

53 – 104 weeks

2 weeks

104-156 weeks

4 weeks

157-208 weeks

5 weeks

over 208 weeks

6 weeks


The right of the employee to longer period of notice is not affected if he is so entitled by custom, law, collective agreement, contract or otherwise.


The minimum period of notice that an employee shall give to his employer is as follows:





26 – 51 weeks

1 week

52 – 259 weeks

2 weeks

260 and above

3 weeks


The Redundancy Fund is wholly financed by contributions from employers. The current rate of the employer’s contribution is, as from 1/3/1996, 1.2% of the employee’s earnings.


Provident Funds


The Provident Funds Law came into operation on 1/6/1982.The Law provides for approval and registration of every provident fund before it is put into operation and ensures the good management of Provident Funds.


The Provident Funds constitute a complement to the retirement and other benefits which the employed persons are entitled from the State Social Insurance Scheme. The provident fund benefits are secured through the collective agreements concluded between the workers’ and the employers’ organisations.


The Provident Funds are financed by contributions paid by the employed persons and the employers. A diversity is observed in the rate of employee-employer contribution into the Provident Funds operated in the various economic activities.


Thus, the joint employee-employer contribution ranges from 5% to 6% on the total earnings.


All Provident Funds operate on the basis of the provisions of their constitution and they are managed by a Committee which is obliged to keep individual accounts for each member showing the contributions collected from the member and the employer as well as the interest and other amounts credited to the member.


The benefits payable out of the Provident Funds to the members or to their legal heirs are provided in their constitutions and they are confined to the following contingencies:


-         retirement

-         permanent incapacity

-         death

-         termination of employment

-         dissolution of the Fund


The reserves of the Provident Funds are invested by their Management Committees in accordance with principles and general guidelines issued from time to time by the Minister of Finance.


Social Pension


The Social Pension Law came into operation on 1st May, 1995. Its main objective is to provide pension to all citizens who are not entitled to other pension or other similar payment from other source. The cost of Social Pension is borne by the general taxation.


Social Pension is paid to a person who:


(a)              has completed the age of 65,

(b)             with the completion of this age or afterwards satisfies the conditions of residence, and

(c)              is not entitled to other pension or other similar payment from other source.


The conditions of residence for the payment of social pension are:


(a)              legal residence in Cyprus for a total period of at least 20 years from the date the claimant has completed the age of 40 years, or

(b)             legal residence in Cyprus for a total period of 35 years from the date the claimant has completed the age of 18 years.


For the purpose of calculation of the residence period, any period of absence from Cyprus for less than two months in any calendar year will be considered as period of residence in Cyprus.


The rate of the social pension is equal to the rate of the minimum social insurance pension. In December of every year a 13th pension is paid, which is equal to the 1/12 of the total amount of pension paid during the year. The rate of Social pension is reviewed in the same manner as social insurance pension.


Family Allowances-Child benefit


The First Law for the payment of child benefit came into operation of 1st January, 1988.


The purpose of the Law is to enhance the income of large families.


The amount of child benefit is non-taxable and the cost for the payment of this benefit is borne by the general taxation.


In 2002 a new law was adopted which provides child benefit to each family with 1 or more children. The level of child benefit is as follows:


Child Allowance


Number of children in the  family




Additional annual

Allowance for families with income up to £9000 per year


Additional annual allowance for families with income


 per year


1 Child




2 children




3 children




4 children and up

600 per child

200 per child

100 per child


Child benefit is paid to families with 4 or more dependent children.






A child is dependent if:

-         under 15,

-         between 15-18 and unmarried,

-         between 18-25 and in military service,

-         between 18-25 if male and attending full time education

-         between 18-23 if female and attending full-time education

-         disabled irrespective of age


Benefits are adjusted in January each year according to changes in the cost of living index.


Hours of work


The hours of work in all the activities of the private sector are fixed by a general collective agreement concluded between the Trade Union Organizations and the Employers Organization.


The general collective agreement, which was concluded in 1993, provides that the 40-hour weekly work will be reduced to 38 hours as follows:


1/10/93:39.30 hours

1/01/95:39         «

1/10/96:38.30    «



For the protection of the weaker groups (shop assistants) the legislation provides that as from 20/7/1990, a shop assistant shall not be employed for more than 8 hours per day or for a total period not exceeding 42  hours per week. A shop assistant may, provided he agrees to do so, work overtime during a week for a maximum period of 8 hours and be compensated for the overtime work at the rate of 1:2 for Sundays and 1:1 ½ for the other days.


In the public and semi public sectors, the weekly working hours are not uniform throughout the year. There is a seasonal differentiation in the weekly number of working hours. Thus, during the «winter» period (September to June) the total weekly hours are 38, whilst in the «summer» period (July to August) the working hours are fixed to 35 per week.


The industrial workers employed by the Government and the semi governmental organisations have similar working hours as those prevailing in the private sector.


Minimum wage


While collective agreements provide for fairly comprehensive minimum wage protection, this system is backed up by an ancillary mechanism enabling statutory minima to be established in selected occupations. The Minimum Wage Law 1941, enacted when Cyprus was a British colony, authorises the Ministry of Labour to determine minimum wage levels for any occupation if it is convinced that the wages applying to that category of employees are unacceptably low. The latest minimum wage order covers four groups of workers, these being shop assistants, clerks, assistant nurses and nursery assistants. The Ministry determines statutory minima following consultations with the tripartite Labour Advisory Board. Statutory minima are updated annually with adjustments linked to the rate of inflation and the general level of wage increases.


In 2005 the minimum wages is £362 and after six months employment £385.


Medical schemes of PEO


As from 1948,PEO has established, and since then operates on an island wide basis, medical funds which offer health care to their members and their dependants.


The beneficiaries are entitled to free medical examinations at the primary health care level and specialists out-patients health care.


For the laboratory examinations, pharmaceuticals, eye-glasses and for the supply of other devices, the Funds offer to their members partial compensation (subsidy) which is equal to about 70% of the total cost.


For surgical operations, the medical funds have agreed special reduced prices with accredited surgeons and clinics for their members and their dependants.


The Medical Funds are, as a rule, financed by an equal employer-employee flat-rate contribution. The current rate of the weekly contribution is £0.70c by either side.


Public holidays


In the private sector the number of public holidays are fixed by collective agreements concluded between the employers and the trade unions of the various branches of economic activity. The annual number of public holidays range from 14-17.


The Industrial workers employed by the government and semi-governmental organisations are entitled to 15 public holidays.




In the private sector the gratuities are provided in the collective agreements concluded between the employers and the trade unions. The gratuities are not uniform in all the branches of economic activity.


The gratuities are generally paid by the employers to the employees in the form of 13th and 14th salary at the end of each year.


The same practice applies also for the employees of the Government and semi-governmental sectors.


Welfare Fund


The creation of Trade Union of Branch Welfare Funds was a target set very strenuously by our movement in recent years.


This target is placed within the framework of our policy and tactics for the improvement of the standard of livening of the working people.


Today nearly all the Trade Unions, in one or the other way, operate welfare funds.


The operation of welfare funds as well as their establishment through the provisions of the Collective Agreements gives a perspective to the institution and at the same time we feel obliged to look after the welfare of our members in the wider meaning of the term.


Within this framework the welfare funds have put into practice their target and carry out various activities, such as:


-Renting of apartments which are allotted to the members at low prices.

-Organisation of excursions abroad.

     -Organisation of exchange programmes with other foreign Trade Unions.


The future activities of the welfare funds include the following targets:


1.      Organisation and subsidization of entertainment performances (theatre, music etc).

2.     Awards to students who have excellent school record.

3.     Organisation of competitions (with prizes) on issues related to the activities of PEO

4.     Children camping or other forms of offerings to the Trade Union members.


The policy of PEO in connection with the quality of the workers’ life


The firm policy of PEO is the continued improvement of the standard of living of the working class. Furthermore, PEO is greatly concerned for an equitable distribution and redistribution of the national income taking into account the capabilities of the Cyprus economy.


More accurately, the policy of PEO is based on three basic objectives:


The first objective is the continued increase of wages and salaries, the improvement of other fringe benefits and, generally, the conditions of work.


The second objective is the more equitable distribution of the national income. This is achieved by securing increases in wages and other fringe benefits, which should exceed the general average increase in productivity, and in such a level corresponding to the particular targets of PEO.


The third objective is the redistribution of the national income in favour of the working population, This is achieved with the improvement and extension of the social benefits, the equitable distribution of taxation and with the expansion and modernisation of the labour and social legislation.








































The importance of industrial relations is enormous for every country. However, particularly for Cyprus, with its small and open economy and with its political problem unresolved for the last 31 years, the industrial relations issue becomes more important.


Sound and normal industrial relations create the preconditions for progress and welfare for the whole population of Cyprus. At the same time they secure steady economic development without financial crises and regressions.


The present system of industrial relations has substantially been consolidated after the independence and the establishment of the Republic of Cyprus:


The Constitution of Cyprus secures in a very specific way:


-         the right to organize in a Trade Union (Article 27)

-         the right to a free negotiation of relevant issues (Article 26)

-         the right to strike (Article 27)


The Industrial Relations Code

The most important development in the area of industrial relations was the Basic Agreement signed in 1962 by the Trade Unions, the Employers’ Organization and the Government.


In the course of time experience has shown that there were some gaps in the Basic Agreement giving cause for misinterpretation and conflicts. These gaps have been completed with a mutually accepted agreement and the new version was incorporated in 1977 to the Industrial Relations Code.




The provisions of the Code recognize to the employees the right to organize themselves in the Trade Union of their choice and at the same time they recognize that “the free collective negotiations constitute the basic way determining the conditions of employment and remuneration of the employees. For this reason both sides undertake to:-


-         encourage collective negotiations and common meetings,

-         negotiate in a spirit of good faith and mutual understanding,

-         observe faithfully the collective agreements emanating from collective negotiations”


The Cyprus Trade Union Movement by signing the Code has also undertaken certain obligations. For example, when they have to submit demands they are obliged to submit same in writing. They must give to the employers sufficient time enabling them to study their demands. The Trade Union movement goes on strike after all the stages of negotiation and consultation are exhausted and after a notice is given.


The voluntary acceptance of this practice and of these obligations is indicative of the fact that the Cyprus Trade Union Movement has moved from the spontaneity stage and consolidated itself as a strong and disciplined movement.


Reviewing the twenty-eight period of implementation of the Industrial Relations Code we can characterize it as successful.


The contribution of the Code in keeping the labour peace was of great importance.


Furthemore the contribution of the Code was important and decisive in promoting the social and economic development of the Republic.


Moreover, similar assessments have repeatedly been made by Mr. Moushouttas former Minister of Labour, adding that “the system has produced, under unfavourable circumstances, tangible results, has served the resultant of the various classes and groups of the population and has served and continues to serve the social mass”.


Inspite of the positive assessment of the contribution of the Code during the 28 years after its was signed, yet in the framework of developments and changes taking place in the area of work due to the harmonization with European Acquis, the Code needs change and modernization.


Certainly the employers, invoking the European Acqui, refer to flexibility, to new forms of work and elasticity. In fact efforts are being made to set aside the Code using personal contracts and other forms of employment.


The work environment in Cyprus after full accession


The accession of Cyprus to the European Union, naturally will have an impact on the formation of the work environment in Cyprus. This work environment will of course include all the elements of the tradition that has been created through the many years of class and social struggles in our country but it will certainly also be influenced by the political environment and the policies prevailing in the European Union.


The general philosophy through which PEO views the new situation cannot be anything other than its position that a new area of struggle is being formed in which the trade union movement should struggle for the protection and preservation of all the positive elements of our own social and labour vested rights, resist whatever pressure is being exerted for a surge backwards in time, deriving from the effort by the powerful economic circles to use policies and practises stemming from the guidelines and framework being shaped in the European Union and at the same time seek to exploit to the greatest possible degree whatever positive elements the European social and labour acquis communautaire can offer.


Europe today may be dominated by forces adhering to neo-liberal and conservative orientations who are interested in promoting the interests of the powerful economic circles, but it does not however divert our attention from the fact that Europe is at the same time a continent embodied with the most glorious traditions of social struggles and workers gains and which has the greatest democratic tradition. Looking at it in this way new opportunities for new gains are opening up, especially in areas where the movement of the working people in the countries of the European Union have attained more advanced social and labour rights.


It is clear that the most decisive factor in the preservation and upgrading of the position of the forces of labour in the new environment being created will be the capability of the trade union movement, by using the organisation and rallying together of the working people, to wage and win struggles which in any case are also continuously developing and in one way or the other affect the whole of the European Trade Union Movement itself.


Freedom of movement of working people


The freedom of movement of working people represents a new important element that will objectively constitute another factor after accession. Freedom of movement certainly will have its affects on our labour affairs given that working people from European countries, and especially from countries with a lower living standard than Cyprus, will be able to come and work freely in our country. This reality makes the need to secure, as a basic principle, that all the working people in our country irrespective of their nationality and their country of origin will work receiving the same terms of labour - as these are defined by the collective agreements and labour legislation - even more important. This is the only effective and secure way to impede unfair competition and the undermining of labour relations through the use by the employers of foreign workers as a cheap labour force. The movement of the working people, without departing from the principle of preserving and strengthening the system of free collective bargaining, should in this direction campaign in cooperation with the state for ways and procedures which will decisively enhance this effort and entrench the principle of the equal treatment as regards the terms and conditions of employment for all working people.


As far as the advent of immigrant workers from the non-EU countries is concerned, the custom of the controlled granting of work permits on the basis of strict criteria should continue. The basic criteria concerning the lack of employment opportunities of Cypriots and the implementation by the employers of labour legislation and collective agreements should continue.


At the same time a substantive and deep dialogue should be held for a totally new appraisal of the situation as it presents itself today, aiming at changes and improvements in the existing criteria which have been agreed, so that they can better correspond to the new conditions and take into account the experiences which have been accumulated in the last few years of the implementation of the agreement.


The protection of immigrant workers from exploitation and the combating of any effort to use them as a cheap labour force, unfairly and in competition to the provisions of the employment terms which are included in the collective agreements, is one of the main duties of PEO and the trade union movement in general.


The trade union movement also has the class duty to fight the phenomena of racism and xenophobia.


Deregulation of labour relations


The attempt to deregulate labour relations, by using the need to increase the competitiveness of companies and the reduction of labour costs as a pretext, represents the main element in the policies of the forces that have the main say in the decision-making centres of the EU and in the biggest and most economically powerful states of Europe.


In the name of the 'freedom' of the market and competitiveness one can observe the trend of also transforming work into a special commodity 'free' from 'commitments' which protect working people through collective agreements and contracts. Conventional labour relations and the stability and guarantee of a full-time job are under serious attack. The promotion of so-called flexible forms of employment, which are undermining the position of working people and the possibility of organisation and collective bargaining, constitute the main weapons in the hands of the employers and big capital. The same forces also make use of the exploitation of immigrants as a cheap labour force, the introduction of institutions such as the assignment of projects to foreign sources and lented work, which is taking on dimensions.


These policies of course are not compulsory for the member states nor do they constitute a part of European legislation. However, the framework of the guidelines being laid out regarding labour relations encourages and helps the employers in their implementation.


It is obvious that employers, also in Cypriot conditions, are striving systematically during the past few years, by also using the acquis communautaire as a pretext, to introduce and promote labour relations and forms of employment which seek to distance working people away from the protection of collective agreements.


Individual agreements and personal contracts represent an integral part of this effort.


On the other hand, they are promoting forms of employment, such as work by the hour without fixed working hours and terms of employment, seasonal employment, the replacement of regular job positions with work from foreign sources through the form of contract assignment. The phenomenon of lented work is also slowly but surely beginning to take root. It is a phenomenon which in some developed western countries has taken on quite a mass dimension.


The phenomenon of undeclared illegal employment, not only of immigrants but also of Cypriot workers, is also increasing.


The trade union movement must oppose and fight these tendencies by utilising collective contracts and the power of organisation as its main weapon. Our collective contracts as a rule exclude such forms of 'flexible' employment and protect working people from exploitation.


At the same time where and whatever legislation exists which can be used should be used in the direction of strengthening our efforts in tackling these phenomena.


Social dialogue and 'Social Dialogue'


Another important area, which is the subject of discussion within the framework of the European Union, is the role and content of social dialogue.


PEO considers the model of tripartite cooperation and negotiation in our country as successful and strives to preserve and strengthen it.


We should put up resistance to the policies which seek to use social dialogue as a replacement of the social struggles and which lend to this dialogue a content that is totally different to the traditions and genuine interests of the people of labour.


PEO considers that the energetic role of the state in the institutions of tripartite cooperation, as it is expressed both through the operation of the Labour Advisory Board and the other institutions of participation and dialogue but also through the Code of Industrial Relations, should not only be preserved but should also be strengthened. We do not underestimate the usefulness of direct dialogue both with the representatives of the employers as well as with the other social groups.


However, the role of the state, as a coordinating and intermediary agency in the social dialogue and as a mediator in the procedures of solving differences and the stipulation of collective contracts, has from our own experience proven to be particularly important.


The non-class logic concerning the 'community' of interests between working people and employers and the attempt made by the neo-liberal circles of the European Union to establish a model of dialogue whereby on the one side we have the 'social partners' (working people and employers) and on the other side we have the ruling powers represents a misleading and dangerous concept. Without excluding a convergence of goals on various matters between workers and employers, there is no doubt that due to the very nature of the social system the interests and aims of the forces of labour can in no way coincide with the interests and goals of businessmen.


It is within the framework of this approach that we are also looking at the question of the possible setting up of an Economic and Social Committee ESC in Cyprus.


PEO considers as valid the reservations that consider that such a committee cannot contribute substantially to the quality and content of social dialogue, given that other institutions already exist which cover this need. Without assessing the creation or not of the ESC as a matter of principle, PEO does not consider within the framework of the analysis made previously that the creation of such an institution is a matter of priority.


On the basis of the above-mentioned approaches, PEO will work in the new environment which is being formulated by outlining a concrete framework of priorities that will correspond and serve our basic goals and objectives and the policy with which our movement is viewing the new environment which is developing.


Policy priorities


Basic points of this priority framework are the following:


1. The preservation and strengthening of the organisational capability and mass trade union membership of Cypriot working people as the most decisive weapon in facing the challenges which we will certainly have to tackle.


In this direction PEO must promote and fight for the enhancement of the legislative and institutional regulations which protect and strengthen the right to organise working people in trade unions. PEO should particularly campaign for an even more strict protection from the Act on Trade Union Immunity but also for the institutionalisation of the campaigns through which the free expression and choice of working people to join a trade union is not only morally protected but also implemented in practise.


However, the preservation and strengthening of the class nature of the trade union movement and its militant character is of equal importance to the mass base of the organisation. This parameter is all the more coming to the fore bearing in mind that one of the central points in the neo-liberal attack is the effort to assimilate, integrate and in the end lay ineffectual and render powerless the role of the trade union movement as the defender of the interests of the working people.


2. The defense of the stability and employment security in work should constitute the main axis of the policy of the trade union movement. Regular work with regulated terms of employment is a social right which we should defend in a determined fashion.



3. The defense of the system of free collective negotiations and the role of the collective agreements as the basic means of formulating the terms and conditions of employment of working people. Collective agreements represented the greatest gain of the Cypriot trade union movement through the years and are the result of fierce and many years of struggle.


PEO will not lend its support to whatever effort that may be initiated for shifting the blame for the conclusion and implementation of collective agreements and labour rights to the sphere of legislative regulations and as a consequence to the judicial and legislative and executive bodies of the state and society. Such a development would constitute a step backwards in the system of labour relations in our country, it would tend to enhance the cultivation of illusions and complacency among working people, weaken the power and decisiveness of the trade union movement and shift the matter of tackling the terms of employment and the problems of working people at a level where the working man or woman will find it impossible to campaign quickly and resolutely for labour rights.


The experience of Cyprus but also of other countries proves that in all the cases where the working people have put all of their hopes on legislation for the implementation of dignified terms of employment, such as e.g. in shops, in restaurants and other leisure and entertainment centres etc, as a rule this legislation is rarely implemented and rarely protects them.


At the same time however, bearing also in mind the need to preserve a balance and in limiting as much as possible the possibility of the creation of a 'two - tier' workforce, we shall fight for the adoption of such legislative provisions that will satisfactory safeguard the minimum standards of social and labour protection, especially in relation to the socially vulnerable groups of the population and those categories of working people who are objectively to a large extent not protected by trade unions. These adjustments should also include benefits which are included in agreements and have taken on an almost universal character such as for example the Christmas bonus wage, the contributions to the Social Funds as well as the regulations which penalise the abusive retention of contributions of workers that are cut from their wages but are not remitted back to the various social funds.



4. Special attention should be given to the effort to fully implement in practise the new legislation concerning social and labour issues that have been introduced as a result of the harmonisation of Cypriot legislation with the European acquis communautaire. These legislations contain substantial positive elements which the trade union movement can utilise in a creative way to the benefit of working people and for the improvement in the quality of labour relations.


Special importance should be attached to the strengthening of the control mechanisms on behalf of the state so that they can be implemented but also assimilated and to use the new legislations by the trade union movement itself as part of its weaponry in our daily struggles.


5. Development of the relations and contacts with trade union organisations of member states of the European Union, aiming at the achievement of common approaches in the tackling of problems, the exchange of information and experiences and the strengthening of the solidarity and common action between working people.





















The Cost of Living Allowance (COLA)


The Cost of Living Allowance (COLA) is one of the most important successes of the Trade Union Movement in Cyprus. This credible achievement has not been given to the working people as a present from anybody but it was the outcome of hard and persistent struggles dated back to 1st March 1944. The leader in these struggles was the Pancyprian Trade Union Committee (PSE) and its successor, the Pancyprian Federation of Labour (PEO).


At the early stages, the cost of living allowance was awarded to the government workers, followed by the workers in the building industry in 1947. The struggle for the extension of the cost of living allowance to the whole of the private sector has been intensified in the decay of 1950. The average rate of inflation during the decay of 1950 was 5.2%, a rate that was very high for the levels of that time. Until 1960 it can be said that all the collective agreements concluded contained the provision of the cost of living allowance.


Until 1974 the cost of living allowance system was applied smoothly and was awarded to the working people every three months. After the coup d’ etat and the Turkish invasion, we had to face the problem of the survival of the people of Cyprus and that of our economy.  PEO, together with the other Trade Unions, has accepted the reduction in wages. It was an organised retreat and a contribution of the labour class for the restoration of our economy.


With the survival of our economy and its reactivation reaching pre-invasion levels, the necessity came up for the reintroduction of the cost of living allowance system. Thus, from 1.1.1978, the system started again its operation.


Until 1.1.1982, the cost of living allowance was calculated on the basis of scales . If the six monthly average of the cost of living index had an upward movement of one scale, then the workers were entitled to 3% COLA. If the movement was at the extent of two scales then the workers were entitled to 6% COLA etc.


The existing system of COLA calculation has been amended in a way that the total emoluments of the working persons at the end of a six months’ period be revised on the basis of the percentage increase or reduction of the average consumer’s price index during the six month period in comparison with the index of the immediate previous six months period.


In 1999, according to a decision taken by Mr. Clerides government, the increases of excise duties were deducted from the Consumer Price Index. Therefore since then, the increases were not calculated for purposes of COLA. PEO strongly opposed to this decision. As a result of this decision the employees since 1999 lost 10% of their basic salaries.
































The 78 year old British colonial rule left us an underdeveloped economy with a backward industrial and agricultural economy.


The uncertain conditions prevailing immediately after the declaration of independence, the mass immigration, the flight of capital abroad, unemployment, the lack of infrastructure in roads, ports, and communications demanded the creation of conditions for the acceleration of the rate of growth, for the development of the industrial and agricultural economy.


It was decided that the formulation and implementation of a strategy be incorporated within the framework of an “ indicative planning of the economy” whilst the work of shaping and implementing the five year Development Plans was handed to the Department of Planning.


Despite the predicaments, the five year plans began to be implemented. Within a relative short period of time the symptoms of economic stagnation had been overcome, unemployment fell to low levels, immigration was significantly limited whilst widespread infrastructure work programmes were carried out.


We can characteristically refer that the rate of growth between 1961-1973 rose to 6.8% and the average income per head from £179 in 1961 rose to £538 in 1973. Whilst the percentage of unemployment fell from 3% in 1961 to 1.2% in 1973!


The Labour Movement during this period fully supported this policy. It supported the encouragement and helped towards local industry and the agricultural economy.


This support, as the 14th Congress of PEO in 1963 underlined “ does not simply aim not only at the inflation of the profits of the big businessmen but also towards the general improvement in the living standard of the people”.


Hence, demands were initially put forth within the framework of the rate of productivity and later on much bigger demands were submitted so that the distribution of the national income could be improved.


We report that the average rate of increase in real wages during the period between 1961-1973 was 5.0% as compared to the 5.5% increase in productivity in the same period.


However during the last few years of this period (1969-1973) the corresponding rates were : real wages 8.4%, productivity 6.7%.


The consequences of the Turkish invasion


The coup d`etat and the Turkish invasion not only stopped the ascendant course of the economy but also completely broke up and disorganised it whilst the living standard of the population fell very sharply.


The main indexes relating to the tragic situation then were :


a) the drastic reduction in the national income. Around 70% of the wealth-producing resources of the country were to be found in the occupied territories of the Republic. More analytically the Turkish occupation troops had taken under their control :


- 47% of the cultivated land of the Cyprus Republic

- 36% of the flocks of goats and sheep

- 45% of the meat industry

- 31% of pigs

- 50% of the poultry

- 100% of the tobacco production

- 65% of the production of cereals

- 45% of industry

- the most profitable tourist regions of Famagusta and Kyrenia.


b) an unprecedented mass rise in unemployment. At the end of 1974 the number of unemployed working people was estimated at 50,000 whilst another number was underemployed. Moreover around 2,000 self-employed persons were economically inactive. Almost half of the economically active population of Cyprus was either fully unemployed or underemployed.


c) the external trade of Cyprus was seriously affected, causing adverse repercussions on the balance of payments and exchange reserves.


Public finances were also seriously damaged, whilst the obligations of the state in facing the refugee and other problems were enormously   expanded.


d) the economic disorganisation, the drastic reduction in the production of a number of consumer products, the difficulties which were created to the external trade of Cyprus contributed to the significant increase in prices which led to a further lowering of the living standard of the working people.


The tackling of the situation


In order to tackle this tragic situation it was considered necessary under the supervision of the state to elaborate a comprehensive economic policy of urgent activity which had the following goals:

1) the increase in production and of the national income, having as an immediate goal their restoration to the pre-coup levels.

2) the increase in employment having as a final objective the abolition of unemployment.

3) to restore the trade balance, to ensure an active balance of payments, the safeguarding of the consolidation of the exchange reserves of Cyprus and the balance in public finances.

4) the restriction of the inflationary pressures and the safeguarding of a greater stability of prices.


The development of the economy during these years progressed based on the two governmental Programmes of Extraordinary Activity (1975-1976 and 1977-1978).


The Cypriot economy not only survived and recovered but decisively overcame the crisis.


In 1978 the absolute size of the Gross National Product reached the levels that had been achieved before the coup and the invasion. The income per head had exceeded the pre-1974 levels.


The rate of inflation in 1978 fell to 7.45% in comparison to 16.2% in 1974. Unemployment fell to 2% of the economically active population.


In evaluating this policy the 18th Congress of PEO (1979) reported that:


“This economic progress which took place 4 years after the tragic events of 1974 represents an impressive achievement and is due to the patriotism and hard work of our people, the consistent, patriotic and responsible policy of the labour movement, the sacrifices of the working class but also due to the correct economic, budgetary and social policy which the state implemented. The progress achieved is also due to the positive role which the employer class played and to the aid which Cyprus received from abroad”.


We especially want to underline the responsible stand taken by the labour movement during those difficult times, which accepted the freezing and even the reduction in wages, the suspension of the provision of the cost of living allowance and the reduction of significant benefits of working people. This was an important contribution of the working class to the recovery of the economy.


The 1980-1990 decade


This decade was characterised by relatively high rates of growth. The average rate of increase in the Gross National Product in the decade 1980-1990 reached 6% at a time when ideal conditions were not prevailing internationally, especially at the beginning of the decade where the rates of growth were insignificant in the European Community as well as in the international economy.


This development had its price since the housing accommodation work projects for the refugees and generally the extensive development policy which was implemented increased the public deficit which ranged from 4% to 6% of the GDP.


The income per head rose from £1547 in 1980 to £4483 in 1990.


The big growth witnessed by the Services sector and especially the Tourist sector differentiated the share of these sectors in the GDP.


So whilst in 1980 we had :


Primary Sector: 14.5%

Secondary Sector: 30.1%

Tertiary Sector: 55.4%


In 1990 we had the following differentiation.


Primary Sector: 7.4%

Secondary Sector. 26.8%

Tertiary Sector: 65.8%


The fact that the great increase in the share of the Services sector created an unbalance in the growth since this sector, and especially the tourist sector, is vulnerable and a healthy economy cannot base its development on such a sector. This was clearly made evident in the years that followed due to the Gulf War, the events of Derynia and the war in Iraq.


Whilst in 1980 the inflation rate was 13.5% ( the highest level reached if we exclude 1974) due to the rise in the price of petrol internationally, it gradually fell and reached 4.5% in 1990. The existence and operation of the Prices Committee greatly contributed to the curtailment of inflation.


The percentage of unemployment, which had gone up to 3.7% (1986) of the economically active population, fell to 1.8% in 1990.


The 1990-2004 period


During this period we had a worsening in the growth rate. The average rate of this period was 4% whilst there were periods when the rate did not surpass 2% . These were :


- In 1991- 0.6%. The Gulf war influenced the sensitive Tourist sector, a fact that also had dramatic consequences on the rest of the sectors.


- In 1993- 0.7%. The international recession seriously affected the economy. (The rate of growth in the OECD member states was just 1.3% and in the EU 0.3%). The exporting industries and mainly the clothing and footware industries faced particular problems.


- In 1996: 1.9%. The events in Derynia and the continued recession in Europe affected the tourist sector.


- 2003: 1.9%. The war in Iraq combined with the international recession affected the Cypriot economy.


However we can generally say that the growth rates were also influenced by the fact that within the framework of the neo-liberal conservative policy of the previous government the development budgets were fulfilled at a very low percentage according to the international practice ( in the harmonisation effort to comply with the Maastricht criteria relating to the public deficit).


The rate of inflation at the beginning of the decade rose due to the introduction of VAT and went up to 6.5% in 1992.


In the years that followed we witnessed a gradual reduction whilst in 2000 inflation went up to 4.1% due to the international  increase in the price of petrol and due to the further increase in the VAT factor.


Unemployment recorded a significant increase from 1.8% in 1990 to 3.4% in 2000.


Public deficit gradually went down to 3% in 2000. But this was achieved to the detriment of the rate of growth, as we have stated previously.


The share of the Services sector continued its ascendant course ( 76.1%) whilst the share of the material production sector shrank even further.





1. Growth Rate


The growth rate is expected to reach 4% in 2005 in comparison to 3.7% in 2004.This increase was based on the service, construction, electricity, transport and communication services.


More concretely the wider area of the Service industry is expected to increase by 4.1%, representing once again the main instrument of growth of the economy.


The construction sector is continuing its positive course with more measured growth rates - around 4% in comparison to 5.2% in 2004.


The number of Tourists in 2005 is expected to increase by 7% in comparison to 2004, reaching the figure of 2.5 million people. The income from Tourism is expected to witness an increase of 3.8% exceeding the sum of £1 billion.


The growth rate in the Manufacturing industry will fluctuate around 1% given that the chronic structural problems this sector faces are continuing.


Despite the positive picture which various areas of economic activity present, the structural problems remain due to our great dependence on the Service industry and the fact that productivity is at 70% of the average rate of the E.U.


We ascertain that Cypriot Industry, which constituted the basis for the rapid development of our economy during the first decades after independence, continues to be in a particularly dramatic state. This branch of the economy has not managed to modernise and restructure itself and as a result it cannot cope with the competition of the European Union. The main problem is the low productivity that is observed in most of the enterprises and which is expressed through the low level of technology, organisation, management, occupational training etc.


The establishment of the Industrial Policy Council is a positive step. The Council has a lot of work to do. It should examine the state of all the manufacturing branches, prioritise the problems and proceed in putting forth concrete proposals for their solution.


We expect that this Council, in contrast to many others that are not operating satisfactorily, will be more determined and essential, so that we can achieve practical results which will help in the revival of the sector.


The rate of increase of productivity in 2005 is expected to increase by 2.2% in comparison to 1.4% in 2004. The average rate during the years 2003-2005 is 1.5%, a percentage that we take into consideration when we define our demands.


Since economic developments concerning the world and European economy in 2006 are expected to be more positive, it is predicted that Cyprus also will be favourably influenced and as a consequence record a slight acceleration in the rate of increase to 4.1%.


2. Rate of inflation


The rate of inflation in 2005 is expected to reach 2.5% in comparison to 2.3% in 2004. The increase is due mainly to the great increase in the price of petrol fuel on the international markets. During the first 8 months of 2005 the increase in the price of fuels in Cyprus fluctuated between

25% - 30%.


We note that structural inflation, to which the effects of a temporary nature are excluded, is estimated to fluctuate for the whole of 2005 around 2%, which is to say around the same rate of inflation as in the Euro zone.


For 2006 it is forecasted that the rate of inflation will fluctuate at around the same levels of 2005.






3. Unemployment


The percentage of unemployment is expected to climb to 3.8% of the economically active population, marking a slight increase in comparison to 2004 (3.6%). The increase in the employment of immigrant workers, and especially of those from European member states, in occupations with a low level of specialisation has led to an increase of unemployment. An increase in the unemployment of women has also been noted who perhaps are seeking part- time work due to their family duties.


Of course in estimating unemployment on the basis of European standards the percentage rises by about 1 unit/ percentage which on the one hand compares favourably with the average rate of the European Union but on the other hand it does not cease to mean that 14,000 people are unemployed.


4. Current Account Balance


This index illustrates the foreign exchange of a country. In 2005 it is expected to show a deficit of £408 million or 5.3% of the GNP, recording a slight reduction in comparison to 2004. Imports are expected to record a deceleration to 6.8% of the GNP in 2005 in comparison to a 14.1% increase in 2004.


Exports of goods are expected in 2005 to record a significant increase in the region of 20.3% due largely to the satisfactory growth of Britain, which continues to be our main market.


Exports of services, apart from tourism, will show a satisfactory increase of 7%.


As far as Tourism is concerned, as we have stated, income will expand by 3.8% as against the reduction of 3.1% observed in 2004.


It is anticipated that in 2005 the deficit of the Current Account Balance will be reduced to 5.0% of the GNP.




5. Public Finances


The public deficit is expected in 2005 to fall to 2.9% of the GNP as against 4.2% in 2004. The reduction is due mainly to the income derived from the tax amnesty that reached the sum of around £120 million, to the improvement in the tax-collecting capability of the state and to the cuts in the operational expenses of the Public Service.


It is anticipated that in 2006 the deficit will be reduced to 1.7% of the GNP and as a result the target that was set in the convergence programme will be achieved.


The public foreign debt is expected in 2005 to reach the sum of £5.3 billion in 2004. The deficit as a percentage accounts for 68.8% of the GNP as against 72.1% in 2004.




































   Rate of Growth (%)







Income per head

(in current prices £)













Unemployed (%)












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Rate of

Productivity %













Public Deficit

Millions of £












Public Deficit

( % of GDP)












Total Public Debt

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Public Deficit

(Intergovernmental excluded)

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% of GDP











Rate of growth and

Rate of Productivity (%)





Rate of

growth (%)

Rate of Productivity






































































































Percentage distribution by

Sector of Economic Activity

1972 – 2003



Primary Sector

Secondary Sector

Tertiary Sector
































































































Prior to the 1974 events the Greek trade Union movement had close contacts in Cyprus and abroad with the Turkish Trade Unions on labour matters and on matters of common interest. After the Turkish invasion to Cyprus in 1974 PEO continued its contacts on the basis of a correct line of reapproachment which was later adopted both by the remaining trade unions, the political parties and other organisations.


In addition to the above collective Trade Union efforts for the reapproachment of the Greek Cypriots and Turkish Cypriots, PEO maintains close relations with the progressive Turkish Trade Unions and extends to them assistance and facilities for the settlement of social security matters arising from time to time (claims for pensions etc.) as well as on issues which are directly connected with the private sector (Provident Funds etc.)


In 1995 the All Trade Union Forum was established with 18 member organizations from both communities. Three forums have taken place. The last one took place in November, 2004 immediately after the referendum.


The Trade Unions of Cyprus, PEO, SEK, PASYDY, ETYK, POED, OELMEK, DEOK, POPAS, OLTEK, ESK, TURK-SEN, DEV-IS, KTAMS, KTOS, KOOP-SEN, BES, KTOEOS, BASIN-SEN, representing the whole spectrum of the working class of Cyprus, on the conclusion of the «4th AL CYPRUS TRADE UNION FORUM», HELD IN Nicosia 10 and 11 November, 2004, unanimously declared:


  1. TheY reaffirm the previous unanimous declarations of the «ALL CYPRUS TRADE UINION FORUMS» of 18th January 1995, 19th March 1997 and 29th May 1999 in their full context, and reiterate their objective for a speedy and just solution of the Cyprus problem, based on a federal, democratic system, the high level agreements and the relevant resolutions of the United Nations Organization, with full respect of the human rights of all the citizens, and the establishment of a unitary economy without any form of discrimination.


  1. They welcome the partial lifting on the restrictions on movement which has helped to promote practical rapprochement of the two communities of Cyprus and has reaffirmed their determination for co-existence and cooperation in their common country.


  1. They repeat their demand to the International and European bodies for the uplifting of all restrictions in relation to free movement of people in order to achieve conditions of real free movement of people throughout Cyprus. They also declare that the current situation cannot be considered as a comprehensive solution to the Cyprus problem which must be speedily sought.


Such development will be also supportive towards the implementation of E.U. projects, enabling the members of the Permanent Committee, the members of the Working  Groups and the Management Group to elaborate on work already done or new programs which are envisaged regarding:-


  1. Unitary standards of wages and salaries
  2. Unified system of Industrial Relations
  3. Educational matters of training
  4. Unobstructed trade union activity
  5. Full implementation of the Acquis on Social and Labour Affairs


  1. They strongly believe that reunification of Cyprus will benefit both the Greek Cypriot and the Turkish Cypriot workers as well as the whole population of Cyprus.


  1. They call on all parties concerned in order to keep the negotiation process alive, aiming at reaching a solution based on the Anan Plan, in line with the European values and which should be meeting the worries and the concerns of the two communities.


  1. They express their belief that in view of the growing globalization of the world economy and the increasing inter-dependence of national economies, the accession of Cyprus to the European Union will benefit both the economy, the workers and the people of Cyprus as whole. In this respect they support a speedy solution to the Cyprus problem so that all Cypriots will benefit from the accession to the European Union.


  1. They reiterate their previous demands and stress the necessity to safeguard in the future Federal State, the following:-


    1. One type system of employment and labour relations
    2. A unitary system of Social Insurance
    3. Unified standards of wages and salaries
    4. Complete safeguarding of the right of freedom of movement, freedom of association and choice of employer in any part of Cyprus
    5. No discrimination whatsoever in respect of employment of emoluments, due to ethnic origin, religion, colour or sex.


  1. They underline the above objectives assume renewed significance as a result of the accession, and they consider them as necessary for full harmonization with the basic principles and practices applying in the European Union. The Implementation of these principles will also enable the Trade Unions of Cyprus to play their eventual role in integrated Europe.


  1. The Trade Unions reaffirm their authorization to the Working Group and Management Group, comprising representatives of PEO, SEK, PASYDY, TURKI-SEN, DEV-IS, KTAMS, to continue its work as outlined in the joint declaration.


  1. In the spirit of the above, the Trade Unions call on the political leaders of Cyprus, on international and regional Trade Unions, the United Nations the European Union and other International Organizations, as well as on all parties involved in the effort to facilitate a peaceful solution of the Cyprus problem, to work for the attainment of the above objectives.



  1. The Trade Unions of Cyprus express thanks and gratitude to the European and the International Trade Unions, to the European Commission and its representatives in Cyprus and all other supporters of their programs within the All Cyprus Trade Union Forum. The Trade Unions of Cyprus commit themselves to intensify their work, collectively and individually until they achieve the declared aims of the Forum. Every support given to this end is speeding up the whole process.


  1. They agree in continuing their cooperation in the framework of the All Cyprus Trade Union Forum and the international trade union movement in order to be able to achieve their common aims.


































More than a quarter of a century after its invasion by Turkish troops, Cyprus remains the only divided country in Europe and virtually the only divided country in Europe and in the world.


In 1983 the regime in the occupied areas unilaterally declared the independence with Turkey’s backing. This act earned the condemnation of the UN Security Council, the European Union, the Council of Europe, the Commonwealth and the Non-Aligned Movement among others. The declaration was considered legally invalid and today the so-called Turkish Republic of Northern Cyprus («TRNC») is recognised by no country other than Turkey on which it is entirely dependent.


The demographic structure of the occupied areas has been substantially changed by the illegal immigration of an estimated 115.000 mainland Turks to the northern part of Cyprus. The settlers, who now constitute the majority, have no affinity with the Turkish Cypriots and an alien way of life. They give their unconditional support to the separatist policies of Ankara and Turkey’s puppet regime in the occupied area which they prop up with their votes. The deterioration of the standard of living of the Turkish Cypriots coupled with widespread unemployment and general disaffection with the political situation prevailing in the occupied area, has forced many of them to leave the country. The Turkish Cypriots, today numbering about 88.000, now constitute only 11% of the population.


The island’s cultural heritage in the occupied north is gradually being obliterated by wanton damage to scores of churches, acts of vandalism and wholesale looting in an attempt to erase all trace of its Greek character.


Framework for a Solution


Since 1974 the United Nations have been actively involved in attempts to find a solution and the Secretary-General has volunteered to offer his good offices under a mission assigned to him by the Security Council. The European Union (EU) has also been involved in the search for a solution.


The basic elements of a solution as detailed in the UN resolutions are:


The removal of the occupying troops and Turkish settlers from Cyprus

The right of the refugees to return to their homes under conditions of safety.

The safeguarding of Cyprus’ sovereignty, independence and territorial integrity.

The establishment of a bizonal, bicommunal federation which will have a single sovereignty, international personality and citizenship.

The safeguarding of the human rights and fundamental freedoms of all Cypriots.

The exclusion of the island’s union in whole or in part with any other state or any form of partition or secession.


Despite these endeavours a solution has not been forthcoming. Several rounds of UN-led intercommunal talks between the leaders of the island’s two main communities have failed to achieve a negotiated settlement.


The latest effort to resolve the Cyprus problem came in the form of the UN Secretary-General’s peace plan of 11 November 2002 and four revised versions.


The plan envisages the reunification of Cyprus through its transformation into a common state made up of two «constituent states»-one Greek Cypriot and the other Turkish Cypriot-which would be virtually self-governing in most areas. The common state would have a single international legal personality and sovereignty and would speak and act with one voice internationally and in the European Union and fulfil its obligations as a European Union member-state. The two sides would be committed to respect democratic principles, individual human rights and fundamental freedoms. Territorial adjustment would be made, allowing some 85.000 refugees to return to their homes under the  Greek Cypriot administration.


On 24th April 2004 referenda were held on the «Annan Plan 5». Although the Greek Cypriot Community rejected it by a vote of 75,8% against 24,2% in favour, the Turkish Cypriot Community accepted it by a vote of 64,9% in favour and 35,1% against.


The views of PEO regarding the solution of the Cyprus problem can be codified as follows:


PEO regards that we find ourselves under an exceptionally important period for the future of Cyprus particularly after the rejection of the solution plan proposed by the U.N. General Secretary Mr. C. Annan and the accession of Cyprus to the European Union.


We appreciate that the overwhelming majority of the Greek Cypriots and the Turkish Cypriots continue to desire a quick solution based on a bizonal and bicommunal Federation-Having in mind the lawful and justifiable sensibilities of the people in the two communities, both our  political leadership and the international factor, mainly the U.N. Organization, ought to work towards the direction of developing a climate of good will and faith, meeting our worries and creating the preconditions so that we have resumption of negotiations leading to a mutually accepted solution the soonest possible.


As basis for the efforts of the solution remains the Annan Plan, which with the relevant and necessary changes can constitute the final settlement.






















Area and Population


The island’s total area is 9,251 square kilometres and its maximum width 100kms.


Cyprus’ population at the end of 2003 was 818.000 of which 81.6% (including Maronites, Armenians, Latins and others) belong to the Greek Cypriot community while 18.4% belong to the Turkish Cypriot community.


Prior to the 1974 Turkish invasion, which divided the island and separated its people, the two communities had lived intermingled for centuries in the same towns and villages under conditions of religious and cultural tolerance and in peaceful co-existence and co-operation.


The official languages are Greek and Turkish, while English is widely used in commerce and government. The main religion is Greek Christian Orthodox followed by Islam. Other religious groups include Maronites, Armenians, Catholics and Protestants.


Administrative Destricts


Cyprus is divided into six administrative districts. These are Nicosia, Famagusta, Limassol, Paphos, Larnaca and Kyrenia. The districts of Famagusta and Kyrenia are under Turkish occupation.


The island’s capital and administrative centre is Nicosia with a population of 177,000. After the fall of the Berlin Wall, Nicosia is the only divided capital of Europe. With the exception of the capital, all major towns are located on the coast.


Limassol, with a population of 136,500 is a holiday resort and combines modern industry with the largest seaport.


Larnaca, with a population of 65,000 is a holiday resort and has the second International Airport.


The towns of Famagusta and Kyrenia are under Turkish military occupation.




Cyprus has a mild Mediterranean climate. Hot, dry summers from mid-May to mid March are separated by short autumn and spring seasons.




Cyprus is an independent sovereign Republic with a presidential system of government. Under the 1960 Constitution the executive power is exercised by the President of the Republic elected for a five-year term of office, through a Council of Ministers appointed by him.


The legislative power of the Republic is exercised by the House of Representatives, consisting of eight members elected by universal suffrage for a five-year term. Fifty six (56) seats of the House are allocated to Greek Cypriots, elected by the Greek Cypriot Community of the island and twenty four (24) seats are allocated to the Turkish Cypriot Community. Following the withdrawal of the Turkish Cypriot members from all constitutional organs of the Republic of Cyprus in 1963 the Turkish Cypriot seats in the House are left vacant, Maronite, Armenian and Latin minorities also elect representatives.


The following policial parties are represented in the House of representatives:


1.      Progressive Party of Working People (AKEL)          20 seats

2.     Democratic Rally (DISY)                                        19 seats

3.     Dmocratic Party (DIKO)                                        9 seats

4.     The Social Party (EDEK)                                        4 seats

5.     United Democrats                                                    1  seat

6.     Green Party                                                              1  seat

7.     ADIK                                                                        1  seat

8.     New Horizon                                                              1  seat


The three religious groups, namely the Maronite, Armenian and the Latin Communities, are also represented in the House of representatives by one elected representative.


At the same time, the Turkish Cypriot Community is entitled by the 1960 Cypriot Constitution to be represented in Parliament by 24 members. This right has not been exercised by the Turkish Community since 1964.




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