STAFF at KEO went on indefinite strike earlier this week over the company’s plans to make 150 workers redundant, without paying them compensation over and above what was stipulated by law and collective agreements. The strike was in clear breach of the industrial relations code, which in Cyprus only has to be observed by the employers’ side. Unions comply with the code and the provisions of collective agreements only when it suits their purposes.
KEO may have done everything by the book, announcing that it would lay off staff as part of a restructuring plan in February and saying that the number would be about a hundred two months later, in early April. It explained that its annual turnover had been in decline for two consecutive years – falling by €14 million by the end of 2010 – while net losses were €3.7 million and €3.35 million in 2009 and 2010 respectively. Given these results, the company’s board was not only entitled to, but obliged to reduce its work-force of 572.
The unions, however, demanded additional compensation for the workers, over and above what they were entitled to by law. The company had offered two months’ wages as additional compensation, at a total cost of €700,000, as a goodwill gesture even though it had no legal obligation to offer this amount. But unions were demanding €5.2 million for the 150 workers that would be laid off, and because negotiations were deadlocked, the two sides went to the Labour Ministry for mediation. On Monday the ministry’s mediation service decided that KEO should pay €2.5 million in compensation and presented this as its mediation proposal.
If conclusive proof were required of the government’s blatant pro-union bias, it was provided by the ministry’s arbitrary mediation proposal which had no basis in the law or the collective agreements governing industrial relations at the company. So how did the bureaucrats arrive at this figure? There is no rational thinking other than that the ministry is on the side of the unions and makes a point of penalising businesses. It is scandalously irresponsible behaviour, which encourages the type of union arrogance and militancy that destroys businesses and cuts more jobs – a policy designed to increase rather than reduce unemployment.
Here was a company that did everything by the book – gave advance warning about the redundancies, justified them as the law dictated it should have done, paid workers everything they were entitled to including the notice stipulated by law and even offered an additional two months’ wages as compensation over and above what it was legally obliged to pay. And to reward KEO for doing this the labour ministry decreed a compensation of €2.5 million, totally out of the blue.
It goes without saying that the ministry has not said a word in public against the illegal strike called by KEO workers nor has it condemned the intimidation tactics employed by strikers outside the Limassol factory. Only after the Chief of Police was contacted did police arrive at the scene to allow management staff access to the workplace. Limassol police followed the government line and refused to offer protection to people who wanted to go to work.
If the government allowed rationality to influence its decision-making on industrial disputes it would have told unions to accept the additional €700,000 offered (it was withdrawn once the strike was called) by KEO. By expecting the company to come up with an additional €1.8 million, it is adding to the company’s losses for this year and worsening KEO’s already dire finances. To cover the extra, government-imposed, losses it might have to cut another 100 jobs next year, in order to survive. Is this the blinkered government’s objective?
The government needs to abandon the short-sighted and catastrophic, pro-union dogma, which will drive businesses into the ground and push unemployment skywards in the foreseeable future. It needs to understand that we are no longer in the class-war era and that in the most successful economies workers and employers are on the same side, working together for the good of their business.
This is how long-term jobs are created and protected, not by small-minded union bosses scoring points at the expense of businesses. But perhaps far-sightedness and a sense of responsibility is too much to expect from a labour ministry that is run by a former trade unionist, who can only see industrial relations as a zero sum game, that workers must always win, even if it means destroying the economy.
