Employers in Cyprus oppose mandatory wage indexation

In Cyprus, the idea of making automatic wage indexation (ATA) mandatory for all private sector employees is under discussion. This would mean that wages would automatically increase depending on the level of inflation.

Renowned lawyer Achilleas Emilianides prepared an opinion on this matter. He believes that such a law violates the Constitution of Cyprus. According to him, the state cannot force employers to include terms in employment contracts that the parties have not mutually agreed upon. The Constitution guarantees the freedom of contractual relations: employees and employers must decide themselves which clauses to include in the contract.

Employers, through the Cyprus Chamber of Commerce and Industry and the Employers’ Federation, supported this opinion and have already sent the document to the president. They warn that passing the law could lead to serious consequences.

What could be the consequences?

• Additional costs for companies, especially small and medium-sized businesses.
• Possible reduction in hiring or dismissal of employees to offset costs.
• Rising prices for goods and services due to increased business expenses.
• Shifting labor disputes from negotiations to courts, creating more conflicts and uncertainty.
• For employees — a chance for more stable income and protection against inflation, if the law is passed.

Employers emphasize that such issues should be resolved through dialogue and collective agreements, not by imposing uniform rules for everyone.