Feb. 2 (Bloomberg) -- Workers on strike at Cyprus’s soft drink producer Lanitis Brothers Ltd, a unit of Greece’s Coca-Cola HBC, will continue their industrial action until Feb. 6, a union official said.
About 350 workers at the plant went on strike today after the company decided not to compensate them with a 1.7 percent wage increase for the loss of purchasing power suffered in the second half of 2011, Giorgos Kasouris, an official at SEK, one of the two major unions on the east Mediterranean island, said today on the phone.
Workers at KEAN Soft Drinks Ltd., who also went on strike today, will return to work tomorrow after the company agreed to raise their wages, he said.
Their decision to unilaterally freeze wages violates a “sacred institution, which is not negotiable in anyway”, said Sotiris Fellas, deputy secretary general at PEO, Cyprus’s left-wing trade union.
The euro area’s third-smallest economy saw its unemployment rate rise to 9.3 percent in December from 6.1 percent the year before, the second highest increase in the European Union after Greece, according to a statement on Eurostat’s website.
The soft drink producer’s decision followed a proposal by the Cypriot Employers and Industrialist Federation that a complete two-year wage freeze in the public sector should also apply in the private sector.
After unions threatened strike action in response, Sotiroula Charalambous, minister of labor and social insurance and former PEO union official, brokered a compromise that exempts loss making enterprises from an obligation to grant pay rises, Philios Zachariades, chairman of EIF said in a telephone interview yesterday.
Athanasios Orphanides, a member of the European Central Bank Governing Gouncil and governor of the Central Bank of Cyprus, said a year ago that the island nation, which was shut out of markets in May, must overhaul the wage compensation system to protect its creditworthiness. In 2009, one in two Cypriot workers benefited from the link between wages and inflation, according to a survey carried out by the central bank.
Standard & Poor’s cut Cyprus’s credit rating two steps to BB+ on Jan. 13. while Fitch Ratings downgraded the island one step to BBB- on Jan. 27. In November, Moody’s Investors Service downgraded Cyprus two stages to Baa3 and placed it on review for further downgrade.
In September 2010, Coca-Cola bottler Lanitis Brothers announced plans to close its Cypriot soft drink production facilities and import beverages to Cyprus in order to cut costs.
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