CIRCULAR
Permanent Agreement on the Cost-of-Living Adjustment (COLA)
The Cyprus Employers and Industrialists Federation (OEB) informs its members that a permanent agreement has been reached between the Social Partners regarding the payment of the Cost-of-Living Adjustment (COLA).
The permanent agreement was signed today, Thursday, November 13, 2025, in the presence of the President of the Republic, whose contribution to its achievement was catalytic.
The agreement is valid from January 1, 2026 and affects businesses and organizations where the Cost-of-Living Adjustment (COLA)system is applied in accordance with the terms of employment of their staff.
The new permanent agreement, the text of which is attached in full, provides for the gradual full restoration of the rate of payment of the Indexation Allowance from 66.7% to 100% of the increase in the Consumer Price Index, excluding consumption taxes (80% in January 2026, 90% in July 2026 and 100% from July 2027 onwards, in July of each year).
In addition, the Cost-of-Living Adjustment (COLA) is paid if the annual percentage change in the growth rate during the previous year is positive, while a ceiling of 4% increase in inflation in the previous year is set for the first time for the calculation of the annual maximum increase in the Indexation Allowance.
Finally, the Cost-of-Living Adjustment (COLA) is linked to the adjustment of the National Minimum Wage that is carried out every two years, through the incorporation of the amount corresponding to the Indexation Allowance of the previous two years in the Minimum Wage Decree.
For clarifications, you can contact the Department of Labor Relations & Social Policy of OEB, at 22-643000.
