Our Take: Bank Workers Deserve a Share of Profits

The Power of Etyk and the Demands for Bank Profits

The union representing the best-paid employees in Cyprus, known as Etyk, has long been recognized for its aggressive approach to negotiations. This strategy has consistently benefited bank workers, ensuring even those with the lowest salaries receive generous compensation. Over the years, Etyk has built a reputation for pushing for more, often leading to favorable outcomes for its members.

One of the key figures behind this success was Loizos Hadjicostis, who led Etyk for many years. His tactics included threatening strike actions, which often forced bank bosses to concede to his demands. Because of this, Cypriot bank clerks have enjoyed some of the highest wages in the country. The fear that Hadjicostis instilled in bank chairmen was so profound that they even allowed him to influence promotions and appointments within their organizations.

Although Hadjicostis stepped down from his leadership role several years ago, he continues to play a significant role as the honorary president of the union. This is evident in recent communications issued by Etyk, which reflect the same assertive tone that characterized Hadjicostis's leadership style.

A New Demand: A Share of Bank Profits

A circular sent to Etyk members last week outlined the union’s stance on ongoing negotiations for the renewal of collective agreements. In an unusual move, the union is now demanding a portion of the banks’ profits. According to Etyk, while banks have reported total profits exceeding three billion euros over the past three years, they are refusing to offer a small percentage of these earnings to their staff as recognition for their contributions.

The union justified this demand using a socialist rationale. It argued that banks have made “super profits” while executives received substantial pay increases and “unreal bonuses.” Additionally, Etyk criticized the distribution of large dividends to shareholders, claiming that bank stock prices have risen significantly. Based on these points, the union concluded that it is logical for a small percentage—between 15 to 20 percent—of the profits to be allocated to employees.

However, Etyk did not provide any economic, legal, or political arguments to support its claim. Despite this, the union has a history of having its unreasonable demands met, raising questions about whether it should now push for banks to become more like socialist organizations, distributing profits among workers.

The Role of Profits in a Market Economy

In a market economy, profits are typically shared among company owners in the form of dividends. Bank employees, on the other hand, are compensated through generous monthly salaries and various benefits. They do not have a legitimate claim on a bank’s profits, as their primary role is to perform specific job functions rather than to share in the financial success of the institution.

Recent high interest rates have contributed to banks earning super profits, but there is no obligation for them to distribute any of these gains to their employees. For over a decade, bank shareholders were not paid dividends, and some saw their investments lose significant value, particularly after the banking crisis of 2013. During this time, bank depositors also faced losses, while thousands of private sector workers lost their jobs.

Notably, no bank employee suffered job losses during the 2013 crisis. They remained well-protected by both the state and their union. This raises concerns about Etyk’s current demand for a share of bank profits, especially since the employees involved face no business risks and enjoy full job security.

A Dangerous Precedent

Etyk’s latest demand is not only unreasonable but could set a dangerous precedent. If banks agree to this request, it may lead to further demands from the union, potentially transforming the relationship between employees and employers in the banking sector. The banks must resist this pressure, as accepting such a proposal could open the door to future claims that would undermine the stability of the industry.

This situation highlights the power of unions and the challenges they pose to traditional economic structures. While Etyk has historically succeeded in securing favorable terms for its members, the current demand for a share of profits represents a significant shift that could have far-reaching consequences.