Public payroll reforms most urgent

E DII TO RII A L

Finance Minister Haris Georghiades will sit in during the first session of the House Finance Committee on Wednesday, basically to drive home the message of urgency that seven outstanding bills delayed by the previous parliament need to be urgently passed.

Most refer to necessary and long-overdue reforms, but the most important of all is the general overhaul of the state payroll and putting an end to its uncontrolled growth, year on year, that, combined with the banking sector meltdown, was equally the cause for the collapse of the economy.

The Finance Minister said that he wants to reiterate to the new MPs that despite Cyprus exiting the MoU with its international creditors (EU, ECB, IMF), it is still under review, as long as its has an outstanding loan to cover the bailout, conditional to reforms.

He has stated that the government payroll must become sustainable in the medium to long term. One way is to link pay rises to the annual rate of growth of the economy (GDP), which would apply to salary increases, seasonal or other pay increments and the automated cost of living allowance (CoLA), as well as to pensions.

The present administration has warned that if the state payroll were to increase at the same rate that existed up to 2012, it could leap to EUR 3.7 bln by the year 2020. At present, it is roughly at EUR 2 bln a year.

Unfortunately, trade unions, especially public sector labour groups, whose members have received their wages uninterruptedly and with menial deductions these past three years, refuse to acknowledge that we have passed and continue to suffer from an economic crisis. The only sacrifice they made was that the public payroll was frozen until the end of 2016, which means that reforms need to kick in before that. Thy also argue that with state revenues picking up again, albeit slightly, payrolls should also resume to the rising path.

Already, certain sectors have called for an exemption to the reforms or the freeze in pay rise, because some groups of professional such as doctors, police and the military have duties of “special nature”.

Perhaps, with the speeding up of the health sector reform and subsequent autonomy of state hospitals, as well as the reduction of the armed forces and the introduction of a leaner, professional army, will make these two sectors more sustainable.

Let’s hope that with the parliamentary elections of the way (yet, the municipal polls coming up in six months’ time), some MPs will see reason in passing the reforms.

Otherwise, we should not expect the Finance Minister to water down the reforms, simply to appease the concerns of the opposition voices.