Pub­lic pay­roll re­forms most ur­gent

E DII TO RII A L

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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