All the wrong incentives
E DII TO RII A L
When the 2012-13 crisis broke, the catch-phrase so adored by politicians at the time was the “real economy”, saying it was the true source of national output and that it was also the biggest group to suffer, because this segment of the economy represented the private sector.
The least affected at the time were civil servants, public sector workers (teachers, police, state doctors and nurses, etc.) and bank employees as pay cuts were mild, if any.
Five years on and the private sector is still struggling to stand on its own feet, with the present so-called “business friendly” administration throwing incentives at the labour force, trying to revive work conditions within companies.
Unfortunately, many of these small and medium sized enterprises are still drowning under debt, unable to tap into low-cost lending, with many headed to closure. The (dis)incentives offered by the state are conditional to the employers meeting all sorts of strict conditions, which makes it harder for businesses to rid themselves of higher costs, to hire people and subsequently resume production.
The aid offered in at least four series so far were geared exclusively at young and unemployed graduates, with the government all proud that it has lowered the jobless levels. However, this is misleading as the tourist season and the short burst in construction has artificially lowered unemployment levels, while the number of long-term unemployed still remains high.
The state then came up with all sorts of magical tricks, saying that Cyprus would generate “thousands” of green jobs, linked to the clean energy projects, many of which have not yet materialised. Most of the time, these incentives are driven or even determined by trade unions, in order to satisfy their present and future membership, neglecting the needs of the “real economy”, ie. those that have ordinary hobs and are not in the public workforce. At the same time, the government was jumping in joy saying that it has been successful in renewing the labour agreement to re-introduce the cost of living allowance (ATA), perhaps the most archaic and counter-productive system in Cyprus.
Another package announced this week aims to aid the traditional print media sector, where once again, union demands have determined the conditions for newspapers to apply for grants, with many publishers not meeting all of the criteria at once. The biggest gaffe by the “press incentives” is that in order to be eligible for aid, newspapers must employ “qualified” journalists and they must be members of the single union of journalists, similar to the card-carrying days of the communist eastern bloc where you had to be a party member to enjoy benefits. The only good aspect of this package is the second half of the scheme that allows for a subsidy to be paid to the distribution companies to allow newspapers to reach small rural communities, where the average age of the readers is far higher than those in urban areas. This way, the rural population will have better access to traditional print media and one less reason to worry about when planning to leave or stay in their villages.
With just six months left to the next presidential elections, it is clear this government is continuing with its faulty programme to offer incentives for younger people (who do not vote) ignoring the rest of the people in the “real economy” who comprise the bulk of the long-term unemployed and who will vote, but will possibly cast their ballot against the present administration.