Paying off civil servants harms economy
E DII TO RII A L
Following on from the relative calm that avoided a storm in labour relations prior to the presidential elections, it is clear the pay-off by the Anastasiades administration was to reinstate civil servants’ pay to their pre-crisis levels, with the add-ons hitting us over the next few years.
Employer groups were reserved in only expressing “surprise” and “concern” this week, when they should have been outraged over the government giving in to the privileged demands of self-interest groups such as the unions representing 85,000 civil servants. Their votes obviously count more than ours after this turn of events.
This administration was re-elected on a platform of economic stability, making clear distance from the banking meltdown of 2012-2013 and quickly exiting the bailout programme imposed by the Troika of international lenders.
Paying the price of this ‘economic miracle’ were the dwindling number of businesses in the private sector, mostly small to medium-sized enterprises, where, to survive, layoffs were severe and wage cuts were to the tune of 40-60%, and not the 40-60 euros many public-sector workers ‘suffered’.
Furthermore, the administration reneged on its promises of root-and-branch reform, taking five years to introduce half-measures and avoiding altogether the troublesome privatisation of the electricity authority and Cyta telecoms.
Effectively, private sector employees will continue to subsidise 85,000 state workers who, on average, are much better paid.
This could go on well into 2029, when projections by the Fiscal Council suggest Cyprus will meet the 60% benchmark of the GDP-to-public debt ratio, presently over 100% after the state decided to guarantee mortgages and NPLs at the state-owned Cyprus Co-operative Bank.
Certainly, the private sector will not be able to withstand this additional burden of supporting the bloated public-sector payroll, despite the artificial figures of bringing public finances into order, that seemed to convince the Troika lenders of our ability to exit the bailout programme and thus avoid more EU taxpayers’ money to be used for yet another rescue.
The ‘real’ economy (once the buzzword for opposition parties who have since had a convenient memory lapse and forgotten this phrase altogether), is still struggling to stand on its feet.
As a result, competitiveness is suffocating and any entrepreneurship genius with start-ups and hi-tech investments will not be enough for Cyprus to regain its rightful place in international markets. Fundamental cuts in the government’s development budgets means that school buildings remain in disrepair, public health reform continues to remain in limbo, roads are merely being patched up and the only projects that catch the eye are those taking place in the private sector.
Pandering to union demands that insulates their privileged position is why Cyprus is not moving forward with the kind of reforms that would make the country more competitive and guarantee our education and health systems are fit for purpose.