General secretary of the bank employees’ union Etyk Christos Panayides did not inspire much public sympathy when he was speaking on a morning radio show on Tuesday about the planned afternoon protest march to the presidential palace by his members. They were demanding full reimbursement by the state of their provident funds that were bailed in back in 2013. A rather embarrassed presenter, said she could not repeat on air the rude messages she was receiving from listeners angered by Etyk’s demand.
Bank employees were by far the best-paid workers in the private sector and went through the crisis, caused by the banks, largely unscathed. Laiki may have gone bankrupt but all its employees were transferred to the Bank of Cyprus and then offered generous pay-offs to take voluntary retirement. Public resentment is understandable under the circumstances, especially as the taxpayer picked up the bill for the partial reimbursement of the provident funds. The government made available €300m in 2013, €168m this July and an additional €20m this month to cover more than 75 per cent of the losses suffered.
That is a cost close to half a billion euro to be paid by taxpayers who may have lost their jobs, with little compensation, suffered drastic pay cuts and lost the ability to repay their bank loans. Of course, Etyk claims that President Anastasiades had pledged to cover all the losses of the provident funds that were bailed in and is now demanding that he keeps his word. It is true that the government did not handle the matter very well, protecting the pension funds of insurance firms while not applying the same policy for provident funds. The government policy was not thought through properly in 2013.
Then again, Etyk did not manage the hundreds of millions of euro it held in its provident fund responsibly. It had these huge amounts of cash deposited in the two big banks, instead of following the basic rule of investment – spreading the risk. The union may have been under pressure from the bank bosses to keep the money in deposit accounts, but it should not have agreed to such an arrangement. Now Etyk is demanding that the taxpayer compensates its members because of the bad way in which the union managed their money. If it had spread the investment risk, the losses of the provident fund would have been much lower and could have been covered in full, at a smaller cost to the taxpayer.
But it seems the powerful unions of Cyprus can play roulette with the money in provident funds because they can always rely on the state to cover their losses. If anyone should cover the losses it is the banks and not the state.