Cyprus Mail
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Our View: This union-sponsored rule of mediocrity must stop

ON MONDAY the bank employees’ union ETYK issued a circular to its members informing them that it was proposing wage cuts at all the banks (except the Bank of Cyprus which had already implemented them), “with the aim of helping all banks and colleagues to survive in this difficult period”. While the proposal, which was overwhelmingly approved by union members on Thursday, drew a positive response from media and politicians, the reality was that it was nothing more than a tactical manoeuvre by the scheming union intent on safeguarding its ability to call the shots.
A condition was set for the ‘sacrifice’ ETYK was urging its members to make – the extension of retirement age to 65. Not much of a ‘sacrifice’ considering the union is demanding a big concession from the banks in exchange, a concession that would more than compensate for the pay-cuts by offering another five years’ service. It is all part of ETYK’s game to keep the upper hand, dictating pay structures, promotions and other work terms for bank employees.
The union even proposed the percentage of pay-cuts that should be imposed by the banks, as if this were its responsibility. It decreed that cuts for salaries between €2,000 and €4,000 would be 10 per cent, €6,000 and €8,000 at 20 per cent and over €10,000 at 30 per cent. It is the same formula that was unwisely agreed by the interim board of the Bank of Cyprus and very similar to the one applied in the public service. The unions dictated that the higher the salary, the higher the percentage cut, which on the surface seemed fair but it is not because it reduces wage differentials.
Why should a senior bank executive, who works long hours, has many more responsibilities and much more pressure suffer a bigger pay cut than someone in middle management with a much easier job? Only unions, the great levellers and enemies of excellence, would think this is good arrangement. In effect, PASYDY and ETYK are imposing an income tax policy, which they have no legal or moral authority to do, in the name of workers’ rights and nobody is prepared to challenge them.
Union bosses support ‘progressive cuts’ because the bulk of the union membership that vote for them are in the middle to low income groups. This is also why they make a big fuss about the banks’ ‘golden boys.’ Yet the reality is that the banks’ have absurdly high payrolls not because a three or four senior executives might earn an annual salary of €200,000, but because unskilled workers like messengers and drivers could earn €50,000, thanks to the union. In the free labour market, in which supply and demand determined wages, these workers would be fortunate to be paid a third of this amount. Members of middle management are also grossly overpaid, as is the case in the public sector.
While these union practices benefit workers, they make no business sense and are harmful to organisations, because they eliminate rewards for excellence and hard work, while protecting the mediocre, unmotivated and unproductive. At the banks the union even has say in promotions, always citing seniority instead of performance as the main criterion. In public sector the political parties ensure that excellence is not rewarded, by promoting mediocrities with no initiative or dynamism.
This union-sponsored rule of mediocrity must stop. It can only be stopped by preventing unions from dictating pay-scales. Proper rewards systems must be introduced – systems that reward good results, initiative and hard work and pay high salaries to those with big responsibilities. It is not bad practice to pay successful top executives big salaries, as the unions seem to believe, as long as they are judged on performance. Those who fail to achieve results should have their employment terminated – lack of job security is the risk that people who earn massive salaries should have to live with.
This is why it is an imperative for the bank boards to reclaim the right to decide the wage structure of their organisation. If the BoC board finds a top banker, with an excellent track record, it would be more than justified in paying a big salary to secure his or her services, because he or she could make all the difference to the struggling bank. ETYK would complain about the ‘golden-boys’, but paying a top professional, capable of turning the bank around, a super-big salary makes much more business sense than paying a messenger 50 grand a year.
It is high time that salaries in big organisations reflected performance and the value added by an employee, rather than what self-serving union bosses dictate.

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