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Our View: Troika pressure needed to rein in public sector payroll

IT WAS encouraging to hear the IMF mission chief raise the matter of the public sector payroll during Wednesday’s conference call. Someone had to do it as our politicians would never dare mention it for fear of incurring the wrath of the pampered public sector workers and their union bosses.

The point was illustrated by President Anastasiades who revealed on Wednesday night that when Ms Velculescu brought up the matter at a meeting he reacted forcefully and decisively. “If we honour our commitments, there is absolutely no obligation to follow any suggestions by a member of the Troika,” he said defiantly, using this as an argument for support of the foreclosures bill which he presented in a television address on Wednesday evening.

Anastasiades regularly panders to public employees, recently raising a few laughs by praising them for the big sacrifices they had made. It suffices to say that public sector workers, the best-paid in the country, suffered the smallest pay cuts, which are temporary, while work conditions remained unchanged; even an attempt to change their working hours was abandoned after a few months. Big sacrifices indeed.

The memorandum provided an ideal opportunity to cut wages and bring them more in line with the private sector as well as oblige employees to contribute from their wages towards pensions and their retirement bonus. But neither the government nor any of the parties dared mention this possibility.

And nobody has complained that the government has yet to appoint a Commissioner for the reform of the public service, after the post was vacated last May. The Commissioner was meant to initiate changes in the public service and reform the pay structure which guarantees automatic increments annually. It would be no surprise if nobody is appointed so that the government does not have to take the inevitably unpopular decisions, because it is against the philosophy of our politicians to look ahead.

But the IMF mission chief, who does not have to think about votes and popularity ratings, felt duty-bound to raise the matter as it is certain to cause problems in the future. In 2016, when the adjustment programme ends, the pay cuts would be rescinded and public employees would receive their pre-2013 wages, plus increments and everything else they are entitled to. Even if their numbers are reduced – a big ‘if’ – the public sector wage bill would still put a big strain on public finances because the economy would be smaller. The state payroll would again be unsustainable.

It is an imperative for the government to make all the changes, which would ensure a sustainable state payroll in the future, now. But this is unlikely to happen without pressure from the Troika, which is why we hope Ms Velculescu will not drop the matter.

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