Cyprus Mail

State beats bonus retreat (updated)

By George Psyllides
THE government beat a hasty retreat yesterday from its plans to tax the retirement bonus of public servants as it scrambled to avert an all-out strike on Friday, calling the unions to a dialogue.
Public sector unions have called a general strike on Friday to protest against the government’s perceived intention to tax civil servants’ retirement bonuses.
“The cabinet has authorised the finance minister to study further and discuss with interested parties potential measures that do not necessarily entail taxing pension benefits,” government spokesman Nicos Christodoulides said.
Expressing the view of the cabinet, the spokesman described the decision to strike as hasty and urged unions to respond to the invitation “to avoid unnecessary inconvenience and potential problems created by a decision based on the wrong impressions.”
Christodoulides declined to get into details, urging reporters to await the results of the discussions with the unions.
Reports suggested that the government will propose paying out the bonus in five equal annual installments.
Unions SEK and PEO said they wanted to hear what the minister had to say before deciding on whether to call off the strike.
“As soon as we are briefed we will convene the general council and take the appropriate decisions,” SEK chief Nicos Moiseos said, adding that they initially considered the government’s stance positive.
He was echoed by his PEO counterpart Pambis Kyritsis, who highlighted the positive parts of the government decision.
But “so far there is no change concerning Friday’s strike.”
Reports said the main central government workers union PASYDY could cut the strike from 24 to 12 hours.
Government doctors said yesterday they will also be taking part in the industrial action between 7.30am on Friday and 7.30am Saturday.
State hospitals will be staffed by skeleton crews but rural facilities and outpatient clinics will be closed, their union said.
The general strike was decided after Finance Minister Haris Georgiades said taxing the pension bonus was under consideration as part of the Troika-imposed economic adjustment programme.
“The issue is being considered from the perspective of ironing out existing distortions of public service reform issues, and of fiscal sustainability,” he said. “All possibilities are on the table, but no decision has been made yet.”
Talk of taxing retirement bonuses now and in the past has prompted many civil servants to retire early over fear of losing out.
The cabinet yesterday also discussed the 2015 budget, which reflected the correction of the state finances but also the need to continue the effort to consolidate the economy, the spokesman said.
It also took into account the fact that Cyprus was still in a bailout programme despite already creating substantive prospects of getting out.
Cyprus has passed all reviews with flying colours though the government is currently faced with a major obstacle after opposition parties approved foreclosures-related legislation that was incompatible with the terms of the bailout.
The matter will be settled by the Supreme Court after President Nicos Anastasiades referred the bills there as unconstitutional.

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