Cyprus Mail
CM Regular ColumnistOpinion

The absurdity of regulating Sunday shopping

DIKO deputy Angelos Vostis, (second from left) is considered the 'father' of the Sunday shopping bill

By George Koumoullis

THE DECISION of the opposition parties that prevents shops from opening on Sundays reinforces the deeply-rooted belief that the great brains running Cyprus will never let us progress economically.

Their erratic policy threatened to deepen the recession and put at risk the survival of thousands of people. Thankfully it was blocked by the labour minister through the issuing of another decree that would keep shops open on Sundays until November 30 or until the Supreme Court decides that the legislature’s law was not unconstitutional, which is highly unlikely.

Until the crash of 2013, the parties had been recklessly approving budget deficits oblivious to the catastrophic consequences. Since then, they have become champions of economic development and custodians of the Keynesian school which favours public and private spending in times of recession.

What inconsistency though that, contrary to their philosophy, they decided to close shops on Sundays! We can only conclude that either we have weak deputies that follow their leaders’ orders like sheep or they are clueless about economics.

It is a matter of great urgency for these stranglers of developments to comprehend that incomes and demand for labour do not come out of the blue but derive mainly from private spending that make up the aggregate demand for goods and services. Private consumption is the most important component of aggregate demand (about 70 per cent).

This why, in a time of recession, the governments of well-run countries try to boost private spending, for example by liberalising shop opening hours which would allow shops to stay open on Sundays. All university studies carried out on the subject conclude that unemployment is markedly reduced through liberalisation of shop opening hours (See ‘Evaluating the Impact of Sunday Trading Deregulation’ LSE Discussion Paper No 1336, March 2015 and Bossler, M. and M. Oberfichtner , 2014 ‘The employment effect of deregulating shopping’).

Deregulation also increases the volume and value of sales; eg. in Sweden by 5 per cent (See Pilat, ‘Regulation and Performance in the Distribution Sector,’ OECD Economics, Department Working Papers 180) while in the USA turnover increased by between 3.9 per cent and 10.7 per cent. (See Goos, M. (2004), ‘Sinking the Blues: The Impact of Shop Closing Hours on Labour and Product Markets’, LSE Discussion Paper Series, No. 664).

It is therefore certain that the closing of shops on Sundays would inevitably have negative effects on the job market and cause GDP to contract more in 2015.

Yet some deputies have been claiming their decision would protect workers. But if they really want to protect the workers, they should ensure employees do not lose their jobs and that employers do not violate the laws regarding the minimum wage and holidays.

It is obvious that opposition deputies have failed to gauge the feelings of consumers before depriving them of the right to shop on Sundays, even though consumer discontent has been reported by all the media. An opinion poll published a week ago in Simerini showed that 64 per cent of respondents were against Sunday closing. The legislature completely ignored the wishes of the people raising the suspicion that a la carte democratic sensitivity exists only in Cyprus.

Keeping shops closed on Sundays would also have brought back the old problems. Consumers would have less available time for their shopping, therefore less time to compare prices which would mean they could pay a higher price for some items. The social cost should also be taken into account. The reduction of available time for shopping would mean consumers rushing to the crowded shops at the same time causing traffic congestion with all its negative consequences.

Some deputies claimed that keeping shops closed on Sunday would protect the social fabric. This is an irrational claim that goes beyond the bounds of absurdity. An increase in unemployment would not only fail to protect the social fabric but would also dash the hopes of the stricken, particularly the young.

But as we are talking about the social fabric, is it not already in disarray as a result of the greed of our politicians for riches and glamour? Is it not this greed that has destroyed us?

And something even stranger: the share of the retail pie has changed in favour of the big stores and supermarkets, claim our super-smart deputies. But this has been the trend in all countries the last decades and is not because of shops opening on Sundays, but because of the economies of scale enjoyed by big companies.

It seems that some deputies are nostalgic for the times dominated by tailors, cobblers, carpenters and street vendors and cannot see that the rise of the big shops is beneficial because it has led to lower prices for consumers. As long, of course, as there are no monopolies and price collusion, which are illegal anyway. But small businesses also have a vital role to play as long as they adapt to the needs of the times and are competitive; for example greengrocers that specialise in high quality produce, restaurants, barbers, etc.

Deputies had voted an anti-popular law which they perceived as people-friendly. Could someone explain to me in which branch of political pathology and group psychology the weird behaviour of our deputies belongs?

George Koumoullis is an economist and social scientist

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