By Angelos Anastasiou and Stelios Orphanides
ON the eve of Cyprus’ bailout exit, an unprecedented strike wave engulfing the country, driven some say, by approaching elections, threatens to derail the fragile recovery the island has achieved, according to economists.
The government must not back down and give in to the unions or it will be “game over”, said Professor Michael Michael, an academic economist at the University of Cyprus.
There was no way the government could afford “under any circumstances” to give in to the demands of striking public sector workers, ruling DISY spokesman Prodromos Prodromou, also an economist, told the Sunday Mail.
Two weeks ago, nurses at state hospitals staged an ongoing indefinite strike, demanding to be paid on par with their degree-holding peers in the public sector.
For most of this week, the Limassol port was shut down due to a strike staged by port workers, until an eleventh-hour cabinet decision broke the impasse on Thursday but it’s entirely not over yet.
And, employee unions at the state-run Electricity Authority of Cyprus (EAC) have announced they will be going on all-out strike as of April 6, hinting at leverage through power outages, in a bid to reverse a government decision to break up the company into two smaller ones – one of which can then be privatised.
The timing of these decisions is no coincidence, some say. They came mere days after the clearest line in the sand of the last few years had been crossed – the infamous ‘Memorandum of Understanding’ with the Troika, a basic cash-for-reforms programme closely monitored by delegates of the lenders, expired.
Due to unfortunate happenstance, this came precisely at the start of the campaign for the upcoming legislative elections on the island in May, and the combination proved explosive. Despite the economic losses, and the risk to human lives nurses have created, the government has thus far held its ground, refusing to give in to their demands.
“In 2016, the government should give no pay rises as the government has to safeguard the soundness of public finances,” Michael told the Sunday Mail.
“In 2017, if any pay rises are given, they should not be given as a result of a strike but as part of a decision concerning workers in the general public sector, including hospitals, civil service or ports. If we start give in to (the demands of) groups, then game over”.
The principle is a no-brainer – giving in to one interest group’s demands after a strike will only lead to more strikes – but there are practical implications here. Not giving in will further damage the economy and destabilise the fragile course to recovery the government has managed to carve out – ironically, with substantial help from the unions, who portrayed exemplary restraint and responsibility during the MoU days.
“There is no way the government can give in, under any circumstances,” Prodromou – an economist himself – said.
“Spreads are on the rise,” he added, referring to the cost Cyprus would have to pay if it were to borrow from international markets, “but it’s nothing dramatic so far, and there are no immediate financing needs for 2016.”
So, the government is prepared to wait the storm out, and – importantly – can afford to do so. And there is another significant line in the sand that could shape developments drastically.
“We’ll have the elections, and we’ll see where we land,” Prodromou said, hinting at a new political landscape that could furnish the government with substantial leverage.
According to Michael, strikes ahead of elections are not an uncommon phenomenon in southern European countries, and the possibility that they might be not only supported, but actively incited, by political parties in opposition cannot be ruled out. This echoed DISY leader’s mid-week statement that some political parties “believe that they will conduct their election campaign through strikes”.
On Saturday, the Nicosia Chamber of Commerce and Industry issued a statement lambasting both the strikes and the politicians backing them.
“Two months before the parliamentary elections, and before we have had a chance to exit the MoU, an unprecedented series of strikes started, by which each group tries to improve its own ‘kingdom’,” the chamber said.
“The strikers are among the most privileged employees in the public sector, and for decades they have benefited from a rotten system that led us to the financial crisis. Most tragically, a handful of deputies, vying for votes and public praise, encourage or tolerate the strikers, ignoring both the economic and social fallout.”
Particularly strikes in the health sector that inconvenience hundreds, if not thousands, of citizens, and place human lives at risk, are the worst kind of extortion, irrespective of whether the demands are justified or not, the chamber added.
“Well, it’s no coincidence,” Prodromou said, but fell short of claiming opposition parties instigated the strikes.
“Even if they didn’t actively encourage the strikes directly, they did so indirectly. Unions saw what happened with CyTA, and they thought they could follow the same path. They bear responsibility, even indirectly. This is all part of their electoral plan.”
“What happened with CyTA” was that, while the government wanted discussion of a bill facilitating the state-run telecoms company’s privatisation down the line to be carried over to the next parliament, DIKO put it to a vote in next week’s plenum, so that it can be rejected.
“It’s hardly surprising – efforts to reform will not be without obstruction and noise,” Prodromou said.
“What can you do?”
Main opposition AKEL, which has been suspected of being directly behind the strike at the ports, vehemently denies any involvement, and points instead to the “long-standing, justified demands” of workers.
“There is no electoral expediency,” AKEL MP Stavros Evagorou told the Sunday Mail.
“The union movement has proven its intentions throughout the economic-adjustment programme – it proved it is serious and responsible.”
But, while the party stands firmly behind protests against the government’s privatisation agenda, their position on the nurses’ strike seems iffy.
“We have proposed that both sides enter a dialogue,” Evagorou said.
The proposal fails to factor in the fact that nurses have repeatedly rejected the government’s pleas to end their strike and come to the table, arguing they will not sit for discussion but only to hear proposed solutions.
AKEL’s stance on the strikes with regard to the damage done to the economy also seems disingenuous.
“But is that what drives the cost of borrowing up?” Evagorou replied when asked whether the strikes can hurt Cyprus ability to borrow from international markets.
“Or is it the confidence investors show in an economy? We don’t believe there is any connection between strikes and spiking interest rates.”