Cyprus Mail
Cyprus

Government signs deal with unions pegging payroll to growth

Harris Georgiades

Finance Minister Harris Georgiades on Wednesday signed an agreement with SEK and PEO, Cyprus’s main trade unions, a new collective agreement which links future pay rises in government-owned corporations to the rate of economic growth.

The deal in question, which will apply in semi-governmental organisations such as the Cyprus Telecommunications Authority, the Electricity Authority of Cyprus and state broadcaster CyBC, was initially agreed in August 2015 as part of a government initiative to overhaul the remuneration system in the public service which takes into account the separate industrial relations system in government-owned entities, the finance minister said on Wednesday.

“Based on the agreement, there will be zero increases in workers’ salaries and pensions in 2015 and 2016,” the statement said. “The two sides agreed to introduce a mechanism through which the rate of increase in the pay roll in 2017 and 2018 will not exceed the nominal gross domestic product”.

The government last year completed an adjustment programme agreed with international creditors made necessary by a banking and fiscal crisis, partly the outcome of an inflated public payroll. In December, the parliament rejected a bundle of draft reform legislations inter alia aiming at curbing the increase in staff cost in the government by linking it to the performance of the economy. The Cypriot economy is forecast to grow around 3 per cent next year and in 2018, as projected in 2016.

As part of the agreement, “demands for pay rises will be discussed in the framework of the institutionalised dialogue and provided the nominal GDP growth rate exceeds compensation for the loss of purchasing power to inflation and incremental pay rises,” the finance ministry said.

The government and the unions also agreed to discuss the introduction of a provident fund for workers hired after October 2011 as well as casual workers, the finance ministry said.

The secretary general of SEK, Andreas Matsas and his peer at PEO, Pampis Kyritsis signed the agreement, according to the ministry’s statement.

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