Glafkos Hadjipetrou, the general-secretary of civil servants’ union Pasydy, said he expects that “in a matter of months” the Supreme Court will decide on the constitutionality of wage deductions which were part of fiscal consolidation measures taken more than five years ago that the union challenged.
The union boss, who was commenting on state radio CyBC a day after he signed an agreement with the finance minister Harris Georgiades linking the public payroll to economic growth, said that the budgetary impact of the phased out deductions amounted to €1.5bn.
“We are not going down,” in case the court DOES NOT? accepts Pasydy’s position, Hadjipetrou said adding that the appellants will receive in that case up to €3m.
“They (the government) got €1.5bn and they are returning €3m,” he added.
The finance ministry pointed out the risk of contingent liabilities resulting from court cases against fiscal consolidation measures or decisions of the bank resolution authority in its Strategic Fiscal Policy Framework 2017-2019 date May 2016. “However, the greatest risks are external,” the ministry said.
The head of Pasydy which represents roughly 17,000 Cypriot civil servants said that the union considers the incremental pay rise granted to civil servants according to seniority, “as part of the salary”.
“It is a basic employment term and cannot be unilaterally changed,” Hadjipetrou continued. He added that “there is an abundance of case laws on this subject,” including the general principles of administrative law, that code Supreme Court rulings.
This, he added, “explicitly provides that the (public) administration cannot a posteriori take back incentives it offered to reach an agreement”.
This was Pasydy’s reservation, he continued, adding that while the union opposes linking the increase of the public payroll to economic growth per legislative arrangement, it consented to the agreement with the finance ministry that covers the period 2017 to 2018 as “as the situation stands, it is certain that incremental pay rises will be granted”.
The finance ministry expects that the economy will grow 2.8 per cent this year and in 2018 after expanding at a similar rate last year. The fiscal consolidation measures affecting exclusively the public sector passed by the parliament already before Cyprus agreed the terms of its 2013 bailout with international creditors included a general wage and hiring freeze, a 10 per cent drop in hiring wages and a permanent up to 12.5 per cent decrease in wages. On top came an extraordinary levy on wages in both the private and public sector which was phased out last year. The above measures helped reduce the government’s staff expenses to €2.2bn in 2015 from €2.9bn in 2011.