Cyprus Mail
Opinion Our View

Our View: No hope that latest Cyta plan will attract investors

IN ONE way, the persistence shown by finance minister Harris Georgiades in his effort to change the legal status of Cyta is admirable. In another, it is rather pathetic that he keeps coming up with new proposals in the hope the authority’s unions would eventually give their consent to some form of pseudo-privatisation, which will change nothing. The word ‘privatisation’ is not even mentioned now, because the unions will not permit it. The government now talks about ‘denationalisation’, which is misleading as the state would remain the majority shareholder in the new entity.

The finance ministry has prepared two new bills for Cyta, it was reported on Monday. These bills, according to Cyprus News Agency, would safeguard the employment rights of Cyta workers and ensure the majority shareholding in the new entity, which would replace the authority, remains under state control indefinitely. All members of staff would be employed by the company that would succeed Cyta, with the status of the present semi-government organisation workers (for pay, benefits and pensions) and nobody would be transferred to other parts of the public sector (this was a provision in an earlier bill which the unions had rejected).

There were more safeguards for the workers in the new bills. If the majority on the board of the new entity – a public limited company – was made up of representatives of the strategic partner, the majority of the state representatives would have to give their consent to any changes affecting the employees. In short, the unions would be in complete control of the new company which would be as inflexible and inefficient as it had always been.

This begs the questions: what is the point of turning Cyta into public limited company? More importantly, where would the government find a ‘strategic partner’ ready to put a few hundreds of millions into Cyta but be prevented, by law, from taking decisions relating to staff? One of Cyta’s biggest weaknesses is over-staffing which restricts profitability, but the strategic investor would be stuck with all these workers because the law is designed to make it almost impossible to get rid of any of them – the majority of the political appointees on the board would have to consent to any decision on staff.

Even putting aside these restrictions on rational management of resources, imposed by law, what investor would want to go into partnership, as a minority shareholder, with a state that is run by weak and populist politicians beholden to the unions? We think Georgiades is deluding himself that a strategic investor could be found to pay hundreds of millions to be a powerless minority shareholder in what is essentially a law-protected, workers’ co-operative. We suspect he will be spared this embarrassment as the Cyta unions will again reject his latest proposal, because it is still not as cushy as the current regime.

 

 

Related Posts

Our View: Unficyp mandate resolution irrelevant to future of Cyprus talks

CM: Our View

Our View: An impossible situation in Chlorakas

CM: Our View

Tales from the Coffeeshop: Time for Mr Nice Guy of politics to come clean

George Hadjichristophi

Nuclear power: the missing piece of the puzzle

Gwynne Dyer

Our View: Twenty successful years for the euro but uncharted waters ahead

CM: Our View

What 2022 will bring for energy

Dr Charles Ellinas

10 comments

Comments are closed.