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Our View: Economic reform programme has little to show

Finance Minister Harris Georgiades claimed on Monday that many of the government's economic reforms had been introduced

CHALLENGED on Monday morning about the ineffectiveness of the government’s economic reform programme, finance minister Harris Georgiades argued that this was an unfair criticism because many reforms had been introduced.

He cited the minimum guaranteed income (MGI) as an example of a successful reform and it is true that this may well be remembered as the most successful measure introduced by the government. Perhaps the privatisation of Limassol port could also be considered a positive reform.

The list on the minus side, however, is much longer. It failed spectacularly in its attempts to privatise Cyta and to open up the electricity production market, despite the plans it had agreed with the troika. The government tried, offering one incentive after the other to the Cyta unions in the hope it would secure their approval, but got nowhere. Admittedly, it did not help that all political parties in the legislature were opposed to privatisation. In the case of the EAC, the management and unions dragged their feet over the plans to make the Transmission System Operator autonomous so it could buy power from independent producers.

Then there was the reform of local government. Although the government prepared the reform bills and the interior minister proposed the postponement of last year’s municipal elections in order to implement them, the majority of the political parties refused to co-operate. We are now left with an excessive number of high-maintenance municipalities until the next local elections scheduled for 2021. The government could blame the negativity of the political parties in the legislature, but the truth was that it backed down too easily.

And the same is true of its six reform bills for the civil service, which, among other things, aimed at putting a limit on annual pay increases. These were also rejected by the legislature. Worse still though was that from this year all pay cuts were ended and civil servants are back on the old pay scales plus increments. And from next year, the automatic adjustment of wages will be introduced in both the private and public sectors. CoLA had been suspended for four years but the interior minister ensured its re-introduction in a modified version for a transitional period of three years.

Then there is Gesy which has become a national cause. The strange thing about Gesy is that the government has decided how much everyone will pay towards it (contributions by the state, employers and employees) without calculating what the cost will be. The cost of operating each hospital has not been calculated yet. It has ensured, however, that the labour costs will be higher by giving pay rises to everyone employed at public hospitals.

In short, despite the government’s alleged reform programme, very little has actually changed.





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