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Cyprus

House opens discussion on bill to restore public sector wages

Legislators on Monday began reviewing a bill submitted by the government that would gradually restore public sector wages to 2011 levels.

Christos Patsalides, permanent secretary of the finance ministry, urged MPs to approve the bill as fast as possible so that it can start being implemented from July 1 this year, in line with the government’s road map.

The bill is based on a deal recently struck between the government and trade unions of government employees.

It aims to phase out the salary and pension cuts introduced in 2011, in six stages beginning in July this year, and thereafter every January 1 of each following year, so that wages and benefits are fully restored by January 1, 2023.

During 2018 and 2019, cutbacks will be rolled back only for persons on monthly wages of up to €2000. This will apply to three pay brackets: €0.01 to €1000, €1000 to €1500, and €1500 to €2000.

The gradual restoration of pay cuts across all brackets is to kick in from 2020 to 2023.

According to the finance ministry, the extra fiscal cost for the year 2018 is estimated at €20.7m. For the 2019-2023 period, the average annual extra fiscal cost will be around €45m.

Earlier, finance minister Harris Georgiades said the measures have been vetted by the International Monetary Fund (IMF).

The IMF was one of the creditors that bailed out the country in 2013. Rationalising the public service payroll was one of its key conditions for providing financial assistance to Cyprus.

The cost of living allowance has also been re-introduced to the public sector, although it has been halved.

Automatic pay increments in the public sector are to be restored as well but will be subject to cyclical conditions – whether GDP grows or shrinks.

 


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