The government is looking into various ways, including amending the constitution, to deal with a court decision that reversed austerity measures imposed on civil servants in 2012 that could cost taxpayers hundreds of millions, President Nicos Anastasiades said.
In an interview with the Cyprus News Agency, Anastasiades said the government had the option of appealing the administrative court decision and can also request a suspension of execution pending the outcome of the appeal.
Another measure was amending the constitution to prevent similar decisions.
The court said a freeze of incremental pay rises, a 3 per cent contribution to pensions, and a reduction in civil servants’ pay was in violation of article 23 regarding the protection of the right to property.
The court ruled that as in the case of pensions, “salaries too constitute property according to article 23 of the constitution.”
“Deprivation or limitation of this right, according to the provisions of article 23.2 of the constitution shall be made except as provided in this article,” the court said, quoting the constitution.
“Other measures are corrective but for the time being I do not want to discuss them because my aim is to convene a meeting with party leaders to jointly study the issue,” the president said. “It was a joint decision in 2012. It might have been under a different government but we all agreed and approved certain measures to save the country from financial ruin.”
The fiscal consolidation measures affecting exclusively the public sector passed by the parliament about a year 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 salaries, and a permanent up-to 12.5 per cent reduction in pay.
On top came an extraordinary levy on wages in both the private and public sector which was phased out in 2016.
The measures helped reduce the government’s staff expenses to €2.2bn in 2015 from €2.9bn in 2011.
The government argues that even if the decision stands eventually it would not mean compensation across the board but only to those who filed the lawsuit.
In that case, the cost will be around a few million euros of compensation to those who went to court and some €200m per year as the state would have to reinstate full pay and benefits to all civil servants.
Compensating all civil servants for lost income would cost more than €1bn.
“These are the dominant legal views,” the president said. “There is a question before the supreme court whether a law that is judged unconstitutional applies only to those who appeal or everyone.”
Anastasiades also suggested that the court should have taken into account the law of necessity.
“The country was in an exceptionally critical condition. Measures and decisions were taken, as has been done in the past, when they were judged as necessary under the law of necessity to rescue the country.”
Passed in 1964, the law of necessity was deemed necessary to allow the state to function after the departure of the Turkish Cypriots from parliament and government positions.
Anastasiades said the government will be in touch with the attorney-general in a bid to find the most effective measures, including any EU law that prevails over the constitution.
“It should be understood by all that the highest duty is the salvation of the country and people cannot cite their property rights while others are burdened with the cost. Depositors also had property rights but despite this their suits have been rejected by European fora and international arbitrations,” the president said of the seizure of bank deposits in 2013.