What has been described as a ‘mini’ national council will be held on Monday at the presidential palace to discuss how to deal with the administrative court decision that ruled the pay cuts imposed on the broader public sector in 2012 were unconstitutional. President Anastasiades, among other things, will seek the support of the party leaders to amend Article 23 of constitution so it does not act as an obstacle again to the implementation of pension and pay cuts when fiscal stability necessitates such measures. A two thirds majority is required to amend the constitution which means the government would need the support of opposition parties.
Apart from the amendment of the constitution the government is also looking at contingency measures for dealing with the situation in the event that the appeal against the administrative court ruling is rejected by the supreme court, a distinct possibility. For now, the finance ministry is considering reducing the payroll by imposing a freeze on appointments and promotions, but this is unlikely to be enough to cover the cost if the appeal fails. The additional cost for the state for the four-year period from 2019 to 2022 is estimated in the region €1.07 billion or a little over €250 million per year.
The government, according to press reports, does not want the extra cost of the payroll to burden the state or citizens, but where would the extra €250 million a year come from, bearing in mind it would also have to meet fiscal targets set by the EU. If it fails to do so there is every possibility the European Commission would demand the adoption of revenue-generating measures that could only be higher taxation. Where else would the funds for covering the shortfall and meeting budget targets come from? Even the gradual phasing out of the pay cuts that began this year would put a strain on public finances. The public payroll is back on an upward path, expected to exceed €3 billion by 2022; in 2011 before any cuts were imposed it was €2.9 billion, taking up a third of total state spending.
In other words, we will return to the profligacy of the pre-crisis days because President Anastasiades did not have the resolve during the recession to take measures that would have stopped the payroll from being a steadily increasing drain on public finances. Why was the 3 per cent monthly contribution of public employees towards their pensions only a temporary measure, when all private sector employees contribute close to 7 per cent, and still receive lower pensions? This is a worker’s conquest, the champions of entitlement of Pasydy claim but it is nothing of the kind – it is an unlawful privilege secured by a militant union from weak and irresponsible politicians in the market for votes, creating two classes of citizens.
Is this not a violation of the constitution which ensures equality before the law? What type of equality is there when people employed by the state are exempt from making a monthly contribution to the social insurance fund like all other workers? The irony is that the non-contributing workers of the public sector are also paid higher average wages than the private sector of contributing workers and, to add insult to injury, much higher pensions. The claim by Pasydy that the state pays public employees’ contributions is disingenuous because it is the taxpayer who picks up the bill for this unlawful privilege, referred to as a worker’s conquest.
If we had politicians who did not see every policy in terms of votes to be gained and believed instead in the principles of democracy such as equal treatment of citizens by the state, Monday’s meeting at the presidential palace would have dealt with the broader issue of public sector privilege. The president would have placed the radical reform of the public sector on the agenda with the aim of ending the many privileges of public employees, which are funded by the lower-paid, second-class citizens, and constitute an ever-increasing drain of public finance, constantly threatening fiscal stability.
We know this is too much to expect from the leaders of political parties that created the problem in the first place. Governments may have granted the privileges and constantly increasing wages, euphemistically known as workers’ conquests, but not a single party ever voiced objections about this scandalous economic management. Even now that the court has ruled that public sector wages and pensions should be treated as property and therefore protected by the constitution, no party dared criticise the decision or the action of the public employees that put their narrow money interests above that of the country and their fellow citizens.
Public employees are untouchable because they represent too many votes, and Pasydy has been exploiting this for decades. Only when we have a government that puts the country’s interests above votes would there be a hope of ending Pasydy’s protection racket and the public payroll veering out of control every few years.