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Cyprus

Anastasiades briefing party leaders Monday on plans to tackle wage-cuts ruling

Photo: Christos Theodorides)

The government has made some plans following the administrative court’s decision to reverse the wage cuts on civil servants, it said, ahead of a meeting Monday morning of political parties, which will be chaired by President Nicos Anastasiades.

The meeting began at 10.30am.

Government Spokesman Prodromos Prodromos told CNA: “Of course we must first look at the fate of the appeal… but the government needs to be ready for all scenarios.”

Prodromou said the president had made some plans and wanted to share it with the political parties “since the issue is crucial”.

He added that the initial decision to implement the decision during the financial crisis was a collective one in order to save the economy.

“With this logic the president wants to now have the views of the political forces on the government’s plans,” the spokesman added.

In a March 29 ruling, the administrative 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 fiscal consolidation measures affecting the public sector, passed by parliament 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 had helped reduce the government’s staff expenses to €2.2bn in 2015 from €2.9bn in 2011.

However, the court ruled that as in the case of pensions, “salaries too constitute property according to article 23 of the constitution.

The state has since said it will appeal the decision at the supreme court, along with a request to suspend compensation pending the appeal.

Should the decision be upheld by the supreme court – a likely outcome – the fiscal impact could be tantamount to an atom bomb.

Various estimates have been offered on how much the decision might cost the state. The most conservative scenario is that a few million euro as immediate backpay compensating only those civil servants who sued; €200m as immediate backpay to the applicants only, plus the additional costs arising over time from restoring full salaries to all civil servants; or €1bn over time for restoring the pre-2012 salaries of all civil servants.

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