The supreme court plenum on Friday upheld by majority decision state appeals against a ruling by the administrative court to reverse austerity-driven pay cuts imposed in 2012 as unconstitutional.
Nine supreme court judges, including President Myronas Nikolatos, voted to uphold the appeal, while four went against. Three of the four issued separate decisions.
The decision was welcomed by the government with a sigh of relief as dismissal of the appeal would have cost the state close to a billion euros over four years amid the coronavirus pandemic when all available funds are being diverted to health, social welfare, and support of the flailing economy.
In its March 2019 decisions, the administrative court had ruled that a freeze on incremental pay rises, a 3 per cent contribution to pensions, and a reduction in civil servants’ pay were in violation of article 23 of the constitution regarding the protection of the right to property.
The judgement applied to civil servants as well as persons employed in the broader public sector, such as semi-governmental organisations.
As such, the pay reductions were deemed null and void and the applicants entitled to compensation, effective immediately.
“In short, it was judged that reductions in civil servant salaries and pensions are constitutionally permissible and legal, as well as the issue of the cost of living allowance and incremental raises,” Attorney-general Costas Clerides said.
The main message of the decision is that the individual rights secured by article 23 are fully respected and safeguarded, the attorney-general added.
“You realise that since it is a decision of the full bench, it sets a precedent so that under similar circumstances the state will be able to act legally and fully in line with the constitution.”
The supreme said the concept of salary had been clearly recognised as a property right, however, it was also established “that the right to property does not extend to a salary of a specific level.”
“Consequently, conditional changes to the level of the salary are not ruled out during critical times for the economy, provided the dignified living standard of the worker is not put in danger,” the court said.
Citing case law, the majority decision said the right to property did not guarantee a right to a particular level of income unless a dignified living was at risk.
“We think the cuts do not affect the core of the right to a salary and a pension, nor do they endanger the dignified living of the respondents. Consequently, under the circumstances, they do not constitute denial of property and violation of the right to property as specified by article 23 of the constitution.”
On incremental raises, the court said it was not granted in a rightful and general manner, but it depended on conditions concerning individual workers.
“It has not been demonstrated by the respondents in this case that they have acquired a legal expectation of an incremental increase that constitutes a guaranteed property right.”
One of the minority decisions argued that the right protected by article 23 was absolute except in those cases in which it can be taken away, but even then, with a reasonable compensation.
“Clearly, the laws in question offer no compensation for the reduction of salaries and pensions,” judge Stelios Nathanael minority said.
They argued that the right to property was comprehensively protected by article 23 “in terms of acquisition, as well as in terms of its extent and scope of enforcement.”
“The so-called core cannot be justifiably separated from the possession itself as a universal right.”
In his decision, judge Antonis Liatsos said the laws displayed unacceptable restriction or deprivation of the respondents right to property.
“The need for fiscal consolidation that emerged is fully understandable under the light of the prevailing circumstances at the time the laws were voted,” Liatsos said. “The obligation, however, to fully align with the requirements of the supreme law (constitution) of the state was also crucial.”
Finance Minister Constantinos Petrides voiced his satisfaction over the supreme court decision, which validated the government’s policy to ensure economic stability.
“Today’s decision legally secured the government’s policies that ensure fiscal and macroeconomic stability and allow us to adhere by the European Union’s fiscal rules,” Petrides said.
“It is of particular importance particularly during this period of the economic crisis, when the entire economy is trying to tackle the effects of the pandemic,” the minister added.
President Nicos Anastasiades also expressed satisfaction earlier, showering the justice system and the attorney-general with praise.
“Congratulations to the attorney-general on the impeccable handling of the case,” Anastasiades tweeted. “It is with particular satisfaction that I once more determine the independence, credibility, integrity, and high level of our country’s judiciary.”
The head of the powerful government workers union (Pasydy) whose members had appealed against the austerity driven cuts imposed around seven years ago did not comment on the decision.
“Pasydy does not wish to make any statement,” Glafkos Hadjipetrou told the Cyprus News Agency.
The head of the fiscal council said Friday the supreme court decision had eliminated a significant uncertainty that had been lingering over the economy.
“What’s more important however, is that it removed the uncertainty concerning the application of fiscal consolidation measures in the future if necessary,” Demetris Georgiades said.
Had the supreme court ratified the administrative court’s decision that the pay cuts in the civil service were illegal, it would have raised the cost and made it harder for Cyprus to seek funding from international markets.
“Something that is of special importance at this time.”
Georgiades also highlighted the huge delay in the dispensation of justice, which took about seven years from start to finish.
“No one could have predicted the current crisis, but it highlights the importance of speed in the contemporary and uncertain environment of the global economy, without it being to the detriment of the decisions’ correctness,” he added.