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Our View: Government should be looking to cut payroll, not expand it

Anastasiades Government Anastasiades Nicos 09
President Nicos Anastasiades

Last week it was reported that the government had prepared the paperwork for advertising 700 positions in the broader public service. The jobs were at different levels, ranging from labourers to top posts in ministries. Nobody questioned the government plan because no political parties wanted to be seen opposing more people getting public sector jobs for life.

In the past, the role of questioning the mindless hiring of public employees and the effects it would have on public finance belonged exclusively to Disy, the only party to argue for economic prudence, but since the election of President Anastasiades, it no longer does this. In the last few years it has either kept quiet or, quite embarrassingly, applauded government job creation that pushes up the already high public sector payroll.

There is therefore nobody to call the government into account and to warn that this is not the time to hire staff for the already bloated public sector. Nobody dares to make the comparison with the private sector, which is certainly not hiring anyone in these economic conditions – businesses are using government schemes to avoid laying off workers but others are already streamlining their operations in anticipation of a difficult year ahead.

Should not the state consider economic conditions and prospects before embarking on a hiring policy? Public debt has risen to 120 per cent of GDP, the economy is expected to shrink by at least seven per cent this year and state revenue has taken a massive hit. If there was some guarantee there would be a turnaround in a few months, the government may have got away with this but nobody knows when the recovery will happen. It could be next year, but it might not be. What would the government do then?

In uncertain economic conditions, a business would exercise prudence and show caution to avoid difficulties in the future. It would certainly not hire more staff if its revenue its steadily falling and the economy is contracting. Why would the state be any different? It is now faced with a widening budget deficit, high public debt which it should not want to increase and the prospect of having to extend its support schemes for protecting jobs for many more months.

Under these circumstances, a responsible government should be preparing an action plan for dealing with the possibility of an extended recession. It should explore the option of cutting the public sector payroll, which is its main expenditure. It might not need to resort to such a measure but this is what it should be prepared for instead of adding another 700 workers that are not needed.



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