Our View: Government playing risky games to satisfy unions

There is little doubt that President Nikos Christodoulides’ government is beholden to the unions. The public support offered him by the Sek union federation in the elections was bound to be repaid and we saw the start of the repayments soon after when Labour Minister Yiannis Panayiotou forced through an increase in CoLA that increased the public wage bill, without benefiting the lowest paid workers. This was an election promise.

In the meantime, Christodoulides has been invited to union offices for talks and was guest of honour at the annual conference of the bank employees’ union Etyk. At the conference of Pasydy in May he announced the restoration of the shift allowance and overtime compensation to their original levels as well as the gradual lifting of the 15 per cent cut to allowances. We suspect this was also an election promise that had to be fulfilled, regardless of the cost to the taxpayer.

Another promise to the unions that seems more difficult to fulfill, although labour minister Panayiotou is currently trying to find a solution, is the lifting of the 12 per cent penalty for those who take their pension at 63 instead of 65. Initially unions wanted the penalty ended, which would effectively mean the retirement age would be lowered, when conditions dictated that it should be raised. With a falling birth rate and longer life expectancy the retirement age should be higher if the social insurance fund is to survive without an increase in contributions.

On Friday, Panayiotou met the labour advisory body, which consists of the so-called social partners, to discuss the matter before the ministry prepared its proposal which would be presented to the council of the social insurance fund. He spoke about a “relief intervention in the pension system in relation to the actuarial adjustment for retirement before the age of 65.” This is how the matter was presented by the minister, who avoided divulging any details. Perhaps he is hoping that the council of the social insurance fund will simply reject the government proposal.

These are risky games the government is playing in its efforts to keep on the right side of the unions, for the sole reason that they represent many votes. All it will achieve is to boost the already excessive power the unions wield, becoming a hostage to them. Making the satisfaction of all union demands a policy objective is a recipe for economic disaster which the government needs to abandon before irreparable damage is caused. It could make a start by informing the unions that ending the 12 per cent penalty, for any group, is out of the question at present.

This could also send the message to union bosses that the government has no constitutional obligation to follow union diktats.