THIS GOVERNMENT, intentionally or unintentionally, is proving bad for business. It seems to look at the private sector with suspicion and, at times, disdain, as if businesses were the root cause of all the economic problems facing the country and had to be punished for it. Businessmen, in the eyes of this government, are the bad guys, who do not pay their taxes, employ illegal immigrants, pay their workers poorly, engage in profiteering and generally make no contribution to economic progress or wealth creation.
And when there is an industrial dispute, or public row between employers and unions, government ministers invariably take the side of the workers when they should at least make an effort to be impartial. Employers’ demands and concerns are dismissed as unreasonable without even being discussed, because, for this government, the business community can never be up to any good. By taking sides in such a blatant way, the government creates the impression that it wants to encourage class confrontation and division. Surely government ministers have an obligation to be impartial and make more of an effort to see both sides in a dispute?
Last year when the hoteliers’ association was in dispute with unions over the renewal of agreements, labour minister Makis Keravnos publicly reprimanded the former for going back on something that had supposedly been agreed. Some compromise was eventually worked out, but he showed little understanding for the predicament of the hotels, which have lost their competitiveness and see bookings decline year on year. This week his ministry decided not to renew work permits for foreign workers employed at hotels and restaurants in the eastern coastal resorts because there were some 2,000 Cypriots from the sector registered as unemployed. Viewed out of context, his reasoning was correct, but should he not have given some consideration to the circumstances prevailing in the hotel sector which needs to employ low-wage foreign workers in order to compete with other destinations.
There is just no interest from the government in the problems facing businesses. This lack of interest, bordering on contempt, was brought home by President Papadopoulos earlier in the week when he publicly rubbished a concerted move by employers to secure a wage freeze for a year or two. He said: “I know that when we are talking about competitiveness, many are thinking about the lowering of prices and wages. I think that whoever have such ideas are seeking the unattainable, because it is neither practical nor socially acceptable.” Was this dogmatic approach to the issue necessary? There have been wage freezes or incomes policies imposed in many countries so why is the president so certain that these are unattainable in Cyprus?
This offhanded way in which he dismissed the matter is indicative of the government’s contempt for the business sector. It is not that there is an economic boom. On the contrary, we are going through a recession, prices are soaring, our main foreign income earner, the tourism industry, is uncompetitive as falling arrivals attest, business confidence is at an all-time low, investment is down and the fiscal deficit is at a record high of six per cent. Under the circumstances, is it so outrageously unreasonable to suggest a wage freeze for a year or two, as the president claims? It would also help reduce the fiscal deficit, which is out of control, if it were applied to the public sector as well. But it seems that Papadopoulos is not prepared to concede anything to businesses, even when these are struggling to survive.
Yet a president, who claims to represent all Cypriots, could have acknowledged the validity of the demand, without adopting it, for the sake of appearing impartial. He could have said that the employers were not totally unjustified in making such a demand – this may have encouraged unions to show some restraint in pay negotiations if nothing else – instead of contemptuously dismissing it. Why is it “socially unacceptable”? Doubling the price of heating fuel is also socially unacceptable but that did not stop the government from doing it when it had to.
Could this hostility towards businesses have been imposed by the president’s communist partners AKEL which wants to make life difficult for the hated capitalists? Or has the president already got his mind on a second term and wants to keep unions, which represent a lot more votes than business owners, happy? It does not help that only one member of the Council of Ministers had experience as a businessman – the rest are technocrats, lawyers or party apparatchiks with no knowledge or understanding of business. The same is true of his advisors. Who is to stand up for the business world when the cabinet takes decisions?
This was why, a few weeks ago the finance minister announced tough new measures against banking confidentiality, which, if implemented, would have caused a mass outflow of capital and pushed the economy much deeper into recession. He even boasted at the time that he would go ahead without consulting the banks — another illustration of the government’s arrogance and hostility towards business.
There needs to be a change of approach and more even-handedness. The government must recognise and show some appreciation for the fact that it is businesses which create wealth and jobs. And the last thing any government should do is to persecute businesses and stifle free enterprise. In times of recession such misguided policies are criminally irresponsible. If the government does not want to cause irreparable damage to the economy it should show a little more respect for the private sector.
