THERE IS little doubt that business confidence has been at an all-time low for quite some time now. Everyone knows the main reason for this is the recession but the situation has been made worse by a government which has proved clueless in managing a struggling economy. The Christofias government’s management of the recession has been nothing short of incompetent, shattering all remaining shreds of confidence and raising fears that the worst is yet to come.
Confidence is all about perceptions and this government has gone out of its way to be perceived as, at best, indecisive and, at worst, clueless. For almost a year it has known that the budget deficit was veering out of control and did nothing – today it has still not decided what measures to take – apart from ordering Russian tanks we did not need for €100 million, giving an Easter bonus it could not afford to pensioners and extending benefits to families with three children. Wasting money when it needs to reduce spending does not inspire confidence.
Neither does a labour minister whose measures are aimed at pleasing trade union bosses, regardless of the damage they are causing the real economy. On Monday Sotiroulla Charalambous, herself a former union worker, announced the raising of the minimum wage by 5.6 per cent, from €840 to €887. Her proposal is subject to approval by the Council of Ministers, which is a formality given the president’s ideological beliefs. It is a resoundingly stupid decision, simply confirming the government’s ineptitude on economic policy.
At a time of record unemployment levels, the government decided to raise the minimum wage, which was the last thing the economy needed. It could be said that 37 euro is a small amount that would not make a big difference but this would be a mistake. Businesses that may have been considering hiring unskilled workers would think again. What is worse, it would deal yet another blow to business confidence as the government is taking decisions calculated to delay the recovery, without even realising it. Ms Charalambous is content with the applause her misguided measure received from the unions and oblivious to the damage she is doing to confidence, by advertising her inadequate understanding of economics.
Is it so difficult for the government to resist Leftist gimmicks until we are out of recession? If Ms Charalambous is unable to understand that raising the minimum wage, in current conditions, would not reduce unemployment, then she should not be labour minister. A labour minister whose measures are more likely to increase rather than reduce unemployment, is, without a shadow of a doubt, in the wrong job.
