DISCUSSIONS will start soon between President Christofias and public servants umbrella union PASYDY for the reduction of wage increases in the public sector, with the aim of saving €35 million in 2011 and the same amount in 2012.
Finance Minister Charilaos Stavrakis yesterday repeated his view that those with the higher salaries would be affected the most by the government’s measures. He said the pensions problems was a time bomb and that he would invite the social partners and political parties into discussions over the next fortnight with the aim of reaching an agreement on finding an expert actuary.
Stavrakis added that his ministry was preparing a bill that would deal with the issue of public officials receiving up to three separate pensions.
Economist Stelios Platis yesterday said he didn’t not share the government’s enthusiasm over the 2011 budget, which he said was just the last act after two years’ of inaction and had not addressed the issue of the public service wage bill.
“It is a very disappointing budget,” Platis said. “We are finding ourselves viewing the same movie. The 2011 budget was a chance for changes, for reform and structural changes.”
However, Platis maintains that the government didn’t dare touch on the original reason for the economy’s structural problems: the state’s inflexible expenditures – primarily the funds spent on maintaining public servants’ salaries.
“Around 48 per cent of the state’s expenditures and 66 per cent of our revenue go on these inflexible expenditures, which we haven’t dared touch on with this budget,” said Platis.
“We need to reduce the cost of the staff and to do that, we either need to reduce the number of staff and/or reduce their salaries; I feel this budget was the last act in the inaction of the past two years. Nothing was done to deal with the problems and the budget continues to do nothing.”
But he added that there were positive elements too. “There were cuts in ministries’ and services operational costs, though not all of these were good – for example the CTO (Cyprus Tourism Organisation); but there were good ones, though they are so minimal in comparison with the expenditures, they defeat the object.”
“If we have a €130 million increase in expenditures, the fact that you saved €40 million means nothing,” Platis explained, referring to the last minute amendment that was submitted by the government to be passed along with the budget, providing a series of cuts from social benefits and state services’ funds amounting to €40 million.
“These operational costs should always be constrained anyway; I think the amendment was a step in the right direction, but the effort needs to be continued.”
Platis concluded: “The most important thing for me was that this budget was a lost opportunity.”
