IT WAS inevitable that the European Commission’s decision to remove Cyprus from the excessive deficit procedure, on the grounds that remedial measures taken were adequate, would be fully exploited by the government and Akel which are already celebrating.
The Akel leadership and the finance minister have been making out that almost all our economic problems have been solved and that the recession is more or less over. Need it be mentioned that what the Commission said was based on the vague pronouncements about spending cuts made by the government and the tax increases that were recently approved. In other words the observations were not based on anything tangible.
It is foolish for the government to celebrate, because it met the short term target for the budget deficit and would be able to raise another €100 million through the imposition of VAT on foodstuff and medicine. Disy’ Averof Neophytou is correct in saying that what the government was doing with the economy was performing ‘cosmetic surgery’ in order to improve the appearance of the patient, without administering proper medication for his serious health problems.
Let us take the state pay-roll which is the root cause of the problem. Every day Akel spokesman Stavros Evagorou and finance minister Charilaos Stavrakis are peddling the notorious reduction in the number of state employees. This boast is beyond a joke.
In an interview published in Phileleftheros last Sunday Stavrakis boasted that in “January 2011the state pay-roll shows an increase of only two per cent, compared to last year, thanks to the big decrease in the number of employees.”
This statement is misleading. What counts is not the increase of one month but what would be the increase in the pay-roll for the whole year when the Cost of Living Allowance of July and the 13th salaries are included in the total expenditure.
But speaking about this year’s budget on September 15, Stavrakis had said that the increase in the pay-roll in 2011 would be 5 per cent. Without the reduction in staff numbers it would have been 6.5 per cent, he said. When was Stavrakis taking us for a ride? In September or in January?
It is important to see what these increases mean in numbers. If we believe that there are 1,000 fewer public employees (taking into account that the total cost of the pay-roll would be in the region of €2.75 billion and there are now 53,000 state employees) this means that the real increase in January was 4 and not 2 per cent. Employee numbers are down by 2 per cent but the pay-roll would be 2 per cent more.
For the same reason, the real increase for this year. Would not be 5 per cent but closer to 10 per cent. And this at a time when there is an alleged freeze on pay increases in the public sector. The 2 per cent increase means €55m and the 5 per cent increase means €137.5 million.
Diko’s Nicholas Papadopoulos was absolutely right in saying that the €100 million raised from the new taxes would go towards covering the increase in the state pay-roll. Evagorou and Stavrakis should therefore cut the public celebrations aimed at fooling us all into a false sense of security.
We have very good cause to worry. It seems a certainty that this state would eventually collapse financially, because there is no chance this government would put aside its populism and tackle the big problems facing state finances.
