PRESIDENT Christofias’ anti-business prejudice was on show again during Tuesday’s AGM of the Hoteliers’ Association (PASYXE) at which he was a guest. Displaying a complete lack of tact Christofias launched a scathing attack on hoteliers, whom he accused of firing Cypriot workers and hiring foreigners on much lower wages and fewer benefits.
This behaviour was “not socially acceptable because it wrongfully leads people to unemployment, condemns workers to working for lower wages and harms the tourist product that we are trying to promote”, he said. And then, like an angry headmaster speaking to his misbehaving charges at a school assembly, he warned hoteliers of the consequences they would suffer for their unacceptable actions.
“This situation cannot continue and I am warning you – I would like to stress this – that in co-operation with the legislature we would take the necessary measures so there is equality and equal treatment.” Christofias was repeating the views of his labour minister, another pro-union fanatic, who considers businesses to blame for all our economic woes. What is even more astonishing is that neither the president, nor the labour minister has ever backed these allegations with any evidence so as to give an indication of the extent of the problem.
But even if there is an issue, should the government not have tried to find out the reasons why hoteliers might be hiring EU nationals instead of Cypriots? A responsible government would have examined the causes, which have been obvious for years now. Thanks to strong unions and the collective agreements, hotel workers’ wages are very high. High labour costs have made it very difficult for Cyprus’ hotels to compete with hotels in other Mediterranean resorts where wages are much lower. Additionally, tour operators have been demanding lower room rates every year.
The only way for hotels to attract business is through cost reduction and, given the opportunity to hire foreign workers at lower wages they seize it. This is one way of becoming a bit more competitive. Perhaps the government should consider the possibility that collective agreements have priced Cypriot workers out of the labour market. We doubt hoteliers are sacking Cypriots and replacing them with EU nationals, but when there are vacancies they are filled by foreigners who accept lower wages.
This is how the open market works. For many years, workers were getting annual pay rises well above productivity increases because there was high demand for labour and limited supply. Now things have changed – the supply of workers is very high and demand limited, hence the falling wages. No amount of complaining and threats by Christofias can stop market forces. He knows enough about economics to be aware of this.
