UNIONS representing government workers yesterday rejected provisions of a second austerity package, whose approval by parliament seems to be essential if Cyprus wants to avoid further downgrades of its economy and the dire effects those would entail.
Secondary school teachers, government doctors and the central government workers union PASYDY, yesterday rejected proposed cuts in their 13th salary and cost of living allowance (CoLA), threatening strike action if the measures are passed.
The government has proposed cutting 13th salaries by 25 per cent and freezing CoLA for two years.
Doctors union PASYKI also rejected plans to cut newcomer pay-scales by 10 per cent and a freeze in promotions in the last 18 months before retirement.
The union asked its members to inform themselves of the measures at local meetings and “decide possible dynamic measures to protect government doctors and public health”.
Echoing the doctors, secondary school teachers union OELMEK said it did not accept the measures, adding that teachers have already paid the equivalent of a month’s salary after the cuts included in the first package, passed late in August.
“The government and the parties cannot return to the workers in the public sector and teachers, asking them to contribute towards tackling the economic crisis,” OELMEK chairman Demetris Taliadoros said.
PASYDY was categorical yesterday that it would not accept any cuts in 13th salaries and CoLA, warning that its reaction would be immediate and dynamic.
In a written statement, the union said public sector workers have contributed their share, adding that it was time the government and parliament sought ways for a fair allocation of the burdens of the crisis.
“It is time they proceed with the adoption of effective measures to collect overdue taxes and other income that exceeds €1.0 billion,” PASYDY said.
On Monday, Ratings agency Standard and Poor’s retained Cyprus on credit watch pending approval of the second package.
The bulk of the contemplated measures for 2012 have still to be passed by parliament, including a proposed 2.0 percentage point increase in VAT to 17 per cent, an estimated €200 million of savings through revised targeting of social expenditure, and a potential one-year freeze on wage adjustments through CoLA, S&P said.
“In our opinion, an agreement with social partners is central to successfully getting these measures through parliament, particularly the freeze on wage adjustments.”
The agency added that if parliament approved “what we view as a credible budgetary consolidation package, and if potential losses associated with the restructuring plans of Greek sovereign debt remain at current anticipated levels, assuming all other factors remain the same, we could affirm our ‘BBB+’ long-term and ‘A-2’ short-term foreign-currency ratings on Cyprus.”
Finance Minister Kikis Kazamias declined to comment on the unions’ announcements.
“To me, what counts is what I hear on the negotiating table. I rate this method as very positive and productive and I will remain within this framework,” the minister said.
Kazamias did say however that the matter of tax evasion cannot be resolved from one day to the next.
He said instructions have been give to the inland revenue department to intensify efforts to collect back taxes of around €450 million.
Kazamias has said that the administration will submit bills that will bolster the state’s tax collection ability.
DISY deputy chairman Averof Neophytou, who was instrumental in passing provisions in the first package that had not been agreed with the unions, avoided commenting on their reactions.
“It is the government’s problem,” he said, adding that the ministry has made commitments in writing.
