THE ULTRA-HARSH treatment of Greece by its euro zone partners may have shocked many people in Cyprus but it also served as a timely lesson to our own demagogues that identified with Alexis Tsipras’ ‘assertive’ stance and urged the Anastasiades government to follow his shining example and re-negotiate the memorandum. This shameless populism, not to mention total lack of judgment, dominated debate after Syriza’s electoral victory and Tsipras’ pledge that he would tear up the memorandum and stop talking to the troika.
“At the time Greece negotiates, stakes its claim and wins, only the government of Cyprus does not discuss the re-negotiation of the memorandum,” said Nicholas Papadopoulos last March. Papadopulos, to be fair, had been demanding a re-negotiation of the memorandum before Tsipras’ election, but felt such an initiative would be successful “if we took on board the example set by the Greek government in seeking improvements for its own programme.” Giorgos Lillikas was certain that the “success of Mr Tsipras will prove the failure of the Cyprus government.”
Thankfully President Anastasiades did not heed the reckless advice of the opposition demagogues and never considered re-negotiating the assistance programme. Finance minister Haris Georgiades remained committed to the programme, despite being labelled “the obedient servant and local agent of the troika,” by the opposition parties. He carried on co-operating with the troika and the economy has been showing many signs of improvement as a result.
On Thursday, Papadopoulos had the nerve to take credit because “we kept Cyprus in our assistance programme and safeguarded stability.” What had happened in Greece in the last few weeks “confirmed the correctness of DIKO’s policies.” In a roundabout way he had grudgingly acknowledged the correctness of the government taking ownership of the programme and ignoring the unrelenting attacks from parties and interest groups.
In fact, after what happened to Greece, the Anastasiades government is in a much stronger position to pursue the remaining measures stipulated by the memorandum and particularly the privatisation programme which is staunchly opposed by parties and unions. AKEL has been arguing that as the money that would be raised was no longer needed, the government should negotiate the removal of the privatisations from the memorandum. But privatisations are not just about raising funds. They are primarily intended to increase competition, make these organisations more efficient and eliminate the costly protection rackets and corruption that plague them.
Conditions are favourable for the government to push ahead with privatisations and having secured PASYDY’s consent for some reform of the public service, it must now focus its attention on the public sector payroll. The matter has been raised in the reform discussions, but the union has not agreed to engage in negotiations without, however, ruling it out. Rationalising the public payroll is as much a part of the modernisation of the public service, which is an obligation under the memorandum, as the introduction of a proper appraisal system and the scrapping of seniority as a criterion for promotions. Unless the automatic annual pay increments are not drastically reduced, a year after the exit from the assistance programme that imposed a three-year freeze on pay rises state finances would be stretched again.
Perhaps Georgiades should ask the troika, currently in Cyprus to conclude the seventh review of the programme, to propose the reduction of the public payroll, which is supposedly being done through annual job cuts. But positions could be opened again after 2016 knowing the vote-buying ways of our politicians and the only guarantee of keeping the payroll under control in the future would be through a radical reform of the pay structure – keeping the programme reductions as well as scrapping CoLA and re-calculating incremental pay scales – which gives public employees automatic annual pay rises in excess of five per cent.
Under-Secretary to the President, Constantinos Petrides, who is in charge of negotiating the reform of the public service, has made it clear he wants to change the pay structure, but PASYDY is unlikely to be very co-operative. A little push from the troika, now that it still has a say on how we run our economy, could force the issue. More changes have been made in the two years of the programme to put the economy on a healthy basis than in the previous 20 during which governments put the state on the road bankruptcy.
The programme and the presence of the troika offer an opportunity for the government to settle the problem of the public payroll for good. It must be seized now because it will meet with less resistance after Greece’s experience.
