A DEAL on an austerity package looked slightly likelier last night, after unions representing government workers grudgingly yielded a little more ground.
Antonis Neophytou, of the SIDIKEK-PEO union, said last night that unionists had struck a deal with the Finance Minister for a 3.0 per cent extraordinary contribution toward pensions (worth €105 million) for three years, running concurrently with a 2.5 per cent permanent contribution toward pensions with immediate effect.
The agreement concerns people working in the broader public sector – civil servants and employees of semi-governmental organisations.
“But of course the deal is on condition that our agreement is respected,” Neophytou qualified, evidently alluding to the parties.
Opposition parties have pledged to pass tougher austerity measures affecting civil servants and potentially prompting the reaction of unions, which have warned against any decisions taken by parliament today without their agreement.
“If these bills suggested by the parties are approved then the ongoing dialogue makes no sense,” said Pambis Kyritsis, chairman of leftist union PEO.
He added that unions expected the parties’ response on the matters discussed with Finance Minister Kikis Kazamias, adding that unions gave as much as they could “in a bid not to open the door of the madhouse tomorrow.”
The outcome of yesterday’s last-gasp negotiations between Kazamias and the unions represents an improvement on the initial agreement that provided for a 3.0 per cent contribution for at least three years.
But that would go out the window if the parties insist on their own proposals, which they say are in line with a July 22 agreement with the government they accused of backtracking.
Kazamias was yesterday conferring with party leaders late into the night, in a bid to get them to accept his deal with the unions.
Parties had said the government austerity package – scheduled to be discussed by the plenum this afternoon — was inadequate and had been studying various ways to bolster and add to the measures, especially those affecting the contribution of civil servants.
The proposals being considered by opposition parties provide for a 4.0 per cent contribution by civil servants in the broader state sector towards their government pension where they currently contribute nothing.
MPs are also looking to introduce a tax on civil servants retirement bonus – 3.5 per cent for 2012 and 2013 and 7.0 per cent thereafter.
They also discussed changing the method of calculation of pensions and bonuses in the civil service, which is currently based on the last salary.
MPs want the basis to be the average of the last 30 months of service, though Attorney-general Petros Clerides said this would be unconstitutional.
Speaking before the House Finance Committee yesterday, Clerides said the right to a pension is a right to property and any intervention would be unconstitutional.
Opposition parties also want to introduce a three-year sliding scale contribution for civil servants earning over €1,500.
The proposals will certainly prompt the reaction of civil service trade unions who had warned strike action if parties attempted to effect any changes to an austerity package agreed with the government.
In that package unions had agreed for a 3.0 per cent contribution for at least three years – also potentially unconstitutional according to Clerides — plus an increase in the contribution to the widows and orphans fund by 1.25 per cent.
The orphans and widows payment is also included in the opposition proposals.
The 3.0 per cent contribution could also be problematic, according to the Attorney-general, since it could be found to be in violation of the principle of equality.
Civil servants may argue that only they are footing the cost of the crisis, Clerides said.
But DISY MP Ionas Nicolaou, who also chairs the House Legal Affairs Committee, suggested that such an obstacle could be overcome by differentiating civil servants from workers in the private sector based on their privileges and other benefits.
Other proposals include the introduction of a new tax bracket of 40 per cent for income over €80,000 and cutting VAT to 5.0 per cent when buying a first residence up to 250 square metres and 15 per cent for a first home between 250 and 300 square metres.
They also propose scrapping real estate transfer fees for three years and scrapping the automatic rise in civil servant pensions whenever there is an increase in government salaries.
Opposition parties are also planning to return management of the public debt to the Central Bank around a year after it had been handed over to the finance ministry.
The proposals and amendments will be discussed this morning by the House Finance Committee, ahead of discussion at the plenum at 4 pm.
The government austerity package also includes a 2.0 per cent rise in VAT to 17 per cent, a rise in property tax, increase of the tax on dividends from 15 to 17 per cent and a 5.0 per cent increase of tax on interest from deposits to 15 per cent.
No changes are expected on these provisions.
