OVERTIME PAY in the public sector cost the taxpayer €62.2 million in 2008, an eight per cent increase on the previous year, it was reported earlier last week. Finance Minister Charilaos Stavrakis was quoted as saying that many of the overtime claims were fictitious, with public servants not putting in the hours of work for which they were demanding extra pay. Nobody carried out any checks.
To combat this phenomenon, Stavrakis wants to set up a Special Overtime Auditing Team to carry out random checks at government departments to check that overtime records are being kept and public servants, who are putting in claims for overtime pay, are actually at work. The previous government had also tried, unsuccessfully, to tackle these overtime scams but it seems that the precarious state of public finances has made it a matter of great urgency.
Stavrakis has been at pains to cut government spending and has finance ministry officials carrying out detailed checks of ministry expenses in an effort the save money. Savings have been made but not enough to allow the minister to sleep easy. The need to cut expenditure was also taken up by the communist party AKEL – an indication of how bad the situation is – which suggested reducing overtime to the bare minimum, cutting back on foreign travel and the use of consultancy services as well as saving energy. It also suggested limiting the hiring of staff on temporary basis and cutting defence spending.
This was nothing more than an endorsement of the government’s efforts to save money, but the truth is that these are drop in the ocean measures – micro-saving that will not significantly reduce the widening fiscal deficit. The government has been resorting to the micro-saving, because ideological prejudices do not allow it to take the obvious measure – cut the public sector wages across the board by 10 to 20 per cent and automatically bring the fiscal deficit under control. Ireland has done this and Greece is certain to follow suit.
Such a measure might have a brief adverse effect on consumer spending, but in the medium term it would benefit public finances and free funds for use on development projects. However for a communist government, wages are sacrosanct, which is why the idea of pay cuts is never mentioned. Fearing that there may be such a possibility in the private sector, Labour Minister Soteroulla Charalambous has come up with some resoundingly absurd measures to battle unemployment. The ministry will subsidise the wages of any person who is hired after being unemployed for longer than four months. A second measure, not finalised yet, would give subsidies to companies to avoid making workers redundant.
Predictably, Ms Charalambous came up with these misguided measures after consultations with her former comrades in the trade unions for whom wage cuts are out of the question. In this way, the minister could claim to have come up with another way of saving jobs than through the economically rational way – pay cuts – which the union barons vehemently oppose because they remain stuck in the class struggle era of industrial relations. They may modify their views once they see the unemployment rate steadily rising over the next few months and accept that pay cuts – not state subsidies – can save jobs.
The recession we are in offers an ideal opportunity for union bosses in the public and private sector to finally grow up and enter the modern economy. It is the best time for them to learn that sometimes workers need to make sacrifices for the good of the economy, and that annual pay rises above productivity increases are not a God-given right. Private sector unions need to accept that they should cooperate with employers and that in exceptional circumstances pay-cuts are the only way to save jobs. Public sector unions need to accept that they cannot be allowed to drive the state to bankruptcy in order to maintain their ultra-high standard of living.
For such a major stride forward to be made, the government needs to take the lead. It could recruit the support of all the political parties for a rescue package – even opposition DISY has proposed collective action to see the economy through the recession – and thus not bear the burden alone of any political cost. This may sound like wishful thinking, as pay cuts are not on the agenda of communist parties, but it is better to take action now than wait for the unemployment rate to hit double figures and the fiscal deficit to climb to seven or eight per cent.
