THIS NEWSPAPER has been criticising the irresponsibly selfish behaviour of Cyprus’ trade unions for years now. It had also been warning that the failure of the government and business to stand up to the arrogant, self-aggrandising union bosses, constantly upping their demands, would have disastrous long-term effects on the economy. Predictably, nobody dared stand up to the union bosses and now the mistakes of the past have finally caught up with us.
President Papadopoulos’ remark to representatives of teaching unions last Monday perfectly illustrated the point. “Do not try to persuade me: there is no money,” he told them bluntly. State finances are in dire straits and the government has said it would freeze pay rises in the public sector over the next two years as part of its efforts to cut expenditure. The union bosses are in denial, refusing to recognise the problems faced by the economy and insisting, even now, on being given rises. They would rather see the economy enter the depths of recession than ask their members to make a small sacrifice for the good of everyone.
They can do this because they still have the support of the political parties. Apart from the president and the minister of finance, no politician has had the nerve to take a clear stand on this very important issue, preferring to pay lip service to the so-called consensus that supposedly governs industrial relations. This consensus, which is supposedly based on the tri-partite co-operation of the social partners — government, employers and workers — is a big myth. It operated for a couple of years after the invasion, but since then, the tri-partite co-operation in effect involved the unions making unreasonable demands and the government of the day encouraging employers’ organisations to accept them.
For as long as there were high rates of growth and the economic cake was getting bigger, employers always gave in to the unions rather than be faced with disruptive strikes. Successive governments satisfied the most ridiculous demands of the public sector unions, especially when elections were approaching. Thanks to this enlightened consensus approach to industrial relations, labour costs have rocketed over the last 15 years, Cyprus businesses have become totally uncompetitive, the public debt is dangerously high and state coffers are empty. Understandably, the EU has been applying pressure on the government to put its house in order.
But the EU does not seem aware of the weakness of politicians in dealing with the unions. Irresponsible, vote-hungry and weak politicians have given a free rein to union greed and arrogance, which is now out of control. In the name of industrial consensus, we have a public sector that takes up 42 per cent of government spending (the highest percentage in the EU) and is unsustainable, a national carrier that is on the verge of bankruptcy, banks with low profitability because of exorbitantly high labour costs, under-utilised ports and uncompetitive businesses with falling profits. Meanwhile, the lifeline of the economy – the tourism industry – seems to be in terminal decline because Cyprus is now such an expensive destination it cannot compete with any of the other Mediterranean resorts.
The economy has reached crisis point, yet the union bosses remain happily oblivious to it, tabling pay demands above productivity and seeking additional benefits for their members. Public servants are demanding pay rises well above the rate of productivity, despite the lack of funds (they would still receive a pay rise by moving up the wage scales, but that is not enough), Cyprus Airways workers refuse to discuss pay cuts or redundancies to save the company and hoteliers have been faced with the threat of strike action over benefits for months. Industrial unrest is spreading to other sectors as collective agreements come up for renewal. Newspapers and car importers are now faced with strikes because they refuse to agree to a monthly contribution to unions which want to establish a so-called ‘welfare fund’ for their members, thus putting additional pressure on businesses.
It is the same union lunacy that reigned in Britain in the ’60s and ’70s and resulted in a protracted recession in ’80s. When things picked up several years later, the unions had been crushed by Margaret Thatcher and they have yet to recover. France, in contrast, never dealt with its own powerful unions, struggled on but has had to contend with a weakened economy and one of the highest unemployment rates in the EU. In Cyprus, unfortunately there is no politician with the courage to take on the union bosses.
In fact no politician outside the government, which is the country’s biggest employer and has finally decided to put an end to spiralling wages, at least in the public sector, is even willing to acknowledge the gravity of the situation and appeal to the unions for restraint. They are happy to sit by and watch militant union bosses give our ailing economy one final push into long-term recession, because they are too frightened to cross them. It is a shameful that even at this critical point, with the future of the economy at stake, politicians cannot put the interests of the country first.
