Cyprus’ main trade unions SEK, PEO and PASIDY delivered a stark warning to the government to reconsider its decision to suspend hiring of new staff and maintain a wage freeze in the wider public sector for the next year-and-a-half.
The unions say the Finance Ministry has stunned them, having led them to believe the austerity measures announced last year would expire by the end of 2006.
The trade unions worry the moratorium on hiring and pay rises opens the way for government departments to contract out work to private companies. There’s also an underlying fear that this will progressively lead to the phasing out of positions in the public sector.
The three unions said they would call a nationwide two-hour strike, “as a first measure” if the government does not reconsider its decision.
The government on the other hand wants to maintain the fiscal austerity plan to reduce the fiscal deficit so that Cyprus can qualify for euro membership.
With between 32% and 42% of the state budget going towards the civil service wage bill, experts have long stressed the need for drastic measures.
The size of the public sector has risen sharply since the founding of the Republic in 1960, with civil servants making on average in 2001, 44.3% more than their private sector counterparts.
In 1960, the civil service numbered just 9,730 employees – including the police, fire service, and teachers.
By 2001 the number had risen to 29,860 – one civil servant (costing on average CYP 22,800 per year) to every 23 citizens or 10.5 working citizens.
The magnitude of the problem is further illustrated when the 10,535 contractual and casual workers are included in the equation. By some estimates, one civil servant costs an average of CYP 18,150 for every 17.1 citizens or 7.9 working citizens.
In 2003, the state received CYP 440.6 mln in direct taxes and CYP 1.57 bln from indirect taxes.
From around CYP 1,497 bln in total tax income, the state had to pay CYP 370.1 mln in loan interests and other related fees, and CYP 923.6 mln on the civil service wage bill.
The increased spending has resulted in the state borrowing further money not only to cover its investment and development needs, but also for covering part of its expenses.
