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Finance Minister Charilaos Stavrakis has declared that from the start of the global financial crisis, the Christofias administration has introduced various packages totaling EUR 470 mln to boost the economy, with the main emphasis laid on the tourism, construction and banking sectors.
To help tourism, the government has increased the CTO’s advertising budget, reduced the VAT and municipal taxes on hotels, and cut landing and handling fees at airports.
For construction, the government has added 10% to the Development Budget and drawn up a list of hundreds of small to medium sized projects for renovation of schools, improvements in the road network and other infrastructure-related work.
The government defends the rush in aid to the tourism and construction sectors, saying these are where layoffs have occurred and where there are signs that the slump in activity will lead to the swelling of unemployment and closures.
However, one area which has been totally neglected is the growing unemployment among the young generation, especially the new graduates from Cyprus universities or abroad.
All major banks, as well as financial, insurance and general trade companies have imposed a moratorium on new hiring, something that is affecting our young people.
Cyprus now risks becoming another Greece with its own 700-euros-a-month generation of young who cannot find jobs in the areas of their specialty. This could lead to frustration that causes social disturbances, increased crime and even more of our young turning to drugs.
While the government should help the tourism, construction and banking sectors, it should not ignore the plight of the young graduates.
We have our reservations as to how many Cypriots will benefit from the EUR 470 mln stimulus package pumped into tourism and construction, with a clear risk that contractors may decide to hire cheap foreign labour instead of Cypriots to keep their costs competitive.
Some of the funds in the stimulus plan should be diverted to give employers job hiring incentives, even on a part-time or temporary basis so that our young people can at least get some training and be prepared to enter the job market when conditions improve.
Cyprus can do what other eurozone members have been doing for ages – give incentives to SMEs to hire young people with the government providing part of the salaries to companies who provide training to our school and university graduates.
The incentive could be in the form of direct grants managed through the Ministry of Labour based on Social Insurance pay-slips or helping companies tap funding programmes that can be channeled through the Planning Bureau.
The methodology is not important right now. The priority should be for the government to realise the problem and then set on the task to solving it. Finance Minister Charilaos Stavrakis has shown sensitivity to the issue. Let’s hope he will take the problem to the President directly.
