The Employers and Industrialists Federation (OEV) has proposed a set of four measures to reduce unemployment, contain the high state payroll and improve the competitiveness of companies.
The Federation advocates a conservative policy on salaries and prices, which requires a commitment by the trade unions not to claim salary increases in the next couple of years and at the same time, a commitment by businesses not to raise the prices of goods and services.
Speaking at the 48th annual meeting of the federation on Monday, its chairman, Dr Andreas Pittas, said that the proposals aim to enhance employment opportunities in the tourism, manufacturing and services sectors.
He said that OEV proposes utilising the reserves of the State Redundancy Fund, those of the Human Resources Development Authority and a conservative policy on salaries, benefits and prices.
Analysing the measure to restrain prices and salaries, Pittas said that all the trade unions should undertake a commitment not to demand salary increases for their members.
He said that the State Redundancy Fund has a reserve of EUR 300 mln which can be utilised to subsidise on a short term an employer's public contributions that rise to 10.5% of wages, if businesses hire people already out of work.
“If basic wages range around 1300 euros a month, or 17,000 a year, then the 10.5% subsidy to an employer for public contributions of, say, 10,000 people would be a mere 18 mln euros a year,” Pittas explained.
Conservative approach
The OEV chairman added that if, as expected, unemployment reaches 5.5%, then wage hikes should be put on hold for two year or until the economy recovers.
“In order to make this proposal work, businesses should commit themselves to a freeze on prices of goods and services, with exceptional cases requiring written proof and justification for a price increase,” he said.
“The trade unions, as well as the (civil servant’s union) Pasydy, should also commit to a free of wage hike demands for the next two years. As regards the automatic wage indexation system (COLA), this will remain as is today.”
Pittas said that this would have a minimal effect of about 0.9% on enterprises, while workers would know that their wages and purchasing power would remain intact for the next two years.
HRDA retraining
The third OEV proposal focused on the reserves of the Human Resources Development Agency (HRDA), suggesting that those out of work who enroll in retraining programmes to fill vacancies or to replace workers foreign workers from third countries outside the EU, receive a subsidy worth 75% of their last salary. Dr Pittas also suggested the establishment of a state prize for Corporate Social Responsibility to be given to companies that hire from the jobless pool and replace foreign workers with Cypriot employees.
Finally, the OEV chairman said ways should be found to overcome the unnecessary bureaucracy at a time when industries and the tourism sector are seeking ways to achieve efficiencies and that the state payroll should be contained, while Cyprus should aspire to become a regional centre for trade and services.
The aim, he said, was to attract foreign investors as part of the efforts to increase the rate of development and social welfare in Cyprus.
Middle of storm
“The Federation knows full well that we are in the middle of a storm out of which there is no way of knowing when we would exit. We find ourselves in front of costly decisions that will determine the future of our nation,” Pittas concluded.
Addressing the same meeting, Labour and Social Insurance Minister Sotiroula Charalambous said there is a common commitment to get through the international financial crisis without undermining the Cyprus system of industrial relations, but with maintaining high employment rates.
Charalambous stressed that all the measures taken to tackle the crisis should be the result of social dialogue. Any such measures should be balanced and mainly supportive towards businesses, workers and the vulnerable groups of the population.
“Our high priority is to modernise the system of the tripartite cooperation (government-trade unions-employers) in such a way that the character and the principles upon which it has been established, are safeguarded”, she added.
