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The government has decided in its pre-election wisdom to re-instate the wage-indexing Cost of Living Allowance (CoLA) for civil servants as of next year, allowing yet another tool that discourages productivity to trickle back into the state budget.
Trade unions, that have bullied their way into strong-arming the administration, say that the state has saved about 200 mln euros a year from 2011 when the inflation-based automatic wage rise was put on hold. In other words, this means that the state will now have to cough up another 200 mln euros a year for the 2018 budget and beyond, depriving other needier sectors, such as development spending, public works, repairing and rebuilding schools, and of course social welfare.
The same way that the government boasts that it is systematically lowering the unemployment level and giving job opportunities to young college graduates (while maintaining the long-term unemployed numbers at high levels), it will probably say that it has reached an agreement with the unions to lower the headcount in the civil service.
Well, at least until after the presidential elections in six months’ time, after which nobody gives a damn if fiscal figures will shoot up again, missing Eurozone targets. At the same time, predictably, government workers (who will no longer have any incentive to be productive) will once again moan about their heavy workloads and that more staff will need to be hired (or promoted) in order to cope with the added burden.
The CoLA allowance should have been abolished a long time ago, and as with many other promises, this administration has backtracked on this principle as well. This means that the public payroll will once again start to expand at disproportional levels and the state budget will reach uncontrollable levels, one of the triggers of the 2013 crisis and bailout.
But since Cyprus managed to exit its bailout programme earlier than expected, the public sector resumed its demands for higher wages, widening once again the gap with private sector workers.
The benchmark for CoLA should be very simple: if the private sector employees get the wage increases (based on productivity), only then should civil servants get their pay rises as well. Otherwise, it will prove the opposition’s claims that these “fireworks” are simply part of the pre-election campaign.
