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By Yiannis Tirkides
The court decision on the ruled unconstitutionality of the laws for the freeze on pay rises and the wage cuts in the public sector from 2012 onwards, is difficult to comprehend.
Defining wages as private property and claiming unconstitutionality on the premise that the constitution protects private property is a matter of case law, not of the constitution.
And cases in law can be revisited by our courts and the judges in them.
They did not do that and instead passed a ruling that is catastrophic for the economy if implemented and which will lead to the sovereign losing its investment grade, lose access to markets and invite another financial assistance programme.
The ruling on its own is totally irrational. In 2012 the public sector was in a crisis, having no access to markets and a budget that was thus unfundable.
In the private sector, a business in the same position would go bankrupt as some did, when everything is lost, wages and jobs.
The government is not a company and cannot go bankrupt in the same way. The government defaults on its debt and its budget crashes with severe consequences.
It didn’t happen in 2012 in the Republic of Cyprus because of the financial assistance provided by the European Union and the International Monetary Fund.
The assistance that prevented the government from defaulting was conditional. The freeze and wage cuts were part of the conditions.
There is no precedence to this in the legal history of the country and no past case law can apply.
But besides its irrationality and its devastating economic consequences, the decision is also unethical, it exposes the country abroad and exposes also the public employees at home, most of whom I am sure do not share in all of this and understand better.
It also exposes the legal system of the country to the citizens of the country.
Going back to the ethical deficit of this decision, the country in 2012 was facing the default of the public sector and the collapse of the banking system.
The consequences would be incalculable. There is not one single cause for the crisis, so others should pay for it.
In the economy, in the period from 2002 to 2012 there was a continuous piling up of excesses and imbalances in all sectors public and private.
There was excessive credit expansion; excessive government spending and fiscal imbalances; excessive wage increases that actually run at double the pace of productivity growth rendering the economy uncompetitive and exacerbating the current account imbalances.
The fiscal side and the wages of the public sector were part of the problem. The entire society paid a high price, some paid more than others, dearly more.
To rule that a part of society and a privileged part at that should be compensated entirely for its loss of income by re-instating their blown up wages from 2012 that were part of the excesses, the imbalances and the crisis in the end, is not just unethical, it is hubris, in the ancient Greek meaning of the word. Hubris doesn’t end well.
The views expressed by the writer are his own personal opinion
