Turkish Cypriots in the occupied north of Cyprus are angry after the ruling coalition of the National Unity Party (UBP) and the People’s Party (HP) decided to slash the Cost of Living Allowance by two percentage points.
COLA to be adjusted to salaries of public sector workers from July was set by the previous coalition at 7.57%, but the new UBP-HP coalition reduced the hike to 5.57%
Wages of public sector workers in the north are adjusted every six months to meet the ever-increasing inflation rate weighed by a volatile Turkish Lira and economic dependency on Turkey.
Unions, economists and the courts ruled that the coalition’s decision is illegal and not in the best interest of the Turkish Cypriot community nor its economy.
A group of unions legally challenged the coalition’s decision, with the high court in the north issuing an interim decision in July for the coalition to freeze any cuts.
UBP and HP ignored the ruling, implementing the reduced COLA rate on July wages, and as announced, they will also be applying it to the August payroll.
The previous coalition collapsed after a scandal involving the son of its senior member Serdar Denktash, power changed hands in May.
The new coalition decided that the inflation rate was wrongly calculated and decided to implement a cut on the allowance, saving TL 80 mln (€12.5 mln) in the process.
Talking to the Financial Mirror, Turkish Cypriot economist and Associate Professor at the Eastern Mediterranean University (DAU) in Famagusta, said that the cut is a setback for Turkish Cypriots who are already in financial dire straits.
The lower rate will see Turkish Cypriot civil servants losing between TL 110 (€17) to TL 418 (€67) a month.
Indicatively, civil servants in the north range from low earners’ TL 5,500 (€861 a month), doctors are paid TL 9,900 (€1,550) and permanent secretaries of public departments receive TL 14,866 (€2,329), before the application of COLA.
The north’s inflation rate, according to the Turkish Cypriot statistical department, is 8.72% since last December, while the annual inflation in July was 23.24%.
“Civil servants were expecting the COLA to relieve part of the burden caused by the loss of their purchasing power under the weight of the crashing Turkish Lira and rising inflation,” said Mustafa Besim.
The associate professor explained that although it’s not the worst thing that has happened to the Turkish Cypriots, regarding their purchasing power, it is expected to take its toll on working people who depend on the increase.
“Many people have made purchases or loan agreements based on what they thought they would be earning over the coming months,” said Besim.
He said the reduced raise will affect future COLA calculations as percentages estimated in the future will be applied on lower salaries.
