— Employers blast teachers over “indifference”
— Gov’t caves in to union demands over pay cuts
The Employers and Industrialists Federation (OEV) condemned what it called the “provocative action” by the teachers’ unions that went ahead with a two-hour strike on Tuesday, despite an agreement reached on Monday between the Minister of Finance and the trade unions SEK, PEO and PASYDY to tax wealth in an austerity package.
“With their actions, the three teachers’ unions (POED, OELMEK and OLTEK) have shown contempt towards fundamental labour customs, but have also confirmed in the worst possible manner their total indifference about the problems facing the Cyprus economy,” OEV said in a statement.
“For decades now, the teachers’ unions have secured privileges for their members unseen anywhere else in Europe, and which can no longer be sustained by our economy,” the employers’ announcement said, adding that the walk-out is costing parents and their employers millions of euros in lost work hours and pay.
The teachers’ unions said that freezing pay rises, pension reforms and restructuring the cost of living allowance (ATA) was a “red line” for them and called on the government to collect about 1 bln euros in unpaid taxes and fines owed by employers.
The employers federation was also critical of the fact that the government and the other trade unions had finally agreed to some measures “after months of inaction”, but that these measures included increasing public spending without any talk of cuts.
OEV said that “no consideration was made to develop the economy nor any incentives announced to encourage businesses to expand their activities.”
“Public sector debt has increased to 3.5 bln euros in the past four years, rising at a rate of 875 mln euros a year,” it said, adding that the wasteful civil service was to blame for the growing budget deficit. The public sector payroll represents 30% of the government’s overall spending.
UNIONS BACK DOWN
On Monday, the civil servants union PASYDY cancelled plans for a 24 hour strike on Thursday to coincide with the debate on the 2011 budget after the government promised it would consider taxing wealth in an austerity package without any talk of reducing spending that included the wages of 55,000 public sector workers.
"We will look at specific measures where wealth will contribute a bigger part in improving public revenue," Finance Minister Charilaos Stavrakis said after meeting the three labour unions.
He did not provide details. Attempts by the centre-left coalition government to increase corporate tax by one percentage point to 11% failed to muster approval from parliament in July, but the government is also fearful of raising value added tax by one percentage point because it could cost it votes in the May parliamentary elections.
Cyprus must bring its projected budget deficit, at 6.0% of annual output this year, to 4.5% in 2011 under an EU excessive deficit procedure. The island's 16.9 bln euro economy represents 0.2% of the 16-nation euro zone.
PASYDY was also angered by a bill pending ratification by parliament attempting to regulate multiple pension payments to former state officials. The union was informed that the government will not pursue the legislative adjustment as it now stands, PASYDY boss Glafkos Hadjipetrou said.
The government last week said it planned to introduce a 5% tax on food and medicine that are currently VAT-free, impose a 0.05% levy on large bank deposits in excess of 100,000 euros, create a bank stability fund, increase tax on tobacco by 20%, hike water rates and discuss pension reform.
The Greens’ MP George Perdikis said the government should admit to its mistake for not seeking an extension to the 5% VAT exemption on foodstuff and medicine when it had the chance in March last year.
The communist AKEL party has repeatedly said a fairer burden of any austerity measures should target wealth.
Alongside the new taxes, the authorities aim to generate 35 mln euros in savings in the civil service next year and salaries and benefits are likely to be affected.
The government said hiking zero-rated VAT on food and medicine was an obligation it undertook when Cyprus joined the EU in 2004 and spokesman Stefanos Stefanou said it was unfair to say it taxed middle classes instead of the rich.
