CYPRUS
A Cypriot court ruling that pay cuts to the Public Service during an austerity drive in 2012 were unconstitutional has sparked a fiscal crisis, with at least one private sector union also calling for compensation.
The ETYK union, representing bank employees who were also subjected to pay cuts, is now demanding repayments and an automatic adjustment of the Cost of Living Allowance for 2019.
Bank officials estimate that ceding to ETYK’s demands would increase labour costs by 5 per cent overnight if they had to reinstate wages to pre-crisis levels.
The cuts were imposed as part of austerity measures imposed by the cash-strapped Government as it tried to rein in debt seven years ago.
During the economic meltdown, private sector unemployment spiralled and wages were slashed by half.
While PS employees were not sacked, their pay was trimmed and increases suspended.
President, Nicos Anastasiades has been meeting with political party leaders in an attempt to limit the damage.
A suggestion that the Government should try to limit the backpay to just the 101 PS staff who brought the case to the court was dismissed as unworkable.
However, Mr Anastasiades said it was paramount that the Government succeeds in suspending the payment of compensation, to give it time to bring a measure before Parliament to change the relevant clause in the Constitution.
Minister for Finance, Harris Georgiades (pictured) said the compensation cost could be as high €1.6 billion (A$2.5 billion) and this did not take into account wage increases for PS employees that had been frozen for seven years.
He feared the court’s decision would also have a hugely negative impact on foreign investment.
Nicosia, 20 April 2019
