Cyprus President Nicos Anastasiades yesterday sounded the alarm over a recent adminstrative court decision reversing civil servants’ wage cuts.
He told parliamentary party leaders at a meeting convened at the Presidential Palace that coordinated action is needed to address the negative repercussions on the country’s economy.
In addition, it was decided that a follow-up discussion will take place shortly – this time with the participation of the Republic’s Attorney General who will also look into the possibility of Article 23 of the Constitution to be amended.
The President and Finance Minister Harris Georgiades briefed the political leadership on all steps that can be taken to mitigate the fiscal impact of the administrative court’s judgement on March 29. This provided that a freeze of incremental pay rises, a 3 per cent contribution to pensions, and a reduction in civil servants’ pay was in violation of article 23 regarding the protection of the right to property.
The fiscal consolidation measures affecting the public sector, passed by parliament before Cyprus agreed the terms of its 2013 bailout with international creditors, included a general wage and hiring freeze, a 10 per cent drop in hiring salaries, and a permanent up-to 12.5 per cent reduction in pay.
At the same time, the Finance Minister said the recent ruling means that the additional cash required in the next five years could reach €1.6 billion. Without even counting the surcharges which, as he added, cannot be calculated.
Georgiades also estimated that as from 2023, the cost of this ruling will lead to a permanent increase in state salaries by €142 million annually. At the same time, ruling Disy leader Averof Neophytou said that if the administrative court’s decision is upheld after the imminent appeal then the cost to the taxpayer is around €2 billion.
The strong position of the majority of party leaders appears to be that fiscal stability should be maintained. And that taxpayers, especially those in the private sector, should be protected irrespective of the recent ruling and whatever the final decision of the Plenary of the Appeals Court.