Spain jobless nears 5m

PRESIDENT Demetris Christofias, his ministers and other state officials have volunteered to take a 10 per cent pay cut in a bid to set an example of the kind of belt-tightening that is needed to tackle the effects of the economic crisis and a burgeoning deficit.

The reduction includes the government spokesman, the undersecretary to the president, the presidential commissioner and the director of the president’s office.

“We have voluntarily agreed to reduce our earnings – salaries and benefits – by 10 per cent. I hope the example is followed by others,” Christofias said during the second of two news conferences in a week to mark his two years in office.

“I of course urge the various independent state officials, and my friend the House President and deputies to follow our example,” Christofias said.

He stressed this was a voluntary matter and that the government could not force anyone to follow suit.

Reports said the move was expected to save the state about €150,000 per year, which is unlikely to meaningfully affect the state payroll. The president recently conceded that the civil service was oversized, costing the state around €2 billion a year to maintain.

But Christofias yesterday appeared unwilling to go head to head with the powerful civil servants merger PASYDY in a bid to cut the general state payroll.

“Do you want to have labour unrest and a confrontation with PASYDY and other semi-government mergers?” Christofias said.

PASYDY is not prepared to accept pay cuts and points out that the government should actively go after tax evaders who cost the state millions in lost income.

Christofias said there would be dialogue with the civil servants but the government had to convince them first that it was taking the necessary measures to tackle tax evasion.

“I cannot go to PASYDY now and ask them to cut this or that,” Christofias said. “This is the easy way. We will discuss with the mergers what their share of the burden would be but we will not go with the easy way.”

Christofias did announce however that he aimed by the end of his term “for the size of the state mechanism not to increase further – in people and I hope in cost.”

The president said the main factor affecting the Cypriot economy was the global economic crisis.

“Everyone thought Cyprus would suffer less … unfortunately we did not,” Christofias said. “We got hit by this storm of the global economic crisis.”

He added however that the main burden should not be shouldered by the workers.

The president said everyone should assume their responsibilities – the government, the employers and part of the workforce.

He said Cyprus can tackle the crisis and its effects without the EU forcing the island to take tough measures like Greece has to.

Cyprus has lost €1 billion in revenue from a fall in tourism and construction but also a cut in consumption.

And though the government did not intend to introduce new taxation there were some things imposed by the European merger like VAT on basic stuff, he said. The EU imposes a five per cent VAT on basic goods.

“We are trying to postpone the introduction of this tax if EU allows us,” Christofias said.

The government is looking at a package of economic measures designed to cut the deficit below 3.0 per cent.

The deficit is expected to reach around 7.0 per cent this year, from about 6.0 per cent in 2009.

The president conceded that the introduction of these measures has been delayed.

He said the government wanted to consult as much as possible and in depth with the parties and merger s and this was ongoing.

Christofias assured that the details of the measures that were made public were not in fact part of the package.

“There cannot be a package from our government that would ask for  the six-monthly index-linked Cost of Living Allowance (CoLA) to be given every year instead of every six months,” the president said.

He did say however that the CoLA issue had to be discussed because it had to be fair above all.

The president wondered if a three per cent rise in CoLA paid to a civil servant who earned €170,000 annually, which would amount to around €5,000, he said, was fair.

“This [a change in CoLA] means more social justice. Not to widen the gap between high earners and low earners.”

But he stressed that people’s salaries would not be cut. “I am making this clear,” Christofias said.

The president also assured that Easter benefits this year will be income-based unlike last year were all pensioners – even some millionaires – received a cheque.

By George Psyllides Published on March 23, 2010
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