Filenews 16 June 2024 - by Eleftheria Paizanou
Technical assistance from the Commission will seek to obtain the Ministry of Finance for the rationalization of the state wage bill, which has been increasing in recent years.
Next October, the Republic will submit a request to the European Commission's Directorate General for Structural Reform Support (DG Reform) for technical assistance.
In an interview with "F", the Permanent Secretary of the Ministry of Finance, George Pantelis, notes that in cooperation with the International Monetary Fund (IMF) the relevant request is being prepared. At the same time, he notes that the study by the IMF is at the initial stage, while a team of the Fund will come to the country later this month.
At the same time, he notes that the number of new jobs that will be included in the state budget has not yet been determined, noting that many requests have been sent to the ministry from ministries. It also shows that from 2012 to last year the number of civil servants increased by 3,199.
The state payroll
In the Financial Framework 2025-2028, it is estimated that expenditure on the remuneration of public and wider public sector personnel in the coming year will increase to €4,259 million, i.e. €200 million more than this year. Until when will this upward trend continue? How will you achieve the target of cost containment?
Based on the most recent forecasts of the Ministry, expenditure on staff remuneration in 2025 is projected to show an increase of 4.9% compared to the corresponding ones in 2024, i.e. to reach €4,259 million compared to an estimate of €4,059m this year. This increase is partly due to the increase in the indexation allowance, as a result of projected inflation of 2.5% in 2024, the projected increased contribution of the state to the Social Security Fund and the GHS, as well as the granting of surcharges and payment of tips.
It is noted that the provisions in relation to staff remuneration include an amount of €130 million. approximately, which concerns the retroactive contribution of the State to the occupational pension scheme in the years 2024-2026. For this reason, projected expenditure in 2027 is projected to show a lower growth rate of 1.9%.
Finally, it should also be mentioned that the International Monetary Fund has already been commissioned to study the rationalization of the state wage bill, based on international and European standards, with the aim of increasing productivity, containing expenditure and correcting any distortions.
As far as we know, the study for the rationalization of the state payroll is ongoing. When will the results of the study be ready and when will they be implemented?
The study on the state payroll is in the early stages. Relevant data have been forwarded to the International Monetary Fund (IMF), whose team will come to Cyprus in June. Subsequently, an IMF report will be prepared, outlining the strategy for reforming the state wage bill and recommendations. The report will be processed by the Ministry of Finance. Subsequently, the IMF will provide us with support in submitting a request, in October 2024, to the European Commission (DG Reform) for technical assistance, in order to examine specific individual issues. Therefore, at this stage we cannot anticipate what the results of the study will be and when the possible changes that will occur in the state payroll will be implemented.
How many new posts are included in next year's budget?
Currently, the budget for 2025 is being formulated, in accordance with the guidelines of the Ministry of Finance, which have been communicated to all Ministries/ Deputy Ministries/ Independent Services. A large number of requests have already been submitted to the Ministry of Finance, which are being examined, provided that savings of equal value are indicated by the competent authorities, i.e. elimination of positions, reduction of purchase of services, reduction of employment of fixed-term employees, so as not to incur additional costs as much as possible.
Increasing employment in the public sector is something that concerns the Ministry of Finance. In 2023, compared to 2012, total employment in the Public Sector increased by 3,199 persons. Although during the same period there was a decrease in the employment of civil servants and hourly paid government staff, employment in the Education sector increased by 2,789 people. Also, in 2016, the institution of Contract Soldiers was implemented in the Cyprus Army, against the reduction of military service, which increased total employment by approximately 3,000 people.
Government employment policy aims to meet the staffing needs of the public service by filling permanent positions and not by hiring Fixed-Term Employees.
Ratings are not up in the air
How do you comment on civil servant evaluations and interdepartmental promotions being up in the air? The proposal of the opposition parties for a law on evaluations seems to face legal issues, as any proposals submitted to the National Health Service will be made with the existing evaluation system, while in case the draft law is approved, the evaluation will have less weight. What do you advise the House to do?
The new system of evaluation of civil servants is not "up in the air". The relevant Regulations were implemented for the first time in 2024, for the annual evaluation of civil servants for the year 2023.
The evaluation process of the employees has been completed and the Service Reports have been submitted to the Public Service Commission, which is also responsible for supervising the implementation of the system and submitting suggestions for its improvement.
The Ministry of Finance, after receiving information from the Public Service Commission in relation to the results of the implementation of the new system for evaluating the performance of civil servants, will evaluate them in order to promote accordingly any necessary amendments to the relevant Regulations, in order to improve / correct certain provisions thereof.
Regarding the procedures for filling the promotion positions, the Public Service Committee will proceed based on the procedure provided for by the relevant legislation, in force as of 01.01.2024, including the Interdepartmental Promotion positions, after the relevant Service Plans before the House of Representatives have been approved.
Regarding the Proposal for a Law submitted by members of the House Standing Committee on Financial and Budgetary Affairs, there is concern, given that some time has passed since the date of entry into force of the law, proposals have been forwarded to the Public Service Commission to fill a significant number of positions and it may not be appropriate for some positions in the same year to be filled differently from others. However, the discussion of the issue was not exhausted before the competent Parliamentary Committee and we certainly cannot pre-empt the decision of the House of Representatives.
Please note that, according to legal guidance given by the Legal Service, the provisions of the Draft Law cannot be given retroactive effect. That is, the Amending Law cannot apply to Promotion posts, for which proposals for filling have already been submitted to the Public Service Commission by the competent authorities.
Regarding cross-departmental promotions and the delay in approving the 75 service plans, when will you be ready?
Regarding the Service Plans of the Interdepartmental Promotion and First Appointment and Promotion positions, it is noted that 67 Regulations have already been submitted to the House of Representatives, concerning the amendment of 175 Service Plans, which were discussed in the competent Subcommittee on Legal Affairs for Service Plans on 19.04.2024.
Also, on 12.06.2024, another 23 Regulations concerning the amendment of 61 Service Plans were submitted and 2 Regulations concerning 6 Service Plans remain, which are expected to be submitted soon.
The expectation of the Ministry of Finance is that all the above Service Plans will be approved by Parliament before the end of its work for the summer recess, i.e. before 15.07.2024.
Multiple pensions, the age limit for promotions and care
After all, what about the bills to abolish multiple pensions for state officials? The parties' disagreement focuses on the lump sum payment, is there any possibility of changing the plans?
The legislative framework proposed by the Ministry of Finance, which, as is known, includes the abolition of pension benefits (pension and lump sum) paid to officials and the payment to them of a one-off gratuity, which is considered the most appropriate solution for the purpose of removing the distortions presented by the current legislative framework.
This, in effect, removes the two main distortions, which are the payment of multiple pensions and the simultaneous payment of pension and salary to state officials who assume more than one office. Furthermore, uniformity is achieved in terms of the starting age for pension payments, which, according to the proposed regulation, is 65 years for all officials. This provision is consistent with the general rules applicable to the starting age for payment of the pension.
The proposed regulation was formulated after obtaining relevant guidance from the Attorney General of the Republic.
At this stage, any alternative designs are not being studied and elaborated.
A few days ago, the MGQ, which you chair, met and apparently the government's proposal to ban promotions 18 months before retirement is being put on hold. But is the proposal still on the table? Will it come back differentiated? In relation to health care, will you table a bill to bring it back?
At the meeting of the MGQ it was decided that the bill elaborated by the Ministry of Finance should not be promoted for the time being and that emphasis should be placed on the issue of accelerating the procedures for filling positions in the public service.
In relation to the medical care of civil servants, it was decided that the Ministry of Finance will promote an amendment to Regulation 5 of the Public Service (Medical Examinations and Medical Care) Regulations, in order to restore this benefit. However, it is a political decision at the level of the Council of Ministers.
