Filenews 29 June 2024 - by Eleftheria Paizanou
Practices and methods implemented by the Troika in 2013, in the context of the Memorandum of Fiscal Consolidation, are included as proposals in the International Monetary Fund (IMF) study for the rationalization of the state wage bill, which has increased significantly in recent years, a fact that concerns the economic staff of the Government and the President of the Republic himself.
The Ministry of Finance has commissioned the IMF to conduct a study, which is ready and which reportedly outlines the strategy to be followed by the government to reform the state wage bill.
In recent days, an IMF team has been in Cyprus, as part of the technical assistance requested by the state to rationalize wage scales and contain state payroll spending. At the same time, the study, which is based on international and European standards, aims to increase productivity but also to correct any distortions found in the state machinery.
On Monday, the IMF team will deliver the report with its recommendations to the Ministry of Finance, which has already been verbally informed about the proposals of foreign technocrats.
The members of the parliamentary Committee on Finance got a first taste of the IMF's suggestions and "wants" yesterday, during their informal meeting in Parliament. Parliament sources said IMF technocrats had informed members of the Finance Committee that among the recommendations included in the study to rationalise the state wage bill was to reduce the wages of workers in the state machinery.
In fact, as they told MPs, the reduction of salaries will come through a reduction in benefits. In particular, they called for the abolition of ATA, as currently granted, and its link to the productivity of civil servants. At the same time, they propose the abolition of the 13th salary and the granting of increments every two years instead of every year as is currently the case.
The study also proposes the filling of all first appointment positions, as the IMF considers that with its current structure the public sector is not productive.
In addition, they analyzed to the members of the Finance Committee their findings that the level of the state wage bill is quite high in Cyprus compared to other European countries. They find that a large number of civil servants do not perform on the basis of their salary. They also believe that there is a large wage gap between the public and private sectors.
IMF technocrats also cited their latest report on Cyprus, according to which state wages and public sector employment are at high levels, compared to other EU member states, while the increase in ATA strengthens the link between public sector wages and inflation. That report also stated that wage adjustments should be based on macroeconomic developments and productivity.
They will evaluate the proposals
A competent government source told "F" that everything proposed by the IMF is just recommendations and does not mean that they will be adopted. As he said, the proposals of foreign technocrats will be examined and evaluated. Before any decisions are taken, they will be discussed with the trade unions.
It should be noted that the IMF is also providing support to Cyprus for the submission of a request next October to the Directorate General for Structural Reform Support at the European Commission, in order to examine specific individual issues of the state payroll. It is recalled that this year the state payroll was increased by €500 million while next year, according to the forecasts of the Ministry of Finance, it will increase by 4.9% and reach €4.25 billion.
