COLA to return as of 2018, says Finance Minister

Cyprus Minister of Finance Harris Georgiades said on Friday that Cost-of-Living-Adjustment, which links salaries with inflation, will be paid to the broader public sector as of 2018.

Addressing the 13th Summit of OHE-SEK trade union, Georgiades recalled that salary increments in the broader public sector have been reinstated from the beginning of 2017 but he denied voices over a fiscal derailment.

To those who express concern we respond with the actual results and the fiscal performance which confirm that both for 2017 and 2018 we remain with no deviation in the framework of a balanced budget.

COLA has been frozen in 2011. As part of the Euros 10 billion bailout agreed with the IMF and the EU, hiring and promotions in the public sector were frozen as well as COLA. After Cyprus’ exiting the bailout in March 2016, the government and the public sector trade unions agreed that COLA will be paid in half only in case of GDP growth. Furthermore, they agreed that the grow of the public sector wage bill will be limited to the nominal GDP growth.

Georgiades added that responsible management creates fiscal space that allows the promotion of important development projects, which have been postponed for years and that underpin further economic growth.

However, we cannot return to the old practices where the state spending money it does not have, pushing the bill down the line. Such practices may be satisfactory in the short run but undermine the economy’s prospect, making employees vulnerable, he said.

The Cypriot Minister also referred to the agreed framework linking salary increases with GDP growth, which contribute to the public wage bill sustainability as well as promotion which now can take place in the broader public sector.

On the other hand, it would be irresponsible and destructive if we were to return to a state of indiscreet hiring which lead to a massive inflation to the public sector, he said.

In this context, Georgiades welcomed the parliamentary approval of the government bill to unfreeze promotions in the public sector and to implement public sector hiring indefinitely.

Under the bill, promotions in the public sector will be approved by the Finance Ministry and by the Parliament, while new hiring will be submitted to the parliament for approval.

Georgiades pledged that the government will not enter into complacency as it believes that Cyprus has not fully overcome the consequences of the financial crisis.

On the contrary, we are well aware that we still have way to go, he concluded.

Source: Cyprus News Agency