Practices and methods implemented by the Troika in 2013 under the framework of the fiscal consolidation memorandum are included as proposals in the study conducted by the International Monetary Fund (IMF) for rationalizing the state payroll, which has significantly increased in recent years, causing concern among the government’s economic leadership and the President himself.
The Ministry of Finance commissioned the IMF to conduct a study, which is now ready. According to reports, this study describes the strategy that the government should follow to reform the state payroll.
In recent days, a team from the IMF has been in Cyprus as part of the technical assistance requested by the state to rationalize the salary scales and restrain expenditures related to the state payroll. Simultaneously, the study, based on international and European standards, aims to increase productivity and correct any distortions identified within the state machinery.
On Monday, the IMF team will deliver their report with recommendations to the Ministry of Finance, which has already been informally briefed on the proposals of the foreign technocrats.
Members of the parliamentary Economic Committee received an initial preview of the IMF’s recommendations and preferences during an informal meeting at the Parliament yesterday. Sources from the Parliament indicated that the IMF technocrats informed the committee members that among the recommendations in the study for rationalizing the state payroll is the reduction of salaries for employees within the state apparatus.
Indeed, as they conveyed to the MPs, the reduction in salaries will come alongside limiting benefits. Specifically, they called for the abolition of the Cost of Living Allowance (ΑΤΑ), as it currently stands, and linking it to the productivity of public servants. Additionally, they propose abolishing the 13th salary, instead offering increments every two years rather than annually as it currently stands.
The study also suggests filling all first-time appointment positions, as the IMF believes the current structure of the Public Sector is not productive.
Furthermore, they explained to the members of the Economic Committee their findings that the level of the state payroll is quite high in Cyprus compared to other European countries. They observe a significant number of public servants who do not perform adequately given their remuneration. They also argue that there is a large wage gap between the public and private sectors.
The IMF technocrats also cited their latest report on Cyprus, according to which the state payroll and employment in the public sector are at high levels compared to other EU member states. Moreover, they emphasized that increases in the Cost of Living Allowance (ΑΤΑ) reinforce the link between public sector salaries and inflation. The report also noted that wage adjustments should be based on macroeconomic developments and productivity.
They will evaluate the proposals.
A responsible government source told “Φ” that all of the IMF’s suggestions are merely recommendations and do not necessarily mean they will be adopted. As they stated, the proposals from the foreign technocrats will be examined and assessed. Before any decisions are made, they will be discussed with trade unions.
