The International Monetary Fund’s recommendations have once again triggered strong reactions across Cypriot society.
This backlash was expected, as the proposals include potentially eliminating key worker benefits such as cost-of-living allowances and the 13th month salary, coming at a time when households are already struggling financially due to rising costs.
The government bears indirect responsibility for this development. It was the administration that invited the IMF to examine and recommend measures for the civil service and specifically for the state payroll, having observed its year-on-year increases.
The IMF is known for prescribing nearly identical measures regardless of circumstances—as if applying the same prescription to every illness.
The Fund proposed similar measures during the 2013 crisis as it does now, despite the crucial difference that then the economy was in dire straits, whereas today Cyprus records one of Europe’s highest growth rates.
Some might argue that while the economy is growing, structural problems in the civil service persist as costs continue to rise. Among other findings, the IMF notes that Cyprus’s government workforce is moderate in size but features high average compensation.
It also indicates that public sector wages in Cyprus are 27% higher than those in the private sector, even when accounting for factors such as education level and age.
This represents only half the truth. While public sector wages are higher on average than private sector ones, there are also civil servants with very low salaries and private sector employees with very high ones.
Therefore, instead of cutting salaries and benefits in the public sector to align with the private sector, one could equally argue for increasing private sector wages to approach public sector levels. This option, however, is not particularly attractive for various reasons.
An alternative approach would be to implement technological upgrades in the public sector, simplify procedures, increase productivity, change the work culture and methods throughout the state apparatus, and develop new organisational structures that enhance workflow efficiency. There are many other solutions to balance costs in the civil service without reaching into workers’ pockets.
Yes, we all occasionally complain about civil servants’ status and benefits. However, the step of targeting the 13th salary goes much too far.
Many other measures could be implemented before considering such a move. If the government truly wants to rationalise the civil service and reduce operational costs, it can do so without calling in the IMF for solutions.
All that’s required is willingness and political determination. Solutions exist and could be implemented immediately.
