Dorita Yiannakou
A decade after the financial crisis that forced Cyprus to slash public sector benefits under the terms of its bailout agreement, the government is now gradually rolling back austerity measures — handing back perks to civil servants in a move seen as both politically strategic and potentially risky.
Public sector employees — whose ranks have grown steadily in recent years — are at the heart of this shift. According to data from the Statistical Service, in October 2010, the total government workforce stood at 52,604 employees, including 42,226 permanent staff and 10,378 temporary workers. Today, the number has climbed to 55,107, with 32,732 permanent staff and 12,849 temporary workers — a significant increase in non-permanent contracts, despite the government's move to restore job permanence.
The return of public sector benefits comes as the government looks to reward civil servants for their sacrifices during the bailout years, while capitalizing on Cyprus' improved economic performance. However, the timing is not without political calculations. The gesture serves as a bonus for President Nikos Christodoulides, whose eye is already on the 2028 presidential elections, with public sector employees likely to be key allies in his re-election bid.
What no one seems to be considering, however, is whether these handouts risk reopening a hole in the public payroll — one that could weigh heavily on the state budget in the long run.
Perks Make a Comeback
One of the most significant perks returning is job permanency. The government recently submitted a bill to Parliament lifting the ban on permanent hires in the public and broader public sector — a restriction imposed in 2013 as part of Cyprus' bailout commitments.
But that's not all. In 2023, the government raised the Cost of Living Allowance (ATA) to 66.7% of inflation and granted a 1.5% general pay increase last October. On top of that, Finance Minister Makis Keravnos announced plans to introduce supplementary health insurance schemes for public sector workers — similar to those in semi-governmental organizations — while openly admitting that private sector workers are the ones most unfairly treated in this equation.
What About the Private Sector?
If you're working in the private sector and waiting for similar perks — don't hold your breath. There's nothing in the pipeline for private employees, who continue to support the economy without job security, automatic wage adjustments, or institutionalized pay rises.
It's clear the government is betting on the public sector vote to secure its political future, leaving the private sector — which bore much of the burden during the crisis — out in the cold. The gap between public and private sector rights and benefits is widening once again, raising concerns of deepening inequality.
History Repeating Itself?
Beyond the obvious favoritism, the bigger issue at play is the return to pre-bailout practices that were once deemed catastrophic for the state. The economic recovery of the past decade wasn't solely the result of public sector sacrifices — it was the combined effort of all workers, across both public and private sectors.
Shouldn't the government exercise more restraint with its promises, especially when they could damage the state's long-term fiscal health? The painful lessons of the bailout era made it clear that the policies once applied in both the public and banking sectors were unsustainable.
So why — when the economy is finally back on track — are some choosing to see the tree, but not the forest?
With the public payroll rising and election games already underway, the government seems more concerned with short-term gains than the long-term sustainability of the economy — a gamble that could cost everyone in the years to come.
*This article was translated from its Greek original
