Opinion
By Yiannos Stavrinides
This government has two choices and it seems determined to take the easy one: the path of handouts, subsidies, and tax breaks. The path that leaves you feeling good about yourself, yet stagnant in relation to the international environment and what is already unfolding, or about to unfold, over the next two to three years.
The Cost-of-Living Allowance (COLA) has been without a permanent agreement for twelve years now. An open wound that periodically festers, demanding time and energy. A process that will repeat itself every time a deadline approaches. This time, however, the situation is even more complex and the responsibility lies squarely with the government.
A government desperately trying to produce something substantial, to change the narrative, and to win back the next election. Within this framework it announced “COLA for all.” A proclamation that sparked both hope and fear: hope among thousands of workers who imagine COLA as something almost otherworldly, a benefit they might finally get to enjoy, and fear among employers who have long sought its abolition, viewing it as distorted, unnecessary, and outdated.
If “COLA for all” means, for the government, an expansion of coverage while keeping the existing list of beneficiaries intact, then it amounts to irresponsible policymaking. Annual surpluses exceeding one billion euros must not become an alibi for decisions that will leave a long-term negative footprint.
If the government is indeed willing, as it likely is, to spend the fiscal cushion, it should know there are far more meaningful ways to do so: namely, through productive economic policies. Policies that, over time, yield real results; substantive, not electoral. Because, according to the classic recipe, elections are won with handouts, benefits, and tax breaks.
Cypriot workers, who stand at the center of the government’s policy agenda, are trapped in a vicious cycle of low investment, low productivity, and low wages. And the only meaningful way this government can act is to break that cycle. And how is that done? Through productive investments in technology and critical infrastructure (not roads).
If the government truly wishes to intervene in the economy in a meaningful way, it must invest the surpluses in boosting productivity. Handouts, benefits, and tax breaks have no positive impact on productivity, if that is indeed the goal. Instead, the government seems prepared to spend the surpluses on purely communicative gestures (for example, a €18-per-month COLA for everyone), with the sole purpose of strengthening the narrative and securing a second term.
It is a pity that, as it appears, the surpluses will meet the same fate as the one-billion-euro Recovery and Resilience Fund. And we say this because, unfortunately, that money too was squandered without any meaningful impact on the economy’s productivity. Squandered, because it was channeled into mature, outdated projects from previous decades. A glaring example: the dispute with teachers over an evaluation system being pushed through; not out of genuine reform intent, but simply because there are a few million euros from the Recovery and Resilience Fund that “must be used.”
Government intervention should be designed around investments that tackle the country’s enduring problems (energy, technology, and defense). But such initiatives require time, and time is a luxury when you’re already preparing to win the 2028 elections.
