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22 May, 2024
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The climb to success in the public sector pay scale

Hold tight for paycheck transformations!

Panayiotis Rougalas

Panayiotis Rougalas

The Ministry of Finance has officially disclosed the main provisions of the agreement reached with trade unions PASYDY and FCC, outlining significant salary advancements for public and broader public sector employees, including those within Local Government Authorities. The adjustments are set to apply across the combined A2, A5, and A7(ii) salary scales.

Concurrently, the Ministry conveyed that the involved parties have mutually agreed to embark on a thorough review and rationalization of the entire government payroll. This initiative is grounded in a study to be conducted by independent consultants and experts, aiming to ensure the long-term sustainability of the public and broader public sector payroll, while also addressing any identified distortions.

In more straightforward terms, the agreed-upon salary increases are slated to proceed as promised. However, a subsequent study will turn its focus towards the low-paid public sector and the creation of new positions.

According to discussions in the House of Representatives, 397 new positions are anticipated for 2023, with an additional 705 slated for 2024. The study is expected to conclude that a comprehensive rationalization of the state payroll is necessary, coupled with the implementation of merit evaluations for those working within the state apparatus.

Despite the clarity on what needs to be done and the widespread acknowledgment of the right course of action, there seems to be a recurring pattern of deviating from the intended path.

The state payroll, as evident in the 2024 Budget, is on a steep upward trajectory, with staff remuneration, including basic salaries, indexed allowances, special allowances, contributions to pension and health funds, and the new occupational Pension Benefit Scheme, estimated to surge by 15.3% to 3.72 billion in 2024, compared to 3.23 billion in 2023.

This surge has led to the Adjusted Total Allowance (ATA) climbing to 66.7%, resulting in low earners ascending the pay scale and further widening the gap between the private and public sectors. The allure of joining the public sector, a dream harbored by many Cypriots for decades, is heightened by a political system seemingly laying the groundwork for widespread involvement, despite the failure to learn lessons from the 2013 crisis.

As if these challenges weren't enough, amidst the increase in public sector wages by the ATA, there's an additional hurdle. Starting from December 1, 2024, employer and employee reciprocal contributions are set to increase by 0.5%, shifting from the current 8.3% to 8.8% on both sides of the employee's insurable earnings.

This means that come January 2024, all employees will witness a decline in their net pay. However, the impact will be particularly profound for those in the private sector, as no compensatory measures are currently in place, leading to what can only be described as "eye-watering" adjustments for this group.

[This article was translated from its Greek original]

Cyprus  |  finance  |  salary  |  wage  |  government

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