The state wage will reach an all-time high by 2023, according to the Fiscal Council's spring report for 2021. As the Fiscal Council notes in the report, the state wage began to increase significantly before the pandemic crisis. GDP. In particular, based on the data, the state wage in the next two years will rise to 14.6% of GDP, a percentage that is the highest to date. “Central government spending on staff salaries for the first four months of the year increased by 4.2% and pension payments by 9.7%,” the Fiscal Council said.
The council argues that recent government decisions, such as upgrading pay scales (eg nurses) and creating a new pension for government employees employed from 01/01/2012 onwards, as well as those who will be employed in the future, will increase the state salary. “Regarding the latter, actuarial studies should be carried out immediately so that in time and if deemed necessary, the contributions of the employer and employees are adjusted to the plan so as not to create deficits with significant budgetary costs”, it is stressed. Another point that needs to be highlighted and mentioned in the spring report is the increase in the number of non-permanent employees, which on the one hand has kept the cost of government pay in recent years, on the other hand comparing their benefits with permanent public sector employees. has created pressures to cover the difference either by claiming new benefits or by changing their status. “This has inevitably led and is leading to a new budgetary burden,” it said.
In addition, an important point highlighted by the Fiscal Council is that while in all sectors the Cypriot state spends higher amounts on staff salaries compared to other EU Member States, the size of government as a percentage of GDP expenditure is comparatively lower than the euro area average and the main factor is reduced social benefits.
The Fiscal Council refers to a series of reforms that need to be made to improve the competitiveness of the economy, attract investment and create surpluses. These, he argues, will help reduce borrowing and service costs, while boosting reserves.
Finally, citing the assumptions and forecasts of the Ministry of Finance, the European Commission and the International Monetary Fund, the council notes that the GDP of Cyprus is expected to return to pre-crisis levels by 2023 and that “based on data and assumptions to date “which are repeated as characterized by a high degree of uncertainty, Cyprus seems to remain able to service the public debt”.