- Observatory: EurWORK
- Published on: 29 June 2014
Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.
The process of CPA structural reform that is in progress since 2011 is very much the result of European economic governance. In this context, a number of instruments mainly of a budgetary nature are applied, affecting CPA in many different ways, such as employment reduction, wage and pension cuts, pension reform. In terms of industrial relations, the most notable development is that the majority of the changes have been imposed through the enactment of specialised legislation without the consent of the trade unions. In this context, although the mechanisms in place have remained intact, in the opinion of trade unions the determination of working conditions outside the procedure of social dialogue is leading to a breakdown of that procedure on both the bipartite and the tripartite level, cancelling out the existing framework in practice.
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This questionnaire is in four sections:
- CPA definition and restructuring;
- Austerity measures;
- Industrial relations reforms;
- Social partners.
1. CPA definition and restructuring (200 words)
A definition of Central Public Administration (CPA) is: “Central government departments or ministries, which carry out planning, management and coordination functions, rather than public-service delivery functions.”
1.1 What, in the definition set out above, does not fit in your country experience?
Apart from the fact that there is no definition for Central Public Administration (CPA), the term in its own is not commonly used in Cyprus. As a result, the term CPA or central government as the most commonly used term, is often used as a synonym for the civil service and CPA employee as a synonym of civil servant.
In the above context, CPA is covered in legal terms by the definition of public service as provided for in the Public Service Law I/1990 as amended from 1990 to 2006. Specifically, public service under the provisions of Law I/1990 means any service under the Republic other than:
- Judicial service.
- Service in the Armed or Security Forces.
- Service in the office of the Attorney General or the Auditor General or their Deputies or, without prejudice to paragraphs 3 and 4 of Section 126 of the Constitution, of the Accountant General or his Deputies.
- Service in any office in respect of which other provision is made by law (e.g. educational service).
- Service of workers or of other persons whose remuneration is calculated on a daily basis.
- Service by persons who are employed on a casual basis in accordance with Employment of Casual Officers (Public and Educational Service) Laws as regularly amended.
For statistical records and analysis, employees of central government also include various categories of employees, such as military personnel, who are not covered by the provisions of Law I/1990. To them three separate laws apply the Educational Service Law, the Police Law and the National Guard Law.
When describing however CPA, it is important to differentiate CPA employees in terms of their employment status. As such, one can distinguish between employees with a public law status and employees with a private law status. In this context, one can also distinguish between employees with a high degree of job security (e.g. life-time tenure, unlimited contracts) or with limited job security (e.g. employees with fixed-term contracts).
According to the results of a study on the future of public employment in CPA: restructuring in times of government transformation and the impact of status development undertaken by the European Institute of Public Administration (EIPA, November 2012), 72% of all employees in the Cyprus’ CPA have a public law status and 28% a labour law status.
In terms of employment relationships/ contracts and their associated terms and conditions of employment, the above mentioned study, as well as the EWCO comparative analytical report on working conditions in CPA (CY1303019Q) provide a good source of information on the different types of Cyprus’ CPA workers.
1.2 What were the main structural reforms to CPA in the last 10 years (for example downsizing, devolution to state or local government, privatization, deconcentration)? Briefly describe each one of them.
The process of CPA structural reform that is in progress since 2009 but most intensely since 2011, it is very much the result of European economic governance. In this context, a number of instruments mainly of a budgetary nature were applied with the enactment of specialised legislation, throughout the public sector, also including CPA. Against this background, specific measures, as illustrated below, make part of the different austerity packages (e.g. Memorandum of Understanding on Specific Economic Policy Conditionality, MoUVThis is the bailout agreement that was reached on 16 March 2013 and finalised on 25 March 2013. Prior to this agreement, a preliminary agreement was reached on 30 November 2012 that is often mentioned as the first bailout agreement. ) and affect CPA in many different ways, such as employment reduction, wage and pension cuts, pension and organisational reform.
In terms of the downsizing process, apart from job cuts, there are also measures providing for the freezing of recruitment and promotion. Specifically, according to the MoU that was reached on 16 March 2013 and finalised on 25 March 2013, the number of public servants should be reduced over the period 2012-2016, by at least 4,500. Given, however, that estimates by the Department of Public Administration and Personnel (PAPD) indicate that this target is difficult to achieve, the Strategic Framework for Budgetary Policy for the 2014-2016 period provides for additional measures.
As far as permanent staff is concerned, it is provided that the freezing of hiring of new personnel on first entry posts will be extended until the end of 2016, while the terms of the MoU that provide for one public servant recruited for every four that retire and for one person recruited for every five retirees for hourly-paid staff in the sectors of health and safety will be suspended, with the exception of hourly-paid staff in the departments and services of the Ministry of Health. It is also forbidden to create any additional permanent jobs and to upgrade pay scales on a personal basis, either for public service jobs in the public sector or for hourly-paid government staff jobs. Additionally, 1,880 vacant jobs will be abolished, including vacant jobs for hourly-paid staff.
In terms of the employment of non-permanent staff, recruitment of fixed-term employees is forbidden throughout the public service for both 2013 and 2014, with few exceptions in specific departments and services (e.g. Air Traffic Controllers, Department of Civil Aviation).
Another important dimension of the MoU in terms of public administration reform, is the interchange ability and mobility of staff in the public service. In this context, the MoU provides for the reduction of impediments to staff mobility within the public and the broader public sector, inter alia, by removing restrictions arising from the Public/Broader Public Service Laws as to the duration and placement of secondments, as well as for the need of employee consent.
Further future reforms, that will be the result of an independent external review, refer to:
- The examination of the role, the competences, the organisational structure and size/staffing of relevant ministries, services and independent authorities.
- The examination of the possibility of abolishing or merging/consolidating non-profit organizations/companies and publicly owned enterprises.
- The reorganisation and restructuring of local government.
- Last but not least, submission of bids for purchase of services or assignment of contract work as provided for by the Law 12(I)/2006 on the Coordination of Procedures for the Award of Public Works Contracts, Public Supply Contracts and Public Service Contracts and Related Matters and the relevant regulations, should be limited to cases where this is deemed to be absolutely necessary. In the same context, the MoU provides for the Establishment of an adequate legal and institutional framework for Public private partnerships (PPPs).
2. Austerity measures since 2008 (500 words)
2.1 Since 2008, were new pay and working hours policies negotiated by the social partners or unilaterally imposed (through, for example, a new law and/or a financial bailout package)?
Based on Cyprus’ commitments under all four priority areas of the EuroPlus Pact, the government put forward a number of measures. Specifically, in fostering competitiveness, a policy of containment of public sector wages has been put forward, including also CPA. In this context, the most important measures affecting directly the wages of those working in CPA are the following:
- Total freeze of wages, salaries and pensions for a period of two years from 1 January 2011 to 31 December 2012, Law 192(I)/2011.
- Total freeze of wages, salaries and pensions for a period of four years from 1 January 2013 to 31 December 2016, Law 185(I)/2012 that amended Law 185(I)/2011.
- Total freeze payment of the COLA. Initially, the measure was applied for a period of two years 2011 and 2012, but with the enactment of Law 185(I)/ 2012 on 21 December 2012 the measure was extended to cover the period from 1 January 2012 until 31 December 2016.
- Reduction on gross monthly earnings of wages, salaries and pensions, initially for a period of two years from 1 December 2012 to 31 December 2014 (2011-2012) as illustrated in the following table (Law 168(I)/2012):
Monthly gross earnings
% of contribution
€1,001 - €1,500
- Law 185(I)/2011
It should be mentioned that deductions as illustrated in the above table refer also to the 13th salary. According to the provisions of the Law 168(I)/2012 from 1 January 2014 a further decrease of 3% will apply to gross monthly earnings of wages, salaries and pensions irrespective of the level of the amount.
For an extensive list of all measures affecting directly the level of wages for those working in CPA, the reader should refer to Annex 1 of the MoU.
In terms of pay determination, the MoU provides that as part of further reforms of the public administration, the authorities will commission an independent external review on the possibility to introduce an appropriate system of remuneration and working conditions (e.g. annual vacation leave, sick leave, maternity leave, working time), in relation to the private sector and to other EU countries and based on best practices, together with a new performance based appraisal system in the public sector, for development and promotion purposes, linking performance with the remuneration system/ increments.
As far as working time is concerned, a non-stop working time will be established in the Public Service, as from 1 September 2013, in conjunction with moving the starting time by half an hour from 7:30 to 8:00 and extending the flexibility period from a half to one hour. With this modification the weekly hours of public officers remain unchanged. Furthermore, as a way to further reduce overtime and related costs to the public sector wage bill, it is provided that working time needs to be more flexible so as to cover, as a minimum, service hours from 7:00 until 17:00 in the entire public sector and service hours from 7:00 until 19:00 for public sector services with extended operating hours, also including the healthcare and security, under regular working time. In this context, working time outside regular working time shall be limited by enforcing strict controls, including requiring pre-approval of any non-emergency work outside regular working time.
2.2 What were the key agreements or laws through which the changes were negotiated or imposed?
All changes were imposed by the enactment of specialised legislation without the consent of the social partners, based on the government's commitments under European economic governance. However, the list of all relevant Laws/ circulars/ regulations is so extensive that cannot be part of this report and all legal documentation is available only in Greek. As such, key legislation is referenced throughout this report.
2.3 Were these changes in line with analogous reform processes in the public sector in general and in the private sector? Please discuss the similarities and differences.
There have not been so far analogous reform processes in the private sector, although some of the austerity policies targeted both the public and the private sectors of the economy (e.g. temporary contribution on gross earnings and pensions, pension reform measures). In this context, austerity measures are especially affecting the public employees while an overwhelming number of the measures that are implemented in the public sector have as their basic objective greater convergence with the private sector (e.g. retirement ages).
2.4 In case there were processes of restructuring in CPA, were these negotiated or imposed?
All changes were imposed by the enactment of specialised legislation without the consent of the social partners, based on the government's commitments under European economic governance.
2.5 What types of reforms/ changes have taken place since 2008 concerning:
- Pension cuts
- Changes in retirement age entitlement
The first pension reform that is directly effecting the pensions of those working in CPA dates from the second half of 2011 and forms part of the Country Specific Recommendations (CSRs), in particular recommendation three. The purpose was to improve the long-term sustainability of public finances by implementing reform measures to control pension and healthcare expenditure in order to curb the projected increase in age related expenditure.The changes that have been put forward and mainly regard pensions in the public and broader public sector have as their basic objective greater convergence with the private sector. The most important measures refer to the following:
- The closure of the occupational Government Employee Pension Scheme (GEPS) to new members and the provision that any newcomers join the General Social Insurance Scheme (GSIS) under the same terms and conditions as those of salaried employees in the private sector, eliminating therefore any inequalities in the level of contributions and pensions entitlements between public sector newcomers and those in the private sector.
- The increase in employee contribution rate towards retirement and survivors‟ pension benefits, in respect of the existing members of the GEPS, by approximately 4 percentage points of pensionable emoluments, in particular from 1% to 5% of pensionable emoluments.
Further important changes however, are the result of the new memorandum laws, as they are referred to, specifically Law 193(I)/2012 (21 December 2012) and Law 216(I)/2012 (28 December 2012).
Specifically, the most important measures, effecting the pensions of those working in CPA are the following:
- Separation, from the accounting point of view, of the provision for non-contributory pensions (pension schemes without contributions) from the pension schemes that have a contributory insurance basis (contributory pension schemes), where the non-contributory part will be financed by the tax on pensions (tax financed).
- Further increase in the legal retirement age (63) for people insured under the GEPS by two years for the various categories of workers, in order to acquire the right to a full pension.
- Introduction of a penalty for early retirement of the order of 0.5% for each month of early retirement, so as to make early retirement neutral insurance-wise.
- Introduction of automatic regulation of legal retirement ages every five years, in accordance with changes in life expectancy at legal retirement age, to be implemented for the first time in 2018.
- Change in indexation of all benefits, from wages to allowances for people insured under the GEPS, on the basis of which pension benefits will be calculated pro rata, taking account of service during a person’s entire working life, with implementation of the measure beginning in January 2013.
- No readjustment of pensions for the period 2013-2016.
For an extensive presentation of the GEPS reform, the reader should refer to the EIRO CAR on social partners involvement in the reforms of pensions systems (CY1304039Q).
3. Industrial relations reforms (1,000 words)
3.1 Are there formal industrial relations processes in the CPA, such as collective bargaining between trade union and management representatives or information and consultation via works councils? Do these apply equally to employees with diverging employment status (such as civil servants and others)?
The first collective bargaining mechanism in the public sector was established during colonial rule in 1947, with the Joint Consultative Committee (MEP) as the official bargaining body. The MEP has been operating ever since on the same principles, albeit with various modifications made for restructuring purposes. The latest modification made on 8 December 1993 involved the reform and updating of its statutes, but without any substantial changes to its general objectives or competencies. Together with its Permanent Sub-committee, the MEP is the official agency for collective bargaining between the government as employer and all public servants, for the regulation of the general terms and conditions of employment in the public service sector, through their trade union organisation the Pancyprian Public Employees Trade Union (PASYDY), as well as other representative trade unions in the CPA, depending on the sector (i.e. healthcare). In particular, the government side is represented by two members: the Director General of the Ministry of Finance, who is Chairman of the Joint Consultative Committee, and the Director of the Public Administration and Personnel Service. The official side of the Permanent Joint Consultative Committee sub-committee consists of the Director of the Public Administration and Personnel Service or his representative, who is also chairman of the subcommittee.
In the above context, the employment status of central government employees, and employees throughout the public sector (with the exception of the broader public sector, e.g. the semi-governmental organisations), is to a large extent determined via collective bargaining. Specifically, in accordance with the provisions of the statutes and rules of the MEP, issues of general principle may be the subject of collective bargaining with regard to: (a) recruitment, (b) promotion, (c) working hours, (d) leave, (e) public holidays, (f) medical care, (g) discipline, (h) emoluments and pay supplements with regard to individual jobs, groups of jobs or the public service as a whole, (i) retirement benefits, and any other issues affecting the terms and conditions of service relative to any job or group of jobs or the public service as a whole.
3.2 Has there been a change since 2008 in the structure of collective bargaining, such as a breakup of centralized bargaining arrangements (decentralization), the creation of sector-specific arrangements within CPA (sectoralization), or the convergence of CPA industrial relations arrangements on the private sector or broader public sector? If not, did this change occur earlier?
3.3 Is there a collective agreement in place for CPA? If yes, which were the main topics discussed or negotiated since 2008?
Currently there is no collective agreement in place for CPA. Since 2011, changes in terms and conditions of employment for those working in the CPA, have been imposed by the enactment of specialised legislation without the consent of the trade unions.
3.4 For those topics not covered by collective bargaining agreements, how are they determined?
Specific matters not affecting general principles and not impacting other services may be discussed in the competent Departmental Joint Staff Committees (MITEPs) which are set up in all the ministries except for the Ministry of Defence. Nevertheless, whether a subject to discussion should be referred or not to MITEPs it’s up to MEP to decide.
According also to Article 11 of the Joint Consultative Committee Statutes, the Committee’s and Subcommittee’s decisions and findings are formulated following unanimous agreement by both sides, in the form of recommendations to the Council of Ministers, and are taken forward for implementation in accordance with the relevant procedures. However, despite the fact that such recommendations are considered to be binding on both sides, the inalienable power of the Council of Ministers to take final, binding decisions by unanimous recommendation, when the Council of Ministers deems this to be necessary or appropriate, is not infringed upon.
4. Social Partners (700 words)
4.1 From the list of social partners set out in Annex 1 for your country, have there been any changes since 2010?
Please tick which ones are no longer involved and please list any new ones.
Trade unions (2010)
Trade unions – no longer involved (please tick)
4.2 Is there competition among trade unions or employer representatives?
Since its official establishment in 1966, PASYDY remains the main union in the sector of CPA. As a result, with the exception of blue-collar workers (CY0611029Q) and a small number of employees in the hospital sector (CY0802019Q) PASYDY is the only trade union in the CPA.
Specifically, on 31 December 2012 (the latest date for which data are available) PASYDY had 19,094 registered members, compared to 20,318 registered members on 31 December 2011, of whom about the 70% was employed in the CPA.
At organisational level, according to PASYDY itself, the most important change refers to its reorganisation in the 1970s, which created the occupational sectors and district departments and the operating procedures of the organisation and its bodies. The procedures for election of the leadership were also approved. Since then, PASYDY organises occupational sectors covering the whole spectrum of the public sector that also includes the municipalities, other local authorities and the publicly owned enterprises and companies, in other words the broader public sector.
In terms of rivalries and competition among trade unions that are active in the CPA, it should be mentioned that the Pancyprian Union of Government Doctors (PASYKI) and the Pancyprian Union of Government Nurses (PASYNO) left PASYDY already in 1998, due to serious disputes over the manner of resolving the problems of members of their professions. PASYKI represents the vast majority of government doctors and PASYNO represents a small number of government nurses.
4.3 Since 2008, have there been any mergers or de-mergers of trade unions or employers’ organisations?
4.4 Have trade unions taken any specific responses to austerity policies, such as industrial action, coalitions with trade unions form other sectors, civil society, cross-border trade union alliances, intensified cooperation with management? If yes, please give details.
During 2012, despite the introduction of harsher austerity measures compared to 2011 (CY1304029Q, CY1303029Q, CY1301019Q) strike activity in the public and the broader public sectors didn’t not follow the uprising trend and the dynamic of the previous year (CY1203029Q). In this context, the most notable industrial action on behalf of public servants refers to the mobilisations of 2011. Specifically, in December 2011, thousands of Cypriot public servants participated in a number of strikes that were called by PASYDY as a protest against the austerity measures. As commented by press and media, it was the first time during the last 10 years that all the unions in the public and semi public sector - state offices, schools, hospitals, telecommunications, electricity, etc - went out on strike.
Nevertheless, faced with the government’s unilateral imposition of measures and its intransigence in discussing the measures in the context of social dialogue, as has been the case for years, PASYDY has, in addition to industrial action, also taken legal action.
Specifically, as regards the emergency pay cuts for public servants for the purposes of ensuring the viability of the Government Employee Pension Scheme (GEPS), PASYDY has taken a number of cases to court for the purpose of highlighting the unconstitutionality of the relevant laws, both on the basis of Article 23 of the Constitution according to which public servants’ right to a pension is protected as an asset, as well as on the basis of Article 28(2), which provides for the equal distribution of burdens in periods of emergency. With regard to the inclusion of new entrants in the Social Insurance Fund (TKA), PASYDY has asked that this be counterbalanced with the implementation of the government commitment on 9 August 2012 that the benefit of the lump-sum gratuity be maintained for new entrants to the public sector, whereas for employees in the broader public sector an agreed-upon welfare fund scheme will be taken forward.
In terms of the pension reform and particularly the increase in retirement age for public servants from 63 to 65 years of age, it should be mentioned that PASYKI, unlike PASYDY, welcomed the measure since it has been one of its standing demands for many years.
PASYDY also intends to take recourse to the higher court in relation to the issue of non-payment of annual bonuses and pay indexation.
4.5 Have employers’ organisations taken any specific responses to austerity policies, such as, coalitions with trade unions, coordination with employers in other sectors or countries, EU social dialogue committee? If yes, please give details.
There is no employer organisation in the CPA.
4.6 What are the views of the social partners vis-à-vis the impact of austerity measures on the industrial relations in CPA? What, in their opinion, will be the most important issues for the sectors’ industrial relations in the near future?
According to PASYDY, the public sector, including central public administration, has become the scapegoat of the crisis. As a result, most measures for exiting the crisis, mainly the budgetary tools that are being applied, put most of the burden on public servants. PASYDY maintains that the percentage of all employees employed in the public sector in 2010 (18%), as well as the percentage of the total state budget represented by the state payroll during the same year (14%) are comparable with the respective percentages in other European countries. In this context, PASYDY argues that one of the most important issues for improving state finances was and still is addressing tax evasion. PASYDY says that whereas public sector employees contribute 40% of total revenue from income tax, the category of self-employed people, including high-income occupational categories (e.g. accountants, lawyers, doctors) who as a percentage are around the same levels as public servants (17%) contributes only 6% to total revenues from income tax. All numerical data are the estimation and position of PASYDY.
As regards the decrease in the number of public servants, PASYDY stresses that the constant staff cuts in conjunction with the freeze on new hiring have weakened the public sector and public administration in particular, whereas new, well-documented needs in selected areas such as the health sector have remained unmet, with serious consequences for the quality of the services provided and the public interest. In this context, PASYDY is willing to collaborate with the government for the purpose of better utilisation of staff and more effective functioning of public administration (e.g. use of new technologies); however, they are not going to agree to a breakup of the public service and human resources management based on financial calculations. PASYDY says indicatively that 23 departments of ministries have been left without directorates.
As concerns labour relations and the system of collective bargaining in particular, PASYDY has stated that the unilateral change in the terms and conditions of employment, in other words the determination of working conditions outside the procedures of social dialogue, is leading to a breakdown in social dialogue both on the bipartite as well as on the tripartite level, cancelling out the existing framework in practice.
According to PASYDY, developments in the health sector are among the most important issues for the future of the public sector. In this context, the organisations active in the sector of public health, mainly PASYDY and doctors’ union PASYKI, have rallied together to an impressive degree against the government’s memorandum, particularly in view of their differences in the past. In a joint communiqué on 6 December 2012, PASYKI and the doctors’ division of PASYDY condemned as unacceptable, unethical and amoral the proposal to abolish free health care for medical staff, and for doctors in particular. The two organisations have stated that doctors in the public sector, mindful of the financial crisis situation, have already accepted harsh financial measures and cutbacks (i.e. freeze on pay increases, freeze on indexation, cuts in salaries and overtime pay, temporary suspension of new appointment and promotion positions, temporary abolition of permanency), precisely at a time when over the last two years there has been a 30% to 50% increase in the workload of government doctors and intensification of work, as a result of the financial crisis and serious staff shortages. PASYKI has stated that the total number of government doctors in all hospitals is only 550, and these doctors cover around 80% of the population, 365 days a year, 24 hours a day, with an additional burden on the state budget of only EUR6 million annually.
5. Commentary (100 words)
Despite all the changes currently taking place in CPA, there are no signs so far that there will be a transition to a drastically different system (i.e. labour law status). Although it is expected that CPA will maintain some of its core characteristics, such as full time employment and life time tenure, there are indications that some advantageous terms and conditions of employment like higher salaries and better pension systems will gradually be converged with those that apply in the private sectors of the economy. With regard to industrial relations, the system remains intact in terms of the mechanisms and institutions that are already in place, although the bypassing of social dialogue bodies during the reform process raises questions on the effectiveness of the existing social dialogue institutions at a time when the Cypriot model has in fact been established as a model for social dialogue. In the opinion of PASYDY, the reform of CPA is based on a short term budgetary gain that eventually will have a negative effect not only to the terms and conditions of employment for those working in CPA but also to the quality of the services provided. In this context, PASYDY is of the opinion that the restructuring of the public sector should be applied in such a way as to bring up improvements that balance the costs and quality and see staff as an asset rather than a cost.
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Eva Soumeli, INEK