NICOSIA, June 4 (Xinhua) -- The Cypriot government will restore salaries and pensions to their level before the 2013 financial crisis, which led to their impairment by a total of 19 percent, Finance Minister Harris Georgiades said on Monday.
Cyprus was bailed-out by the Eurogroup and the International Monetary Fund in March 2013 under a 10-billion-euro financial assistance package, which also provided for austerity in the form of salary cuts and additional taxes.
Even before the bailout, salaries were cut in 2011 by 12 percent as part of a reform effort to avert the oncoming crisis and avoid more austerity. After the bailout, international lenders demanded further salary and pension cuts.
Georgiades, who took over the helm of the economy soon after the bailout managed an impressive comeback of the economy, with growth returning in 2015 and a steady expansion ever since.
However, his success brought him a headache as unions demanded salary increases, on the grounds that the economy has fully recovered and is expanding as a steady pace.
The government and the main general workers unions have already agreed on the principle of gradually restoring salaries to the pre-crisis levels but they did not define how this would be done.
Georgiades told state radio that he would suggest a gradual restoration of the salaries instead of introducing salary raises.
"The annual reduction of the salary cuts will be within the limits the economy can afford," Georgiades said.
But the main government employees union, PASYDY, demanded an immediate return to the 2011 salary levels.
"My union has always been in disagreement with other unions on the issue. We demand a one-off return to the old salaries," the union's Secretary General Glafkos Hadjipetrou said.
He added that economic conditions today are entirely different and much better than in 2011, warranting restoration of pay packets the pre-crisis level.
But Georgiades pointed out that even if the government wanted restore salaries in one move, the economy could not withstand the burden.
Meanwhile, business associations, such as the Federation of Employers' Association and the Cyprus Chamber of Commerce and Industry, fearing a backlash on the private sector salaries, strongly criticized the restoration of salaries in the public sector.
