Labour Research August 2012

European news

Concern over bailout conditions

Unions in Cyprus are waiting anxiously to hear what conditions will be attached to the financial support that the Cypriot government has requested from its European partners and the International Monetary Fund (IMF).

At the end of June, Cyprus became the fifth Eurozone country to ask for financial aid. The weakness of its main banks, caused by their own exposure to the Greek crisis, meant it was no longer able to borrow in international markets.

Officials from the IMF, the European Commission and the European Central Bank, known collectively as the “troika”, have already visited the island and are expected to publish their recommendations shortly.

Aware of the damaging impact of the troika’s proposals for other countries in the same situation, like Greece, Portugal and Ireland, both main union confederations, PEO and SEK, have warned against similar austerity being imposed on Cyprus.

PEO argues that “significant progress” is being made in reducing the budget deficit through measures that have already been agreed. SEK says that “harsh austerity cannot be the solution”.

As well as fearing cuts in public sector pay, which is already frozen, one of the unions’ other concerns is that the troika will demand the abolition of the cost of living allowances.

These go up automatically twice a year in line with inflation.