Cyprus govt workers strike over pay freeze

AP News
Posted: Dec 13, 2011 8:21 AM
Cyprus govt workers strike over pay freeze

Thousands of Cyprus government workers held a three-hour strike Tuesday to protest a proposed two-year salary freeze they regard is unfair.

Even limited strikes are rare in the eurozone member of 800,000 people with a bloated public sector that takes up around a third of all government spending.

But trade unions said they were not adequately consulted in talks between the government and opposition parties _ which hold a majority in Parliament _ in hammering out the deal.

The strike closed schools early but did not affect airports, sea ports and hospitals.

In Nicosia, hundreds of protesters booed and mocked lawmakers entering and exiting parliament, and union leaders said they should have targeted tax dodgers and the rich, not public employees.

"We unreservedly say no to these false dilemmas that make workers easy prey, while provocatively leaving businesses, big capital and generally those who have untouched," said Glafcos Hadjipetrou, boss of the PASYDY union.

Finance Minister Kikis Kazamias told union leaders they were left out of the talks because he needed a quick deal because the island faces sanctions under EU rules if it doesn't agree on deficit-cutting measures by mid-December.

"This was something that shouldn't be considered the rule, but rather the exception," Kazamias said.

Cyprus is trying to slash its fiscal deficit and restore investor confidence following credit rating downgrades _ mainly due to its banks heavy exposure to debt-laden Greece _ that have brought it a step above junk status.

The island, with a euro18 billion ($23.8 billion) economy, has been largely locked out of international markets for loans to pay its bills and refinance its debt, as interest rates on its bonds have shot up as a result of the downgrades.

Cyprus is relying on a euro2.5 billion ($3.3 billion) loan from Russia at an interest rate much lower than what markets are offering to see it through until around middle of next year.

Austerity measures the government is trying to push through parliament include raising a sales tax from 15 to 17 percent, a scale-based levy on private sector salaries above euro2,500 ($3,312), reducing social benefits by euro200 million ($265 million) and reducing public sector positions.

Lawmakers will hold separate votes this week on the budget and additional austerity measures, which aim to shrink the deficit from the current 6.5 percent of gross domestic product to 2.4 percent.