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44 reforms change economy

21/09/2012 08:46
Amendments in working hours and assessment of the public employees, reduction of state pensions, personal responsibility of the companies’ directors and the establishment of fiscal council are among the measures included in the reform package prepared by troika for Cyprus.

With the 44 reforms, troika wants to change the operation of the public and private sector and believes that their implementation will contribute to the strengthening of the investment activity and the recovery of the economy.

The changes to be made to the system are many and some of them are expected to spark reactions from deep cuts and new taxes demanded by Cyprus’s creditors.

Reforms should be made immediately since the Greek experience shows that were consolidation efforts are not accompanied by them, troika’s recipe tends to fail.

StockWatch has outnumbered the biggest changes as well as those expected to meet the most serious problems.

Some changes touch the mode of government. In addition to the wage cuts, troika wants to change the schedule of the public employees in order to reduce overtime costs.

It is also expected that it will implement a new assessment system, since the existing shows in devastating way that 98% of the employees are excellent. The new system will be based on performance and productivity and will be connected with the payroll of the staff.

The health system will also be subject to significant changes, bringing an end to the privileges of public employees. It is proposed – as in the general health care system - a system of co-payment for medical services and medicines.

Doctors will also be encouraged to prescribe generics and the rules governing prescriptions and additional diagnostic tests will be revised.

Pensions will be changed too, as public employees will contribute themselves. Today, they pay almost 5%. They will be called to pay another 2% in five years.

We also put a ceiling to the maximum pension amount and there will be proportional reduction or taxation of the state pension exceeding average wage.

As for the fiscals, new institutions will be introduced and a fiscal council will be established on the basis of international practices.

Certain semi-governmental organizations will be privatized.

As regards tax evasion, troika proposes what was promoted in Cyprus two years ago but this stumbles at the objections of those directly affected.

There should be personal responsibility for the payment of corporate taxes to those who actually run a company and personal fines for non-payment of taxes.

The state should also prohibit the alienation of property held by the taxpayer in cases where taxes are not paid.

In the welfare system, they proposed the better targeting of benefits and a ceiling to those receiving multiple benefits.

Besides the abolition of COLA in the public sector, they proposed its abolition in private sector too.

Troika also recommends further financial support of the CTO to be able to implement its ambitious plans. Hoteliers will be asked to pay more for water, sewage and electricity and less on wages.