Mainland's austerity measures grind down island's economic wellbeing
CYPRUS:Jobless figures are up fivefold as cash-strapped island prepares to take rotating EU presidency
AT LEAST a quarter of the shops along Makarios Avenue, the upmarket high street in Cyprus’s capital, Nicosia, are closed. Shops still open have slashed their prices.
A merchant who says she may have to shut complains that the government has done nothing to aid business. Chic cafes garner small change from customers who, for the price of a cup of coffee, idle away hours chatting or surfing the net on free wifi connections.
In the supermarkets, the majority of the checkouts are closed. Staff have been downsized.
My travel agency has cut its employees by two – an accountant and the cashier. The agents who do the bookings now write out the invoices as well. The number of jobless rose to nearly 35,000, more than 10 per cent of the work force, an increase of 8,000 since May last year. Cypriots are used to a jobless rate of 2 per cent.
Most of the unemployed are in construction, trade, hotels and restaurants and manufacturing. Newcomers to the labour market snap up any jobs they can find. A Cypriot friend’s son, who has a British master’s degree in business administration, is tending bar at €5 an hour.
Greeks fleeing their country’s economic meltdown are coming to Greek-speaking Cyprus and offering to work for lower pay than Cypriots.
A physician says doctors and private clinics are suffering because Cypriots are postponing elective medical treatment or going to government hospitals. Burglaries are on the increase, although the rash of bank robberies that plagued the island a couple of years ago seems to have declined after banks installed security cameras and doors that lock behind customers as they enter.
Cyprus Airways, the national carrier, requires a restructuring and rescue plan, but it must be acceptable to the pilots who are an influential a force in the land. Eurocypria, the cost-cutting air- line, has collapsed. Two airlines were a luxury for a country with a population of only 839,000.
Tourism revenues dropped 16.1 per cent between April 2011 and this April, from €136.7 million to €114.6 million. April tourist arrivals fell from 199,762 to 189,648. Cyprus’s sun and sea are expensive for Europeans, the majority of tourists who come here. They are also suffering from the global economic meltdown and euro crisis. Costs are rising.
Resentment is particularly high over the soaring price of electricity since a blast from explosives badly stored at a naval base not far from the island’s main power station destroyed its two functioning units.
Instead of celebrating the island’s assumption of the EU’s rotating presidency at the end of this month, Cyprus could be hum- bled by the need to apply for an EU bailout. Politicians argue the bailout would not be for the economy but for the Cyprus Popular Bank, the country’s second-largest lender, overly exposed to Greek debt. But an injection of €1.8 billion would actually be for the state, because last month parliament adopted legislation to underwrite a fresh issue of shares by the bank.
If the money cannot be raised by the deadline, the government will have to apply for assistance from the EU stability mechanism. Cyprus and its commercial banks have not been able to secure funds from international money markets since June 2011 when the credit rating plunged to junk status.
Cyprus’s president Demetris Christofias, a communist with close ties to the powerful labour movement, has blamed global economic instability on the evils and excesses of “capitalism”. He has tried to steer an economic course that maintains wages and guarantees growth while imposing only limited austerity measures. The European Commission is not best-pleased because the government has only partially implemented last year’s recommendations and insists on a better effort for the latest crop.
But 2013 is an election year in Cyprus. No one wants to displease workers and public servants, who still cash their 13th-month salary.
Russia has given Cyprus a low-interest €2.5 billion loan to tide it over, and a Chinese loan is rumoured. Help is needed: the central bank expects gross domestic product to shrink by 1.1 per cent this year. Cypriots are crossing their fingers and hoping the euro zone will survive the current chaos.