Changes ahead for semi-state organisations

Changes ahead for semi-state organisations


By Thanasis Gavos – London

A wave of significant interventions in the operation and structure of major semi-state organisations is being examined by the government in Cyprus. The discussion has been focusing on two plus one enterprises that are deeply woven into the national identity perception, namely Cyprus Airways and the Cyprus Broadcasting Corporation (RIK), as well as the Electricity Authority of Cyprus.

The next few days will see the first 200 of more than 400 redundancies being announced in Cyprus Airways, as the newly appointed administration tries to deal with a survival problem. The case is an example of how not to handle such sensitive issues, as the unions had secured a government pledge for special extra redundancy payments to the ones that will be leaving the firm. The government now says it cannot keep that promise, practically inviting trouble.

At RIK a debate over a controversial governing party proposal to ban commercials has started, with reports claiming that even those that made the suggestion have started backing down, following criticism by deputies, advertisers, even private channels. In a very small country like Cyprus, with such sizeable diaspora, the role of the public broadcaster becomes all the more important, as the developments in Greece over ERT have reminded everyone. It is true that it would be hard to imagine how RIK could maintain its current level of services and quality (regardless of the large margin for improvement there) without so significant a source of revenue. And even if one could argue that the people (and hopefully not the state) should be the exclusive funder of RIK, it is hard to imagine how such a bold move could materialise effectively in the current period of thin cows.

The Auditor General Chrystalla Georghadji, in the meantime, has rung alarm bells on the state and future of AHK, the electricity authority. According to a revealing report, the company faces a pressing lack of liquidity, magnified by the surge in unpaid and even more worryingly un-payable bills. The customer base of the company has been feeling the pinch of the austerity measures and the rising unemployment, creating a vicious cycle similar to the one seen in many other enterprises in many other countries of the European south. The Inspector has also dismissed as provocative a plan to reduce the organisation’s directorships through early retirement and high compensation payments. Again, restructuring seems essential, but the way to go about it requires careful planning.

The much used motto of the austerity era of the last 4-5 years has been that reforms should be implemented where needed but not in an excessive and self-defeating way. At least in the case of Cyprus it seems like a well thought motto; changes should occur, but with meritocratic criteria and not in a pace or manner that creates havoc; and not under the often proven misplaced pressure of the foreign creditors or an ideological drive in favour of the private sector and against the public services character of such organisations or on the other hand against the public interest (see unjustified excessive compensations). Cyprus Airways, RIK and AHK are not simply numbers and money, they are part of Cyprus’s identity, servants of the people and they command respect in handling their problems. It doesn’t help that until now plans have been drawn too hastily or left too late.