Construction workers strike

Cyprus construction workers strikeWORKERS in the construction industry – one of the sectors most badly hit from recession – are due to strike today and tomorrow island-wide because employers are not taking any action to protect their jobs, unions SEK, PEO and DEOK have said.

“The strike will take place because for three years now, employees are being fired, are forced to join the queues at unemployment offices… and are being replaced with cheap labour,” the unions said in a joint announcement read out during a news conference yesterday.

The unions said there were some 10,000 workers hailing from the EU who “are unorganised” and are not part of collective agreements that tend to guarantee better benefits for employees.

However, PEO’s Michalis Papanicolaou said that in 2008, shortly before the construction and real estate sectors started shrinking after unsustainable growth,  “there may have been even more [EU workers]”.

Some 46,000 people are employed in the sector, roughly the same number of people as in 2008, the unions said yesterday.

Numbers have remained stable because projects have shifted to more labour-intensive ones rather than say roadworks that require fewer workers, Papanicolaou said.

And the unions conceded that in 2008, the labour ministry stopped issuing work permits to third-country nationals who were seeking employment in the construction sector, effectively guaranteeing more jobs for Cypriots and other EU workers.

But SEK’s Yiannakis Ioannou said the unions have been pushing for stricter control on the industry and have proposed the creation of a committee to regulate the sector in all districts, issuing licences to prospective employees.

“We do not have the right to impose barriers on EU workers, but we have the right to support policies formed on correct criteria,” Ioannou said.

Some 1,506 construction workers were registered as unemployed in December last year, from a total of 41,625 of registered jobless. The unions said yesterday that at least 6,000 construction workers have no job.

Unemployment is expected to reach 13.8 per cent this year and peak at 14.2 per cent in 2014 before dropping a year later. The construction industry continues shrinking with cement sales falling, given a lower demand for concrete. The property bubble burst in 2009, following four years that that saw prices triple.

The unions were due to meet with labour minister Sotiroulla Charalambous yesterday afternoon as the cement makers warned that a strike might be a death blow to the struggling industry.

Construction workers strike

MEP calls for Cyprus land law reform

ON the occasion of the handover of the presidency of the European Union from Cyprus to Ireland Sir Graham Watson MEP for South West England and Gibraltar, gave the following address:

“President Christofias, I was rather critical of your Presidency at the outset, but I would like to congratulate your government on a fruitful first presidency – and to salute especially the excellent work of Andreas Mavroyiannis in difficult political and personal circumstances.

“Liberal Democrats regret that no progress has been made on matters on your island affecting hundreds of thousands of other EU citizens, such as reform of your land laws and the establishment of a banking ombudsman. And we are deeply concerned about discrimination by your broadcasters, especially CyBC or RIK as you call it, against our candidate in your current presidential election.

“But we hope that your experience of seeing how other member states function will inspire the domestic reforms, which will make your country a well-functioning modern democracy.”

[youtube=http://www.youtube.com/watch?v=ogk1_DGSlbI&rel=0&w=470&showinfo=0]

MPs reject property tax bill

cyprus_governmentMPs on Thursday rejected the cabinet’s new Immovable Property Tax (IPT) rates, opting instead to postpone discussions on the grounds that more time was needed to study the provisions in depth.

The government wanted the bill approved before Monday, when Eurozone finance ministers are scheduled to discuss the island’s bailout bid.

The bill, approved by the cabinet on Wednesday and submitted to parliament on Thursday, is in line with a preliminary bailout agreement and in theory it could fetch the government some €120 million in 2013.

The government requested the bill to be classified as urgent, meaning parliament would have to discuss and vote on it immediately.

However, the government’s request was rejected by majority vote – 31 to 17 with only ruling AKEL voting in favour. There were no abstentions.

Main opposition DISY deputy chairman Averof Neophytou stressed that despite the postponement, a clear message must be sent to international lenders that parliament remained committed to approve additional property tax after the necessary time was given to lawmakers to study the bill.

“We do not have all the information before us,” Neophytou said during the lunchtime session.

DIKO’s Nicolas Papadopoulos echoed Neophytou in that parliament remained committed to passing a tax bill, adding too that more time was needed to “examine the bill in depth.”

EDEK MP Giorgos Varnava felt the need to stress that this should not be interpreted as an attempt to protect privileged groups.

AKEL however, accused the opposition of trying to postpone discussion until after the presidential elections in mid-February, although House President Yiannakis Omirou said efforts would be made to put the issue back on the agenda and call another session before the elections once some discussion had taken place at committee level.

Nicos Katsourides, the party’s parliamentary representative accused his colleagues of hypocrisy. “In all the years I have been an MP, whenever an IPT bill came to parliament it ended up being shredded to pieces,” he said, adding that under the provisions it was clear that 78 per cent of all property owners would not be affected by the new tax. Wealthy property owners on the other hand, would be.

Addressing his opposition colleagues, Katsourides pointed out that no one had expressed any concerns when parliament hastily passed a batch of austerity measures in December that involved tax and other hikes affecting the man in the street.

Katsourides said the opposition’s intention was clear: “to not discuss the bill before the presidential elections.” “If your intentions are honest then come back in one week,” he added.

Earlier in the day the bill was discussed at the House Finance Committee.

Inland Revenue boss Giorgos Poufos and permanent secretary of the Interior Ministry Andreas Assiotis made it clear to deputies that even a small change would throw off the state’s calculation designed to bring in €120 million.

MPs reject property tax bill

Chinese developers have their sights set on Cyprus

CHINA Daily has reported that a number of Chinese property developers are planning to buy land in Cyprus or set up joint ventures with local developers to build homes for Chinese people here.

Christos Mavrellis, managing partner with Cypriot law firm Chrysses Demetriades & Co LLC said “They are also interested in developing an exhibition centre for Chinese exporters”, but he declined to reveal their names.

According to the China Daily, the move would be in line with the changes to Cyprus’ immigration laws designed to encourage foreigners (non-EU citizens) to buy property in the country.

According to Mr Mavrellis, a foreigner (non-EU citizen) with an annual income of no less than €30,000 euros who buys a property with a value of no less than €300,000 euros in Cyprus could be eligible for permanent residency permit in the country.

By the end of 2012, Cyprus had received 590 such applications from China, according to the country’s media.

“We set up a China desk last April to cater to Chinese companies’ growing interest in investing in Europe,” said Stavros Loannou, CEO of Grant Thornton Cyprus. Given the country’s location, Cyprus is regarded as a gateway for investment in the European Union, Africa and the Middle East.

Revised property tax bill vote

FOLLOWING much criticism from the Cyprus Land & Property Owners Association, hoteliers, property developers, etc. a revised bill to increase Immovable Property Tax (IPT) will be voted on today by MPs at the House plenum.

Yesterday the Cabinet approved the tax increases that should enable the government to raise a further €118 million/annum as part of the agreement with the troika. However, a government spokesman noted that it was likely that approximately €90 million would be collected, based on a return of 75 per cent.

In the past, Interior Minister Eleni Mavrou has said that that that the government is making every effort to avoid taxing the average home owner, such as those with a house on half a building plot or a large apartment. “If the €40,000 threshold based on the values of 1980 is finally adopted we more or less maintain the groups included in the existing law and increase the number of contributors,” she said.

However, by lowering the threshold from the present €120,000 to €40,000 will affect many property owners who were previously exempt.

The proposed rate revisions to be voted today are as follows:

1980 Property Value
Proposed Tax Rate
Up to ?€40,000 nil
From ?€40,001 to ?€120,000 0.4%
From €120,001 to €170,000 0.8%
From €170,001 to €300,000 1.2%
From €300,001 to €500,000 1.5%
From €500,001 to €1,000,000 1.8%
€1,000,001 and above 2.0%

The tax changes are designed to collect approximately €43 million from individuals and €75 million from companies.

The bill exempts property with a 1980 value of up to €40,000, but it also removes the tax-free threshold. This means that properties valued above €40,000 will be taxed on their full value. So, using the table above, the owner of properties whose total 1980 value was €50,000 would be liable for €200 IPT.

We understand that opposition parties DISY, DIKO and EDEK are not satisfied with the provisions of the revised bill and are preparing to submit a number of amendments.

Evening update

MPs refused to vote on the bill saying they wanted more time to consider its ramifications.

Moody’s downgrade piles on the junk

MOODY’S Investors Service has downgraded the senior unsecured debt and deposit ratings of three Cypriot banks to Caa2 and lowered the standalone credit assessments of two of those banks, Hellenic Bank Public Company Ltd to caa3 from caa2 and Cyprus Popular Bank Public Co Ltd to ca from caa3.

In its statement, Moody’s said that it rating actions are triggered by the downgrade of Cyprus’ government bond rating to Caa3 and they reflect:

  • uncertainty regarding the timing and conditions of a finalised Memorandum of Understanding (MoU) between the Cypriot government and the International Monetary Fund, the European Union and the European Central Bank to finance bank recapitalisations;
  • heightened risk of sovereign default, which could jeopardise the effectiveness of bank recapitalisations once the external support programme is in place; and
  • the associated impact of increased sovereign credit risk on banks’ standalone credit profiles, given the banks’ sizable portfolios of government securities.

The three affected banks are:

  • Cyprus Popular Bank Public Co Ltd: Senior unsecured debt and deposit ratings downgraded to Caa2 from Caa1; standalone credit assessment lowered to ca from caa3, within the E standalone bank financial strength rating (BFSR) category.
  • Hellenic Bank Public Company Ltd: Deposit ratings downgraded to Caa2 from B3; standalone credit assessment lowered to caa3 from caa2, within the E standalone BFSR category.
  • Bank of Cyprus Public Company Limited: Senior unsecured debt and deposit ratings downgraded to Caa2 from Caa1; standalone credit assessment of caa3 remains unchanged within the E BFSR category.

The outlook on the banks’ senior debt and deposit ratings is negative.