The struggle to modernise Cyprus’ economy is nowhere more strongly highlighted than in the state sector, which still owns the last public telecommunications company in the EU - the Cyprus Telecommunications Authority (CYTA). In the latest developments, a plan to privatise the company has been sent to the House of Representatives.

In comments to the state broadcaster, Finance Minister Haris Georgiades said the first step is to set up a limited company which will be owned by the CYTA state corporation, and then find investors for the private company. The current CYTA employees would continue to be public employees during the privatisation process and until retirement if they wanted, and would be moved to the private company depending on the needs.

This is not being well-received by trade unions, whose leaders believe they are entitled to state benefits from birth until death, including large retirement funds, working hours that end at 1pm, and favourable taxation rules, and view the private sector as their mortal enemy only worthy of the most vituperative propaganda about ‘oligarchs’. But privatisation of the state-owned companies like CYTA and the electricity authority is part of the 10-billion-euro bailout deal with the Troika, and there is no avoiding it any longer.

Nonetheless, the existing civil servant contracts that have been negotiated with the trade unions will remain in force for the early years of privatisation at least, said the finance minister. If the high salaries are not continued, then the private company would risk losing the skilled employees, which wouldn’t be in its interest, he said.

One of the main problems in the economy is a large state sector, which sucks up a lot of resources without giving much in return in the way of efficient, helpful service. Most people here complain endlessly about delays, piles of paperwork, rude government employees with attitudes a mile wide, and a complete lack of efficiency and flexibility. The ‘take-it-or-leave it’ approach would be punished in the private sector by the loss of customers and revenue, but in the public sector, there is no choice when it comes to electricity utilities that are needed by the whole country.

The telecommunications market is a bit different now, ever since competition opened up the market, CYTA has overhauled its services and its approach to consumers in a manner which is now much more in-line with what you could expect when you hand over your hard-earned money for a service or a product. Whether privatisation will improve matters even more depends a lot on how the process is handled by the government, and dealt with by the trade unions.