The Central Bank has waived the need for welfare recipients to deposit their cheques and wait for four days, so they can now cash them at any bank and receive the money immediately, said the labour ministry.
The banking system is extremely slow to clear cheques and transfers, causing inconvenient delays to their customers who need the funds for their daily needs.
It takes up to four working days to clear a cheque between different banks, and two working days to clear a cheque from the same bank.
The reason for this is not clear. Some think it is a fail-safe in case the cheque bounces, others think it is a way for the banks to collect interest on the overnight deposits.
All, without exception, think it’s inconvenient and slow service.
Welfare recipients who need the money even more given their circumstances must be breathing a sigh of relief that they don’t face the prospect of not eating for four days.
But other situations are equally urgent. In a tiny country like Cyprus, clearing a cheque should take one working day, it would improve everyone’s cash flow and cause less irritation for the bank’s customers.
Tens of thousands on welfare
In the wake of the economic crash, 59,000 people are receiving welfare payments in the form of the Minimum Guaranteed Income (MGI), said President Nicos Anastasiades in a speech about his presidency.
The MGI was introduced as part of a package to protect vulnerable social groups, like those with large families, low incomes or unemployed family members. The cost to subsidise the 35,100 families living on the edge of poverty is 860 million Euros per year, he said.
The subsidy covers a monthly allowance, mortgage interest payments, municipal charges, emergency home repairs or replacement of household equipment, free medical care and a 20 percent discount on electricity bills.
There has also been a revision of subsidies given to asylum seekers, who now receive grocery and other vouchers instead of cash, showing a savings of 10 million Euros, said the president. All the administration for welfare benefits has now been moved under the Labour Ministry’s umbrella, instead of being scattered amongst various ministries, said Anastasiades.
The economy has slowly started recovering some of the losses seen during 2007-2013, but it is still a long way back to normal growth rates for Cyprus, which at the end of the day, will be the only way to revive the job market. When investors feel there are positive prospects for them to start new companies or hire more personnel, only then will unemployment see a significant fall.
Direct impact of the economic crash
The number of unemployed people and welfare recipients has skyrocketed since the economic and financial crash in 2013, while many lost their savings in the bank bond scandal, and others lost their jobs. The roots of the problem were the banks and state over-investing in worthless Greek Government Bonds, and corruption on a massive scale. These weaknesses were exposed during the wider international economic slowdown and financial crises, and ordinary people suffered the most from the mismanagement.