Our View: Okypy’s deficit cannot be fixed while unions rule

Presenting his ministry’s budget for 2025 at the House finance committee on Monday, Health Minister Michael Damianos said that an action plan would be prepared in the immediate future for the state health services organisation Okypy, to increase its revenue and reduce its expenditure. He did not elaborate how this would be done, other than to say that one way was through energy upgrades.

While the objective of the government was to support public hospitals, “this does not mean the covering of the deficits would be indefinite,” said Damianos. He also pointed out that in cooperation with the finance ministry the Okypy law was amended so that the state would cover its deficits beyond May 31, 2025. The law had stipulated that from June 2025, public hospitals should become autonomous, self-sufficient entities, although everyone knew that this would not happen.

Damianos did not rule out the possibility that state support for public hospitals would continue, “in some way” beyond 2027. A decision would be taken further down the line, he said adding: “For the state to come and support Okypy financially, Okypy must upgrade its services and cut its costs where it can.” This is a diplomatic way of saying that the taxpayer will be covering the deficits of Okypy forever, because public hospitals will never become self-sufficient.

The extortionate salaries Okypy pays and the union restrictions they operate under, will ensure public hospitals will always be loss-making. Damianos knows this as does the finance ministry. The main expense of public hospitals is the labour costs, the previous government, agreeing to unjustified pay rises to avoid industrial unrest. The first thing any business, which is incurring losses every year does, is cut its payroll. Public hospitals, in contrast, see their already bloated payrolls rising every year. Another way of reducing costs is reorganising operations to make them more efficient – end of overtime rates for afternoon work, for example, excessive numbers of staff per shift.

Okypy can do neither, because public hospitals are run on union-dictated rules, designed to generate maximum income for a maximum number of doctors and nurses. Any attempt at cost-cutting would spark industrial action, which no government, even less so this one, wants. This is why Damianou was careful to say he expected Okypy to “cut costs where it can.” He knows the main cost – staff wages and benefits – cannot be cut and that any attempt to do so would spark a revolution.

Given that the “government’s position is that public hospitals will not be privatised,” the deficits will remain, and grow bigger every year. And the minister of health, whoever he or she may be, will carry on telling us that Okypy will cut its costs where it can, not where it matters because the unions are too powerful. Even if Okypy wanted to cut jobs and end costly restrictive practices, the government would not allow it to do so, because it would not want the political cost. Under the previous government Okypy was instructed to give doctors everything the unions were demanding, with the result that public hospitals pay doctors three times as much as they are paid in hospitals in Greece, for example.

For as long as the deficits are manageable, nothing will be done, the taxpayer’s money being used to pay the greedy staff of public hospitals, instead of being used to improve and upgrade healthcare.