An Overview of Civil Service in N. Cyprus

A
AnnO verview
Overview
o
off Civil S
Civil ervice
Service
in North
in North Cyprus
Cyprus
Tufan
Tufan Ekici
Ekici
About the Author
Tufan Ekici is a quantitative social scientist with a background in economics. He has worked
in academia teaching economics and conducting empirical research in various social science
disciplines. He has also been involved in consulting local governments and professional
organizations in north Cyprus as well as working for private financial institutions in the USA
and the UK. After 12 years of working in north Cyprus, Ekici relocated to the United States in
2018. He is the author of the forthcoming book "The Political and Economic History of North
Cyprus: A Discordant Polity".
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An Overview
Of Civil ServiCe
in nOrth CypruS
Tufan Ekici
Report 3/2018
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ISBN: 978-82-7288-898-4 (online)
production and Cover design: Crystal Graphics

CONTENTS
1. OVERVIEW AND GUIDELINES .............................................................................................................. 7
1.1 IntroductIon ................................................................................................................................ 7
1.2 termInology and PublIc confIdence In cIvIl ServIceS ............................................ 8
1.3 data SourceS................................................................................................................................ 11
2. LEGAL BACKGROUND.......................................................................................................................... 13
2.1 cIvIl ServantS law..................................................................................................................... 13
2.2 PerSonnel offIce law ............................................................................................................. 15
2.3 PublIc ServIce commISSIon eStablIShment law ........................................................ 15
2.4 law regulatIng the aPPoIntment of SenIor-level cIvIl ServantS ................. 16
2.5 SocIal SecurIty and retIrement lawS............................................................................ 17
2.6 recent changeS .......................................................................................................................... 19
3. HUMAN RESOURCES............................................................................................................................ 21
3.1 aggregate number of PublIc Sector emPloyment ................................................. 21
3.2 number of cIvIl ServantS ...................................................................................................... 24
3.3 PublIc emPloyeeS under each mInIStry ......................................................................... 27
3.3.1 emPloyment wIthIn each dePartment/offIce ................................................ 28
3.4 a cloSer look at the toP three ProfeSSIonS ............................................................. 29
3.4.1 PublIc educatIon............................................................................................................ 29
3.4.2 PublIc health ServIceS ................................................................................................. 33
3.4.3 PublIc Safety (PolIce force) ..................................................................................... 55
3.4.4 PublIc attItude towardS PartIcular and general cIvIl ServIceS ....... 36
3.5 Some demograPhIc characterIStIcS of PublIc Sector emPloyeeS................. 38
2 An Overview of Civil Service in North Cyprus
4. BUDGETARY FRAMEWORK................................................................................................................. 43
4.1 IntroductIon ..................................................................................................................................... 43
4.2 hIStorIcal aggregate budget data................................................................................. 44
4.3 trnc State revenue ................................................................................................................... 51
4.3.1 taxeS....................................................................................................................................... 51
4.3.2 PrIce StabIlIty fund....................................................................................................... 52
4.3.3 fInancIal aId from turkey ........................................................................................ 53
4.4 general budget for cIvIl ServantS ................................................................................. 55
4.4.1 aggregate fInancIal burden ................................................................................... 55
4.4.2 cIvIl Servant SalarIeS................................................................................................... 58
4.5 budgetS of IndIvIdual mInIStrIeS .................................................................................... 60
4.6 court of accountS .................................................................................................................. 64
5. CONCLUSION AND DISCUSSION ...................................................................................................... 65
6. REFERENCES ............................................................................................................................................ 68
7. APPENDICES............................................................................................................................................. 70
3
LIST OF TABLES AND FIGURES

Table 1.1 Glossary of terms
Table 2.1 Percent contributions of gross salaries

Table 2.2 Ratio of current/retired civil servants
Table 3.1 Number of civil servants 1993-1997

Table 3.2 Gender distribution of civil servants, 1996-1997
Table 3.3 Distribution of civil servants by different categories 2007-2016
Table 3.4 Number of public servants by different employment category (November 2016)
Table 3.5 Number of civil servants within each Ministry (as of December 2015)
Table 3.6 Teacher/Pupil ratio in public education 1992-997
Table 3.7 Teacher/Pupil ratios by cities (2015)
Table 3.8 Public schools 2015-2016
Table 3.9 Some statistics at state hospitals (2012)
Table 3.10 Some statistics at state hospitals (1997)
Table 3.11 Percentage of people who have confidence in the following areas
Table 3.12 Percentage of people who have confidence in these areas (north Cyprus only)
Table 3.13 Some characteristics of public and private sector employees (HBS 2008)
Table 3.14 2008 HBS
Table 3.15 2011 HLFS results on public sector employees
Table 3.16 Age and tenure of public sector employees
Table 4.1 General budget of TRNC (2005-2015)

Table 4.2 Government deficit of European countries as a percentage of GDP (2010-2015)
Table 4.3 Domestic and foreign public debt in TL and $ (2010-2015)
Table 4.4 Share of different services in overall budget (2005-2011)
Table 4.5 Number of people who receive monthly transfers
(wages or pension or other kind) from the state (2013-2015)
Table 4.6 Average of 2006-2016 state budget allocation by ministries
Table 4.7 Percentage of budget allocated for salaries of public servants (2016)
Table A1 Number of public servants receiving wages and salaries from central budget
(May 2015-May2016)
Table A2 List of government departments under each ministry as of July 2016
Table A3 Allocated budget (2016) for Each Office in Central Government
Table A4 Civil servant net salaries in TL (as of July 1, 2013)
Table A5 Number of government retirees (as of 1997)
Table A6 Distribution of public debt stock (2015)
Table A7 Government-consolidated gross debt as a percentage of GDP
Table A8 Public health spending as a percentage of GDP in Europe
Figure 1.1 Share of public who have confidence in civil services
Figure 3.1 Ratio of public sector employment to total employment

Figure 3.2 Percentage change in public and total employment
Figure 3.3 Public services as a percentage of gross domestic product
Figure 3.4 Teacher/Pupil ratios in various school types (2003-2015)
Figure 3.5 Distribution of teaching staff at various public school types (2015-2016)
Figure 3.6 Pupil/Teacher ratios in public primary and secondary education around
selected world countries (most recent year available)
Figure 3.7 Trend of medical doctors (including dentists)
Figure 3.8 Government Pensioners by Age Group (2008 HBS)
Figure 4.1 Aggregate state budget- income/expenditure ratio

Figure 4.2 Percentage of government deficit to GNP
Figure 4.3 Public debt as percentage of GNP
Figure 4.4 Public debt stock (as of the end of the corresponding year, TL accounts)
Figure 4.5 Public Debt stock (as of the end of the corresponding year, $ accounts)
Figure 4.6 Tax revenues of TRNC (million TL, 1977 prices)
Figure 4.7 Ratio of grants and loans to total financial aid from Turkey (1974-2015)
Figure 4.8 Distribution of grants from Turkey
Figure 4.9 Distribution of loans from Turkey
Figure 4.10 Ratio of budget allocated to past and current civil servants
Figure 4.11 Distribution of current transfers in state budget (2015)
Figure 4.12 Percentage of total fixed investments on public services
Figure 4.13 Percentage of fixed public investment on health and education
Figure 4.14 Average monthly salaries ($) of civil servants
Figure A1 Percentage of students at private/ public schools to total students (2003-2015)

5
ABBREVIATIONS
SpO State planning Organization
evS european values Study
Mof Ministry of finance
Moh Ministry of health
Moe Ministry of education
See State economic enterprises
7
1. OVERVIEW AND GUIDELINES

1.1 introduction
Although the Turkish Republic of North Cyprus (TRNC) is not recognized internationally by
any country except Turkey, there has been a form of independent economic and political
governance since 1974. The state has its own constitution and related laws and regulations,
and policymakers are elected in democratic elections. The economic system can be classified
as pro-socialist and the laws are designed to protect the citizens and provide them with basic
human rights. At least this is how it looks on paper.1
Since the separation of north Cyprus from the Cyprus Republic, the economic and political
system in the north has gone through important changes. In the early years after the estab-
lishment of the TRNC, policymakers were confronted with the task of building a new state
with limited resources. Although they enacted significant laws and the regulations necessary
for rebuilding, in practice these did not function very satisfactorily. Political clientelism and
the using state’s resources to maintain or strengthen political power have become the norm
rather than exception (Sonan, 2014). Such systems paved the way for corrupt and unfair
government practices that primarily targeted the public sector, since employees in this sector
represent an important percentage of total voters.
The public sector is rampant with nepotism. Over the years, policymakers have promised
people employment in the public sector that provided very generous benefits. The public
willingly accepted this as there were not many favorable opportunities elsewhere. Turkey has
continued to provide financial aid over the years without worrying how the funds were
allocated. The result is the TRNC’s huge public debt, which today amounts to more than 100%
of total Gross Domestic Product (GDP).2 Years of corruption have seriously debilitated north
Cyprus, leaving the state to now face serious financial and political challenges. The following
analysis (Sonan, 2014) offers an excellent summary of the political economic history of north
Cyprus and the likely challenges that the country will face in the years to come:
1 I would like to thank to Ayla Gürel, Mustafa Besim, Rüştü Yücel, and Serkan Mesutoğlu for their helpful suggestions and
comments. The project is funded by PRIO Cyprus. Any remaining errors in the report are my own.
2 There are two kinds of financial aid provided by Turkey: grants, which are given as gifts to be used mainly to improve
infrastructure; loans (credits), which are given to finance the budget deficit. These loans have never been repaid by any
TRNC government.
“… the public sector was even more bloated than it has been widely assumed, and that this
was the consequence of bureaucratic clientelism. In the absence of any large-scale
productive sector that could act as a locomotive for the rest of the economy, the cost of
sustaining the system gradually grew, and at some point in the mid-1990s spun out of
control. the result was an “assisted society,” which made the whole politico-economic
structure not only susceptible to economic crisis but also, as soon it would turn out, to the
political meddling of the sponsor of this clientelistic system: ankara.” (p232)
In this report we concentrate on the workings of the central government and affiliated offices
in north Cyprus. The main focus is on human resources (employment) and the budget for the
civil services and the central government, while some state public services will receive special
emphasis. We will also analyze the financial aid the state receives from Turkey and examine
how those funds are, and have been allocated. Any organizations/companies that provide
public services but not funded through the central budget or local governments (munici-
palities) are not covered in this report. Those people employed in the civil services will be
referred to as civil servants as opposed to public employees, as the latter category includes
all the employees in all kinds of public sector employment.
1.2 terminology and general confidence in civil services

The laws and regulations regarding the civil services are (naturally) written in Turkish in north
Cyprus, and while we make every attempt to ensure that meanings are not lost during
translation, there may be instances where the meaning slightly differs from international
applications. For this reason, we produced the following table wherein we explain the
intended meanings of the most commonly used terms in the text. This list is by no means
exhaustive and we strongly urge readers to refer to the context in which they are used.
The main distinction we would like the readers to note is the public vs civil services. The
distinction is basically attributed to the different parts of the state that provide the services.
Although utility services like water, sewage and electricity are provided by public authorities,
they are not within the scope of this research because such services are provided directly by
the municipalities or State Economic Enterprises (SEE). Although municipalities receive funding
from central government and some of their responsibilities are regulated by the state, they
are required to pay the wages and salaries of their own employees. Similar conditions apply
for some SEEs as well. The workings of the municipalities and SEEs are not the subject of this
project. We will only focus on the civil service and the employees working directly for the
central government.
1. overview and guidelines 9
table 1.1 – Glossary of terms used most frequently
term used explanation

Public Sector Part of the economy where the goods and services are provided by the
central and local governments
Civil Service Part of the economy that provides services under the control of central
government excluding local municipality services
Central Government The part of the government that controls the civil services
Civil Servant Workers working in areas that provide civil service
State Economic These are enterprises that provide public service but are not fully controlled
Enterprises (SEE) by the central government. They have public and other private ownership
and are responsible for their own budget except, in some cases, the salaries
are paid by the central government. Some of the members of the board of
directors of these enterprises are appointed by the central government
Public non-civil workers Those who are working to provide public services but are not paid by the
central government (generally includes municipality employees)
Office/Department The departments of the state that have responsibility for some civil service
and are managed by a related Ministry
Director The person directly in charge of a state office
Available Positions Each office has its own laws/regulations that also dictate the maximum
(kadro) number of civil servants it can employ. But that does not mean that there is
always a call for employment. These positions can only be filled if Public
Services Commission actually advertises the openings.
The Chart below shows the general hierarchy of the state offices. For our purposes, civil servants
are the people who work at the state offices under the control of the central government.
Different ministries could have different number of offices under their authority. There are
currently 67 different state offices in the TRNC. The meaning of the title ‘musavir’ will be
explained in more detail in section 2.4. There may be some SEEs that are responsible to a
ministry, but since their budget is not supposed to be financed through the central
government, they do not appear in this chart.
Chart 1.1 hierarchy of a Ministry in north Cyprus
Musavir Minister Principal Clerk
Undersecretary
Director of the Ministry
Office Dicrector Office Dicrector Office Dicrector
Vice-Director
Secretary
Driver
Messenger
Throughout the report we will give examples when discussing the efficiency of the civil
services in north Cyprus. Before we do that, we introduce in the next figure the percentage of
people in selected European countries who have confidence in civil service in their respective
countries. The data is obtained by using European Values Study (EVS) of 2008. The corre-
sponding question asks participants: “How much confidence do they have in the civil
service?” with four response options: “A great deal”, “quite a lot”, “not very much” and “none at
all”. We collapse the first two and the last two responses to have binary code for “Have
confidence” and “Do not have confidence”. Thus the percentages in the figure below shows
percentage of respondents who have confidence in civil service in their own country. The
figure actually shows that the confidence in the civil service in north Cyprus is quite high
compared to other participating countries in Europe.
figure 1.1 – Share of public who have confidence in civil services
80,0%
70,0%
60,0%
50,0%
40,0%
30,0%
20,0%
10,0%
0,0%
Croatia
Czech Republic
Albania
Italy
Turkey
Malta
Luxembourg
Spain
Sweden
Austria
Slovenia
Lithuania
United Kingdom
Latvia
Romania
Belgium
Kosovo
Slovakia
Estonia
Hungary
Bulgaria
Serbia
Germany
Montenegro
Bosnia and
Portugal
France
Greece
Ireland
Poland
Finland
Denmark
Iceland
S. Cyprus
ALL Countries
N. Cyprus
Netherlands
Source: evS 2008, author’s own calculations using response to question v212

1. overview and guidelines 11
However, this is an uncommon result for the TRNC: the public attitude towards civil services
and other public sector services in the TRNC is usually quite different. In fact, the efficiency and
professionalism of civil servants have been questioned and heavily criticized and although
past governments have promised to address these issues they have not done so (Diler, 2015).
According to a survey in 2011, only 11% of the public thinks that “public sector employees
have the necessary knowledge and qualification” and 55% think that they are “inadequate”
(TEPAV, 2013). The competitiveness reports for the last 6 years also show that the most
problematic factors for doing business is “inefficient government bureaucracy” (Sertoglu et.
al., 2015). One could argue that these results are from more recent data but there is no reason
to believe that the performance of this sector has worsened only in the last 5 years.
1.3 Data Sources

It is unfortunately difficult to obtain detailed and reliable data in north Cyprus regarding the
civil service. Throughout the report we explore several different data sources in an attempt to
present the most comprehensive picture. However this sometimes could turn out to be less
than useful as some of the indicators from two different data sources could be different. In this
subsection we discuss some of the data sources that we will be using throughout this report.
european values Study (evS, 2008)

The EVS is a very comprehensive survey that has been conducted throughout Europe
since the 1990s. The survey started in 1981 and has been repeated every nine years in an
ever-increasing number of countries. The most recent survey (2008) included 47 European
countries/regions.3 The survey basically collects information on values and attitudes of
Europeans on various topics. It is especially useful for us as it collects information on both sides
of Cyprus, thus providing valuable data that is lacking in north Cyprus. We use this data to report
attitudes regarding confidence in civil service in north Cyprus and other participating countries.
State planning Organization (SpO)

The SPO is the only entity in north Cyprus that has the legal authority to collect economic and
social data. The Organization has three sub-divisions; statistical and research, economic
planning and social planning. The SPO has a monitoring and coordination department to
oversee and integrate these three sub-departments. Unfortunately the data collected is
rarely shared in its entirety, and even when it is shared, it is either delayed or includes incorrect
information. Most of the aggregate historical statistics are available on their website, but for
a number of reasons, we use them only as the last resort.4 We were also able to get a hard
copy of the SPO’s 1997 Statistical Yearbook, which includes much more detailed information
than available at their website.
3 http://www.europeanvaluesstudy.eu/page/history.html
4 In the Appendix we explain several flaws we identified in the SPO data.
personnel Office (pO) Data

The Personnel Office website has some detailed information on the number of civil servants.
However, the information only goes back to 2007 and is not as detailed as we would have
hoped. We applied5 to this office to obtain staff numbers for each state office; we were able
to gather that information (hardcopy), which we present in the Appendix. Under any trans-
parent governance, such information should readily be publicly available for anyone who
wishes to use it.
individual “Ministry” websites:

For the most recent information in different areas we also applied to individual ministries. For
example, we obtained information on budget, education sector and health services from the
respective ministries, and spent considerable effort to gather and transform the material into
a more readable, useful format. We found the statistics from Ministry of Finance, Ministry of
Education and Ministry of Health especially useful.
Other reports
The World Bank reports and the annual reports complied by the Turkish Embassy in northern
Cyprus also provide a good source of information on north Cyprus that the state’s own SPO
does not share with the public.
5 Right to Acquire Information Law (Bilgi Edinme Hakki Yasasi) allows individuals or entities to apply to a public office to
obtain public information.
13
2. LEGAL BACKGROUND
Employment in the civil sector regulated by two pieces of legislation: the Civil Servants Law
and the Personnel Office Law.6 Each department within a particular ministry has its own
Foundation Laws that delineate their specific functions and other regulations. Given that
there are over 60 different offices under the central government, we will not individually
analyze each one’s Foundation Law, but we will make brief mention of them when relevant.
There is also a law regarding the appointment of senior level state officials that we will discuss
here; this is a law that has been criticized by many over the years. Finally, we will review the
laws related to Social Security and Retirement.7
2.1 Civil Servants law (Kamu Gorevlileri yasasi, 7-1979)

This statute was enacted on 23 May 1979 and has since been modified 76 times. The scope of
the statute is to regulate the conditions regarding “the people who work as employees of the
state and public institutions that are responsible for public services, and receive salary from
the government budget”. Employees excluded from this statute are judges, public
prosecutors, the state Registrar, the state Audit Court, board members of the Public Service
Commission, members of the Armed Forces, Civil Defense personnel, National Electric
Company, EVKAF (Pious Foundations), police force, state teachers and all other SEEs
employees. Members/employees in these groups are not within the purview of this law; each
entity will have its own regulations. This exception has been used inconsistently in some
cases and resulted in extra financial burden on government budget (TEPAV, 2013).
This law stipulates three types of civil servants: permanent staff (kadrolu memur), con-
tractual staff (sözleşmeli personel) and workers (işçi). Permanent personnel refers to the civil
servants who are tenured and can only be fired in extreme circumstances; they are also
entitled to full pension benefits. The contractual staff, on the other hand, refers to fixed-term
contracted workers, although their contract can be extended. These employees are also
tenured, but they have different starting salaries and work conditions; they are also eligible
for full pension benefits.
6 Laws are enacted by the TRNC parliament. When a law is modified or renewed, the latest version is posted on the
internet, However, to identify the exact modifications, one needs to dig further- which time constraints on this project
prohibited.
7 A word of caution is in order here: the language of statutes and legal documents is often confusing and the descrip-
tions extensive. Thus we will only summarize the main points and comment only on some of the items. When we say:
“the law was modified”, it could mean that only one item is added to the original document or a more comprehensive
revision was made.
Original law final version

Permanent Staff Those who are working in public services SAME
provided by the state and are paid from the
state budget
Contractual Staff Employees who have specialized and expert Those (citizens or foreigners) who have
knowledge in some areas that are required specialized and expert knowledge,
for the execution of development plans or and who can be hired temporarily or
other projects. If any permanent staff has on a contract basis. The contract
similar skills, then no contractual employee duration can be at most for 2 years
is hired but can be renewed indefinitely.
Temporary Staff Those who are hired for the supply of purely NA
temporary civil services and their contract
cannot exceed one budget year
Workers Any employee of the state who does not fall SAME
under one of the above categories
The regulations for contract-based personnel have been modified many times, especially
in the last 10 years. For example, in 2014 there was a new clause regarding the “paid vacation”
rights. Contractual staff’s paid vacation time is set out in the contract whereas vacations are
regulated by law for all other public servants. Similarly, the salary and other payments are also
regulated according to the contract, and in 2014, the year-end bonus salary (13th salary) was
also awarded to this category of employee. Thus it seems that the above-mentioned benefits
are now permanent for contract-based employees.
This law contains a clause that requires civil servants to obey all/any orders given to them
by a superior. However, if an employee feels that the given order contradicts the constitution
(or any other law and regulation), he/she can refuse in writing. If the superior repeats the
order in writing, then the civil servant cannot be held responsible for any wrongdoing. This
clause actually gives an important role to the civil servants: if they know the relevant laws and
are willing to execute them, then they can ensure that the ministers and upper-level manage-
ment respect state’s resources. Furthermore, since by law permanent civil servants cannot be
fired they should not fear invoking this clause. In practice, however, it appears that most civil
servants hesitate to disobey irregular requests.
This law offers civil servants numerous benefits, including free medical treatment, 13th
salary, inflation-adjusted salary increase (since 2009), rank-based annual salary increase,8
over-time payment (110% of normal salary if during normal workdays, 150% if during national
holidays or weekends), education scholarship, and relocation expenses reimbursement. All of
these are in addition to a 37.5-hour work week9 and generous pension schemes (more on this
in section 2.5). These benefits are the main reason why people in north Cyprus try very hard
to find employment in the central government.
8 Every 3 years the rank of civil servants increases automatically.

9 During December, January and February, public servants work 40 hours per week.
2. legal background 15
The law also imposes several restrictions on civil servants, the most controversial being
prohibited from registering with a political party. While some criticize this clause as being
undemocratic, others argue that elimination of this clause will further increase nepotism in
the civil services. Also prohibited are having a second-job and participating in any kind of
commerce or other income-generating activity. Such activities include all the medical clinics,
private offices and agricultural enterprises. Yet, it is well- known that many civil servants
flaunt this clause and engage in another income-generating activity (Besim et. al., 2015). In
particular, many physicians who work in state hospitals are known to have their own private
clinics, or to be employed by such clinics; instead of applying the relevant regulation, however,
the government actually collects tax from such earnings.
2.2 personnel Office law

(Personel Dairesi (Kuruluş, Görev Ve Çalışma Esasları) Yasası, 77-1989)
This law stipulates the obligations of the Personnel Office with regard to permanent and
temporary employees working as civil servants, and the provisions referring to the Office’s
“purpose” and “responsibilities” have been modified 44 and 43 times, respectively. The law
outlines 25 distinct duties, most of which are also mentioned in the Civil Servants Law. One
duty requires that the Office become involved with the general education of civil servants; in
fact duty #11 requires the preparation of a “Civil Servant General Training Plan”, and duty #10
stipulates establishment of “centers to teach English and other foreign languages to civil
servants”. Duty #8 requires the Office to submit recommendations to the Board of Ministers
regarding the working hours. While these duties are important and necessary for better
functioning of the public sector, it is doubtful that they are all accomplished.
2.3 Civil Service Commission establishment law

(Kamu Hizmeti Komisyonu Ve Dairesi Kuruluş, Görev Ve Çalışma Esasları Yasası, 53-1983)
The main goal of the Civil Service Commission is to handle the “appointment, approval,
placement, promotion, transfer, resignation, retirement and all disciplinary action” related to
the civil servants in accordance with this law. Employees working in public sector other than
as civil servants are not subject to this Commission. The law clearly specifies “those who are
receiving salaries from government budget” are the employees subject to this law.
The Commission has one director and four other members, all of whom must be retired
from the civil services with at least 15 years of experience and who are appointed by the
President of the TRNC. All the members receive salaries equivalent to scale 19 (see Table A3)
which is the highest scale in civil services. This commission has a very important role in
shaping the civil service employment, but the fact that the members are appointed by the
President casts doubt on the degree of independence of this commission. TEPAV (2013)
claims that the civil Office under this commission (Civil Service Commission Office) lacks the
necessary human capital to ensure rightful execution of duties and the examinations (both
oral and written) used for assessing appointment and promotion are inadequate (p. 35)
2.4 law regulating the appointment of senior-level civil servants

(Üst Kademe Yöneticiliği Yapan Kamu Görevlilerinin Atanması Hakkında Yasa, 53-1977)
There is a specific law stipulating the appointment criteria of top-level civil servants in the
central government. This law was first enacted in November 1977, thus prior to establishment
of the TRNC and it has undergone 26 modifications since then10. The scope of senior-level civil
servants has been extended to include Chief and vice-chief of the Police Department and
teachers. The upper-level civil servants are basically the directors of offices, undersecretaries,
and heads of certain special committees. The appointment of upper-level civil servants is
regulated by the so-called three signature decree, which requires the signatures of the
President, Prime Minister and the related Minister conditional on the applicant satisfying the
minimum conditions for the position.11 Discharge of these employees requires the same
three signatures, and there is no need for explanation Importantly, however, although an
employee is discharged from a top-level position, he/she does not lose the status of civil
servants (unless he/she was not working as a civil servant at the time of appointment), nor
can the employee be demoted according to other regulations. As a result, these individuals
become what is called musavir, a position where they basically receive a promotion and they
are supposed to act as a consultant to the related Minister.
Over the years politicians have exploited this law, using it for nepotistic purposes.
Although the appointments need three signatures, two (prime minister and related minister)
would hardly disagree as they are part of the incumbent government, and the president
would rarely dispute the government by not signing. Thus every time a new government
comes into power, the first thing it does is to replace the top-level civil servants. And since
those who are replaced remain civil servants, they will continue working in the capacity of
musavir. Furthermore the newcomers will choose not to work with these musavirs—contrary
to the intent of the law— and so the musavirs will receive one of the highest salaries among
the public servants and do absolutely no work. Later in this report we will discuss in more
detail the number and financial burden of the musavirs.
Two recent changes to this law merit further discussion. The original law states one of the
appointment criteria as “to have previously worked as a civil servant in at least a second-
degree service class [position] that requires university (or higher) education”. This criteria was
modified in 2006 to eliminate the minimum second-degree requirement and adding “or having
worked at least for 10 years in a first-degree position that requires a secondary education
diploma.” Theoretically, if someone was working as a driver (requires secondary education
10 This law was modified 12 times in the 1980s, 8 times in the 1990s, and 6 times in the 2000s –the last of which was in
2010, This shows that even as recently as 2010, policymakers are still trying to change the regulations to create
positions for as many individuals as possible in exchange for votes in the elections.
11 If the position is under Presidency or Prime Ministry, then the Finance Minister’s signature is required instead of the
related minister’s.
diploma) for 10 years, and has a university degree (which is an easy thing to do in north
Cyprus), he/she could be promoted to a director position. The law also dictates the minimum
criteria for these high-level civil servant positions. For some departments, the law states “a
university diploma with 10 years of working in the publics sector” or “a high school diploma
or equivalent with 15 years of work experience”. So it appears that in the lawmakers’ opinion,
the difference between a high school and a university (or postgraduate) diploma is five years
of public sector employment. On the one hand, it is true that many civil servants did not have
university degrees when they first started, and so the modifications offer the opportunity for
promotion to director positions after working15 years. On the other hand, as this author
believes, this modification was designed to make it easier for politicians to practice nepotism.
This is not to say that actual work experience is not as important as formal education. However,
given the general structure in the country, it is this author’s view that this change has served
to lower the minimum eligibility criteria and increase the possibility of nepotism. Furthermore,
the regulations prohibit anyone outside the civil services to be appointed as director—even
if they have the required qualifications. Yet if such individuals were allowed to apply and the
law was correctly applied, the civil service sector might become much more productive.
On the other hand, some modifications to the law added extra criteria to qualify for
promotion. For example, changes in 2005 made eligibility for Foreign Office representatives
(also considered upper-level management) more difficult. The original law made it possible
for high school graduates with at least 15 years of public service to be appointed as a
representative at a Foreign Office. The modifications in 2005 added a university diploma as a
minimum requirement for this position.
2.5 Social Security and retirement laws

The social security system in north Cyprus, established in 1977, was designed to be very
generous to beneficiaries; over the years however, it has proven to be financially unsustain-
able. Prior to 2008, there were separate systems for those working as civil servants (emeklilik
yasasi) and others such as private-sector employees and self-employed (Sosyal Sigortalar
yasasi). These two were combined into a single system by the Social Security Law (Sosyal
guvenlik yasasi, 73/2007) that went into effect on the first day of 2008. Although since 1985
all governments have promised to formalize one type of social security system (Diler, 2015),
these two systems were only finally combined in 2008. In this section we will discuss only the
civil service pensions system.12
Prior to 2008, the pension system for civil servants provided different coverage and contri-
bution rules for different type of workers. The contributions of those whose employment in
12 There is also the Provident Fund (İhtiyat Sandığı), which is self-funded by member contributions and which gives out
lump-sum payments upon retirement.
the civil sector started before 1 July 1987 would be mostly covered through government
budget; those who started working subsequent to this date are only partially funded by the
government. The contribution rates for different groups are presented in Table 2.1. The
pension payments were also affected as a result of differences in contribution rates. Each civil
servant will receive approximately 75% of his/her final salary as pension if employed before
2008. For the new generation of civil servants (and other employees in private sector) the
pension will be about 45% of their salaries.
table 2.1 – percent Contributions of Gross Salaries
prior to July 1, 198713 1987-2008 After 200814

(public and private
combined)
Male 2.5% 5% (+4% if married) 9%
Female 0% 5% (+4% if married) 9%
Source: SPo employment office
On top of the monthly pension, every retiree is also entitled to a one-time lump-sum payment.
This payment is calculated by multiplying the employee’s last month’s gross salary by his/her
years of service. This offers the incentive to continue working. But this scheme does not take
into account an employee’s lifetime earnings and thus puts extra pressure on the government
budget. According to a World Bank Report (2006) “civil servant retirees with more than 25
years of service should receive a 25 percent cut in pension after having been paid the
gratuity. However, this legal provision was never enforced” (p. 45). In fact, TRNC governments
consistently borrow money from local banks to pay civil servant pension benefits. Altiok and
Jenkins (2013) estimate the present value of the total cost of pre-2008 pension scheme to be
276% of annual GDP of north Cyprus.
This amount is very substantial and represents a heavy financial burden on the central
government in years to come. Furthermore, after the changes in 2009 to civil servants’
starting salaries and age of retirement, the contributions to the joined scheme are no greater.
The joined scheme means a greater burden on the contributors, and since there is substantial
unregistered employment in private sector (Besim et. al., 2015), the truthful contributions
from low-earning civil servants will never be enough to balance the social security.
13 If the worker chooses to work more than 30 years, then the government will contribute an additional 3.5%.
14 The employer and the state are supposed to contribute, respectively, 11% (at least) and 4% ,in addition to these
numbers.
Table 2.2 indicates the ratio of all presently employed civil servants to government
pensioners. The higher ratios would indicate a higher potential contribution to the retirement
fund that pays the pensions of the civil servants employed before 2008. As we see, the ratio
has been steady for the last three years, but it went down from 1.7 to 1.4 almost 20 years ago.
Furthermore, some currently working civil servants are now contributing to the combined
Social Insurance Fund, where the contributions are not used to pay the previous government
pensioners. Thus the ratio is probably smaller.15
table 2.2 – the ratio of current/retired civil servants
1993 1994 1995 2013 2014 2015

Government
Pensioners16 8123 8426 9368 12999 13097 13223
Total Civil Servants 13476 14149 12866 18179 17973 17930
Ratio 1.7 1.7 1.4 1.4 1.4 1.4
Source: SPo 1997, Personnel office, ministry of finance
2.6 recent Changes

There have been two major changes in the legislation related to civil servants in recent years.
The first is a 2008 amendment to the Civil Servants Law, and the second is a new law regulating
monthly salaries and other earnings of public servants.
In 2008 performance-based criteria for promotion were added to the Civil Servants Law.
The amendment introduced a “performance assessment form” and stipulated the regulations
pertaining to the administration, content and use of this form. Although the amendment is
potentially useful, its execution has not been very successful. TEPAV (2013) claims that a
supervisor in charge of 5-10 public servants will have to devote approximately 30 days out of
the year on performance assessment. The same report also claims that according to Personnel
Office statistics, only 20-25% of all government departments are currently submitting the
necessary forms (TEPAV 2013, p. 36). Unless the law is simplified, the applications will be limited.
The new law regulating civil servant salaries was introduced in 2010 under directions from
Turkey, in an attempt to lower the financial burden on the central government. The law was
strongly opposed by the labor unions who promptly dubbed it the “Immigration Law.”. This
law stipulated a new and lower salary scale for civil servants who entered the public sector
after January 1, 2011. The unions retaliated with claims that the reduced salaries were
insufficient and would force the affected civil servants to migrate (hence the nickname). The
government has not bowed to union pressure and the law is still in effect.
15 The ratio of active/passive contributors to other social security schemes are not analyzed here as this report is only
focusing on civil service. For more information on those, please refer to World Bank paper.
16 The number of government pensioners in 2003, 2004 and 2005 respectively are 11.050, 11.134, and 11.215.
Although laws and regulations are forever being amended, they are never sufficiently
modified to meet the needs of the changing economy. As we reported before, the Civil
Servants Law and Personnel Office Laws have been amended many times, the changes are
usually quite specific rather than thinking about the overall applicability of the related laws.
In fact, most laws and regulations in the TRNC, even including the Constitution, are outdated.
Lawmakers promise to draft new laws or update the existing ones significantly, yet they rarely
do so or else make simple, cosmetic changes that only benefit a small group of supporters.
Changing the laws requires serious political determination and effort by the members of the
parliament—which unfortunately has not ever been the case.
21
3. HUMAN RESOURCES
In north Cyprus employment in the public sector is highly sought for its generous salaries and
compensation packages. For this reason, politicians are notorious for promising such
employment in exchange for votes (Sonan, 2014). Although the overcrowded public sector
employment did not pose a serious problem in the early years of the new republic, with the
years it has proven to be financially demanding and economically inefficient.
In this section we will examine and analyze the size and composition of human capital in
central government, looking first at the public sector employment in general, and then more
particularly at the central government employment (civil servants). We analyze a variety of
data sources to have a clear picture of the different employment types. We will focus on the
specific socio-demographic characteristics of a sample of civil servants, and will closely
examine the high number of civil service retirees. Although this group does not represent the
current human capital in this sector, it nevertheless represents a significant burden on the
government budget because of the generous pension payments.
As we stated above, data on the number and characteristics of civil servants and retirees
is supplied from various sources. The best source of data on civil servants numbers is the
Personnel Office (PO), which is charged with regulating and monitoring civil servant employ-
ment. We also review the Household Labor Force Survey (HLFS) to ascertain the characteristic
of the working population in general. The survey is conducted annually and targets
approximately 3000 households throughout the country. We have data from 2004 until 2011
so our findings will not reflect the most recent snapshot. We have also analyzed the 2008
Household Budget Survey (HBS), which contains extensive information on wealth and
government payments. We start with the total number of civil servants.
3.1 Aggregate number of public Sector employees

Figure 3.1 indicates the percentage of employed labor force in the entire public sector; thus,
included are civil servants, workers in the municipalities and those working in SEEs as the
HLFS does not distinguish among these groups.17 Looking at the years 2005-2015, we see a
17 As we explain in the appendix, the number of employees in the public sector as recorded by the SPO may not be
accurate. But if we assume that the SPO made similar (proportional)errors with regard to the total employment
numbers, then the ratio between the two could be somewhat informative.
gradual decrease in the ratio of public sector employment, dropping from 35% to 28.6% in
this 10-year period. Yet the total employment numbers increased from 28,903 to 32,218
during the same time period. Despite the increase in the actual numbers, the declining trend
can be attributed to rapid increase in total employment figures mostly driven by foreigners
working in the private sector. Sonan (2014) has found that the ratios were even higher in the
1990s, while actual numbers were smaller. The growth rates (percentage change over the
years) of total and public sector employment are also shown in Figure 3.2. The percentage of
public sector employment is rather large compared to other nations. According to OECD
(2015) report, only two countries in the 2013 OECD list had a higher percentage of public
sector employment than north Cyprus (OECD 2015, Table 3.2, p 85). These countries are
Denmark and Norway at 34.6% and 34.9%, respectively; the percentage for the Republic of
Cyprus (RoC) in 2013 was 19.8%.18 ; R
1
1
figure
F 3.1 – ratio of public Sector employment to total employment
40,0%
35,0%
30,0%
25,0%
20,0%
15,0%
10,0%
5,0%
0,0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: SPo hSlf

F h a
2 2 2
18 Source: Republic of Cyprus, Ministry of Finance, Statistical Service.

-
o
2 2 2
3. human resources 23
F h a
figure 3.2 – percentage of change in public sector and total employment
15,0%
10,0%
5,0%
0,0%
00
2005 2006 20
007
7
2007 2008 2 9
2009 201
2010 2011 2012 2013 2014 2015
-5,0%
-10,0%
%change (public) %change (t

(total)
otal)
Source:: SPo, author’s own calculations

o
Figure 3.3 below illustrates the contribution of public services to the overall Gross Domestic
i , t i
Product (GDP) for the period 1997-2013. Although the percentage of employment in overall

public
sector
is rather
high, the contribution
of public
services
to GDP is also high. This sector
contributed 15-20% during 1977-1989, and this increased to 20-25% during 1990s. There is a

decreasing trend after 2009, primarily attributable to the 2008 amendment that lowered salaries
t
foro this sector. Our warning regarding aggregate numbers from SPO in this sector notwith-
standing, this section has talked about the trends regarding the overall employment in this
sector. We next analyze the actual number of civil servants obtained from various data sources.
figure
F 3.3 – public Services as a percentage of Gross Domestic product
30,0
25,0
20,0
15,0
10,0
5,0
0,0
1981
1991
2001
2011
1984
1994
2004
1977
1978
1979
1980
1982
1983
1985
1986
1987
1988
1989
1990
1992
1993
1995
1996
1997
1998
1999
2000
2002
2003
2005
2006
2007
2008
2009
2010
2012
2013
Source: SPo, table 4

3.2 number of Civil Servants

The actual number of civil servants for 1993-1997 is shown in Table 3.1 and the gender
distribution (for 1996 and 1997 only) in Table 3.2. The police and teachers together make up
around 34% of all civil servants. We will see later that these two categories will continue to
make up a significant portion of the state’s human capital allocation. Females make up 37%
of all civil servants, but 44% of the group if we exclude police, teachers and workers. Police
and workers have traditionally been male-dominant positions.
table 3.1 – the number of civil servants 1993-1997
1993 1994 1995 199619 1997

Civil Servants (total) 13476 14149 12866 13416 13257
Administrative 51 47 29 49 49
Clerical 817 789 477 654 401
Messenger 197 186 182 177 161
Messenger-Driver 19 19 14 14 17
Technical 4514 4532 3574 3801 3618
Police 1633 1732 1731 1718 1794

Teacher 2433 2504 2617 2705 2729
Permanent Workers 2033 2333 2242 2199 2151
Others 1779 2007 2000 2099 2337
table 3.2- Gender distribution of civil servants, 1996-1997
1996 the years 2007-2015.

Table 3.3 shows more recent information, covering 1997
Although the
Male Female Male Female
Total 8483 4933 8407 4850
Civil Servant 2637 2058 2370 1870
Police 1627 91 1704 90
Teacher 1143 1562 1143 1586
Permanent Workers 1574 625 1524 627
Others 1502 597 1666 671
Personnel Office Law delineates only three categories of employment (permanent civil
servant, contractual staff and permanent workers), the table lists more than that. Similar to
Table 3.2, the figures for those employed as police and teacher are presented separately.
However this table (3.3) includes several new categories that are not stipulated in the relevant
laws. For example, the category of temporary staff is not defined in the regulations. Similarly,
19 Total population of 15+ in 1996 was 156,317.

various governments over the years have employed some individuals as civil servants
without enacting formal regulations (see footnotes 20,21,22). Thus, although some people
have been working as “civil servants”, their legal status has been questionable. In 2006,
temporary staff were awarded similar monetary benefits as the equivalent permanent staff.
table 3.3 – the distribution of civil servants by different categories 2007-2016
Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015
Civil Servant 5077 5287 5551 5285 5126 5290 5210 5259 5222
Primary Education 1502 1547 1550 1519 1544 1571 1556 1584 1593
General Secondary 1564 1664 1712 1735 1743 1743 1699 1724 1757
Vocational Training 491 541 516 520 515 537 537 565 559
Police Force 2248 2198 2245 2181 2193 2181 2165 2147 2175
Civil Police Force 135 160 159 179 208 207 206 204 197
Civil Defense Organization 97 95 93 89 87 86 NA NA NA
Armed Forces (AF) 127 121 114 105 129 116 NA NA NA
Contractual Staff 148 146 173 140 148 126 123 154 177
Permanent Worker 1756 1693 1605 1473 1385 1344 1246 1194 1129
Musavir 95 83 125 110 103 106 137 146 130
20
22/1984 167 130 86 50 43 39 27 23 18
19/200021 738 566 177 148 129 68 49 18 16
Temporary Worker 1281 1302 1364 1378 1433 1398 1353
Temporary Civil Servant 541 606 923 954 1210 1075 1051
Disabled Staff 334 328 321 313 311 305 295
Obligatory Service Personnel 18 34 40 36 26 27
Fund 18 23 31 31 36 36
Temporary AF 38 116 NA NA NA
Permanent AF Worker 30 30 NA NA NA
Privatization Law 22 304 344 329 432
Seasonal Worker 31 3 2 3
Total Civil Servants 14145 14231 16262 15806 16115 16611 16398 16206 16194
Total Employment 89787 91223 91550 93498 97103 96539 97867 103149 112811
Ratio 15.7 15.6 17.7 16.9 16.6 17.2 16.8 15.7 14.4
Source: Personnel office website (http://www.personel.gov.ct.tr/). the number of employees in the armed
forces is not available after 2012. total employment numbers are from SPo.
20 These are the people whose status was legally changed from temporary to permanent in 1984.
21 These are the “additional positions” created as a result of modification of Establishment Principles of Ministries Law in 2000.
22 The Privatization Law has regulations regarding privatization of public sector enterprises. One regulation stipulates that
an employee who has worked in the public sector has the right to find employment as a civil servant if his/her
workplace goes through privatization, The numbers in this table are basically the Cyprus Turkish Airlines workers who
lost their jobs after CTA went bankrupt.
Table 3.4 below shows the most recent snapshot (November 2016) of the distribution of civil
servants,23 as well as number of available positions for each category, as regulated by the laws
explained in Section 2. The total number of actual employees in civil service is 16,148, which is
about 14.3% of total employment. There are two important features on this table. First, there are
some employment categories that are not defined by the related laws but exist nonetheless. For
example, there are 1049 people working as “Temporary Personnel” and 1350 “Temporary Workers”
but there is no such employment position defined under Personnel Office Law. These two make
up around 15% of all the civil servants. Secondly, for all the legally defined positions the actual
number employed is less than the legally allocated maximum numbers. This shows that instead
of filling in the available positions, employment in the civil sector has gone rogue. Filling in the
available positions legally would require announcement of available positions, examinations
and other legal administrative framework required by the Public Services Commission Law.
Instead, politicians seem to have created these alternative employment categories and filled the
positions through nepotism. The gender distribution of public servants is also revealed in this table.
table 3.4 – number of public Servants per employment Category (november 2016)
total Current
employment type position women Men employment % of total
employment type
Permanent Civil Servants 10,378 2,703 2,477 5,180 32.1%
total position women Men Current employment % of total
Elementary Education Teachers 1,810 1,068 516 1,592 9.9%
Secondary Education Teachers 2,128 1,267 530 1,797 11.1%
Technical Occupational Teachers 710 306 225 531 3.3%
Temporary Teachers - 20 14 34
Police Force 3,000 130 2,107 2,237 13.9%
Civil Police Force 434 93 118 211 1.3%
Contractual Staff 312 101 94 195
Müşavirs - 33 110 143
22/1984 - 13 15
19/2000 15 5 11 15
Permanent Workers 2,413 340 742 1,059 6.6%
Temporary Workers - 469 868 1,341 8.3%
Temporary Civil Servants - 597 443 1,020 6.3%
Disabled Staff - 82 208 289
Mandatory Service Personnel - 13 10 17
Fund - 18 18 36
Seasonal Worker - 2 1 3
Privatization Law - 217 210 421
Total 21,202 7,348 8,800 16,148
Source: Personnel office
23 The total numbers from the Ministry of Finance are also available for the last 12 months ( see Appendix).
3.3 public employees under each Ministry

In this section we analyze the employment figures for the various ministries, using numbers
derived from the 2016 state budget documents prepared at the end of 2015. When the
budget is prepared the total payments to the civil servants are documented along with the
total number of workers within each office. There is also the information on the maximum
number of available positions; the maximum number of employment within each office is
regulated by each office’s own “establishment laws”.
Table 3.2 indicates that all ministries in the TRNC government are currently employing
fewer than the maximum number allowed by law —an argument policymakers utilize when-
ever they defend employing more people in the public sector. However if we look at the
maximum number of allocated positions (around 21,000 people), the maximum civil service
employment as stipulated by law is about 19% of total employment in the TRNC.24 But most
of the maximum employment figures were decided when the laws were first written,
therefore the actual number of civil servants intended at the time of the establishment of the
government was a much higher proportion of total employment.
table 3.5 – number of Civil Servants within each Ministry (as of December 2015)
Maximum Current Current

positions employment Müşavir Availability
Presidency 158 84 3 74
TRNC Parliament 211 97 2 114
Prime Ministry 909 399 16 510
Ministry of Foreign Affairs 399 240 9 159
Ministry of Transportation 1971 859 4 1112
Ministry of Finance 1380 749 8 631
Ministry of Interior and Labour 1735 932 24 803
Ministry of Economics, Industry and Commerce 157 72 9 85
Ministry of Environment and Culture 812 351 15 461
Ministry of Education 5727 4399 16 1328
Ministry of Agriculture and Natural Resources 1019 409 10 610
Ministry of Health 2358 1337 8 1021
Ministry of Tourism 370 156 7 214
Police Force 3474 2335 0 1139
Others25 733 420 3 313
Total 21,413 12,839 134 8,574
24 Using total employment of 112,811 from SPO’s 2015 September HLF survey.
25 The category Others includes the Courts, State Prosecutor, Public Services Commission and Ombudsman’s office.
If we compare the figures from the Personnel Office on Table 3.3 with the figures on Table 3.5,
we note several discrepancies. According to Table 3.3, the total number of employment at the
end of 2015 was 16,194. However according to the 2015 state budget, there are only 12,839
employees in the central government.26 The difference is due to employment within cate-
gories that are not defined by the Personnel Office Law, which therefore has no legal
foundation and does not appear in the budget document. But if these employees are not
included in the budget, then how, i.e., via what mechanism does the central government pay
their wages and salaries?
3.3.1 employment within each Department/Office:

There are 68 different departments/offices in the TRNC government.27 Ministries have varying
numbers of offices, and each office requires at least one director, vice-director, secretary and
messenger (odaci). Although each office has its own duties and responsibilities, it is unclear
why some offices cannot be joined into one in order to decrease the administrative and
financial burden. For example, under the Ministry of Economics there are both the Commerce
Department as well as the Industry Department. Under their individual laws, each office has
a list of responsibilities (13 and 19, respectively), four of which are worded in exactly the same
way. The only difference is in the name of the relevant office, meaning that only one office
and two separate departments are really not necessary. It is meaningless to create two separate
offices with two separate laws and two separate top-level officials. The same argument applies
to other ministries; e.g., the Tourism Ministry, which controls the Offices of Tourism Promotion
and Marketing and Tourism Planning. These examples indicate not only the inefficiency/
redundancy of the government structure, but the fact that the design was intentional to
increase the number of Directors and other civil servant positions that politicians can favor in
exchange for votes.
Another important number is that of musavirs. This position is widely criticized by the
media and NGOs, while the entire country is aware that it was created to perpetuate the
practice of nepotism. When governments change, the new ministers will promote their own
people to the Undersecretary and other Director positions. But the incumbents cannot be
demoted nor can they be laid off: they are awarded the enviable position of musavir, where
they do absolutely no work and are paid on the second highest salary scale. In some cases the
new government appoints the existing musavirs as Undersecretary or other senior-level
position, but that only means the incumbents will have to become new musavirs. Therefore,
numbers continue to grow; in fact, in the last 10 years the number of Musavirs increased from
95 to 143. This practice is unfortunately a good example of how the state’s resources are wasted.
The number of employees in some of the offices reveal some unusual findings. For
example, in 2014 the Office of Gender Equality (under the Ministry of Interior) was estab-
26 These numbers do not include Armed Forces and Civil Defense Department.
27 The list of all the offices and the total employment numbers are provided in the Appendix.
lished, yet it has no appointed members; and the Immigration Office has only seven
employees (out of the maximum legal allocation of 46) in a department that has quite a
heavy workload. On the other hand, the Post Office has 96 employees, which seems high
considering that there isn’t much postal activity in north Cyprus. The lack of future planning
combined with the security of civil sector employment have resulted in an uneven
distribution of employment among different offices. In the next section we analyze the three
most desirable civil service positions.
3.4 A closer look at top three groups of civil servants:

One of the important duties of any pro-social state is to provide affordable and reliable public
services. Education, health and civil protection are, therefore, three key areas and, not surpris-
ingly, the highest concentration of employment in civil services in north Cyprus is in one of
these three areas. Thus one would be inclined to congratulate the policymakers in the north
for employing almost half of the civil servants in these three areas (45.8%) without any further
information. However the services provided in each of these areas deserve more scrutiny
which we shall do so in this subsection.
3.4.1 public education

The law that regulates the working conditions of teachers in public schools is called the
Teachers Law (Öğretmenler yasası, 25-1985); it was enacted in June 1985 and has been modified
50 times since. The law states that, depending on their rank, primary school teachers shall not
be required to teach more than 23 hours per week, and secondary school teachers are
required to teach maximum of 20 hours per week. Primary and secondary school hours are
from 8:00-13:00 Monday through Friday, from September till June. The secondary schools
have two midterm reading weeks per semester (during which teachers do not teach), and all
public schools have a two-week mid-semester break. State schoolteachers are entitled to a
fully paid summer holiday (3 months), with the possibility of participating in educational
activities during the summer break— decided jointly by the corresponding labor union and
the ministry (these summer activities could take up at most 42 working days). Teachers are
also entitled to paid sick day leaves of 42 days per year.
The Teachers Law entitles teachers to certain additional payments (Article 100) that are
not given to other civil servants. For example, every teacher receives the “Academic Year
Preparation Payment” (Öğretim yılı hazırlık Ödeneği) at the beginning of each academic year.
This payment is 1.75 times the minimum wage, but was reduced after 2010 law modifications
mentioned in section 2.4, which only affected the teachers who started working after the law
went into effect.28 Furthermore, all the teachers in secondary and technical education schools
28 This change was heavily criticized by the related labor unions and they have negotiated intensely with the related
ministry.
receive 4% of their salary as “Subject-matter Payment” (branş tahsisatı) and Atelier Teachers
receive 5% as “Atelier Payment” (atölye tahsisatı).29 The same 4% payment is also extended to
primary school teachers but it is called “Special Payment” (Özel tahsisat). These payments were
somehow included in the laws at some point and due to enormous power of the trade unions
they could not be taken away. The rationality of these in today’s circumstances is questionable.
Next we present some indicators on the public education in north Cyprus. Table 3.6 shows
the Teacher/Pupil ratios in public education for 1992-1997.30 This ratio is used worldwide as
a proxy for the quality of education, as higher teacher/student ratio suggest that a teacher
has less time for each student. Apart from primary education, we can observe lower teacher/
student at all levels of public education during this time period. The ratio for teacher /student
is particularly high in the Vocational High Schools, a very positive indicator for the state of
public education.
table 3.6 – teacher/pupil ratio in public education 1992-997
1992 1993 1994 1995 1996 1997

Primary Education 18.82 15.29 12.87 14.71 14.03 15.81
General Secondary Schools 39.75 16.88 27.62 13.8 19.92 12.05
General High Schools 9.9 14.6 14.8 9.9 8.6 11.08
Vocational High Schools 9.3 7.3 7.3 5.8 7.7 6.13
Source: Statistical yearbook (1997), SPo
The progression of teacher-student ratios for the period 2003-2015 is shown in Figure 3.4. The
teacher/student ratio in all levels/types of public schools improved, during this time period,
with the exception of secondary vocational schools. In contrast, the ratios at private schools
indicate more students per teacher, but the numbers are still smaller than in the public
schools. This would seem to indicate that the quality of public education improved during
this period; however, at the same time the numbers attending private education (primary
and secondary) increased. In other words, the improved teacher/student ratios in public
schools could be the result of more students transferring to the private schools. This then
raises a concern over the quality of the public education and begs the question: why are
more and more students enrolling in the private schools?
29 Atelier teachers are not entitled to the Subject-matter payment. Also, teachers working in the Karpaz and Tatlisu
regions receive 5% as the Subject-matter payment.
30 These numbers differ from those provided on the SPO website. The source makes no distinction between public and
private schools, but there were not many (maybe none) private elementary and/or secondary schools in the 1990s. The
distinction is only made for kindergartens where we only use public school numbers. There are also teachers who work
at Teacher Training Academy, special education centers, and OTEM (these numbers and the non-teaching teachers are
included in the aggregate numbers).
figure 3.4 – teacher/pupil ratios in various school types (2003-2015)

25
20
15
10
Public T
Public Total
otal Pre-Primary
Pre -Primary Primary
Primary
General Secondary
General Secondary Secondary Vocational
Secondary Vocational Private
Private Total
Total

Source: ministry of education annual Statistics

The current situation in public education is detailed next. First, in Figure 3.5, we show the

distribution

of

public schoolteachers

in north Cyprus,
where
46% of all public
schoolteachers

work in general secondary education (lower- and upper-secondary).

Although the state offers

special education,

judging
by

the
ratio of
teachers

working
in this

area, the

state probably

needs to allocate more resources
tospecial education. Table
3.7 shows the teacher/pupil
ratios
at public schools
located in different major cities of north Cyprus, revealing that
Morphou

(Güzelyurt)
and Trikomo (Iskele) are the most advantageous
cities, respectively,
in
primary and

secondary
general public
education.
Although thereare few teachers in those cities,
there are

also only
few students attending public schools there because those who are financially able

tend to send their children to public schools in the bigger cities or the private schools.

figure 3.5 – the distribution of teaching staff at various public school types (2015-2016)
1,4%
6,8%
13,6%
Pre-primary
Pre-primary
Special Education
Education
32,0%
Primary
Primary School
School
General Secondary
General Secondary Education
Education
Vocational
Vocational And T
Technical
echnical
46,2%
Source: ministry of education annual Statistics

table 3.7 – teacher/pupil ratios by City (2015)
teacher/pupil ratios nicosia famagusta Kyrenia Morphou iskele total

Pre-Primary 15.0 18.1 17.9 15.6 14.8 15.8
Primary 13.9 13.3 14.8 10.8 13.4 13.5
General Secondary 8.8 7.2 6.5 5.4 5.1 7.3
Vocational Secondary 8.9 5.9 NA 5.6 5.2 NA
Table 3.8 below provides some statistics on teacher/pupil numbers in the public education
system in north Cyprus. We observe that the total number of teaching staff for this period is
3988, which represents 24.6% of total civil service employment in north Cyprus.
table 3.8 – public Schools 2015-2016
total teacher/
total teaching total Student Average
Students Class Staff teachers ratio Class size
Pre-Primary 3969 228 269 251 15.8 17.4
Primary School 15621 717 1312 1187 13.2 21.8
Secondary Academic 15160 628 1832 1713 8.8 24.1
Secondary Vocational 3892 261 575 505 7.7 14.9
Total 38642 1834 3988 3656 10.6 21.1
Source: ministry of education Statistical abstract (2015). “teaching staff” includes administrators, teachers
and technical staff. teachers include permanent and contractual but exclude part-time teachers. no staff is
counted twice.

Finally, we compare north Cyprus teacher/pupil ratios to those around the world, and note
that north Cyprus (13.2 and 8.8 for primary and secondary) is in a better position than most
of the countries shown in Figure 3.6 below.
figure 3.6 – pupil-teacher ratios in public primary and Secondary education around
selected world Countries (most recent year available)
40
35
30
25
20
15
10
5
0
Bahrain
Dominican Republic
Slovenia
Serbia
Czech Republic
West Bank and Gaza

Saudi Arabia
Malta
Slovak Republic
Lebanon
Turkey
France
Cabo Verde
Bulgaria
Indonesia
Qatar
Ecuador
Hungary
Niger
Albania
Ghana
Latvia
Austria
Germany
Costa Rica
Brazil
Portugal
United States
Nepal
Italy
Netherlands
Cyprus
China
Korea, Rep.
Belarus
Belgium
Puerto Rico
El Salvador
Poland
Finland
Primary education Secondary education
Source: world development Indicators, united nations educational, Scientific, and cultural organization
(uneSco) Institute for Statistics.
3.4.2 public health Services

Another important obligation of the state is to provide health services to its people. In fact,
Article 45 in the constitution states: “It shall be the duty of the State to ensure that every
person enjoys sound physical and menta1 health and receives medical care”. The TRNC
provides free public healthcare to all those covered by social security; however, the quality of
public health care has been declining and those who are financially are increasingly using
private health care. In this section we analyze some of the features of public health services
in North Cyprus.
To practice medicine in the TRNC, the appropriate licenses and registration with the
Cyprus Turkish Medical Association (kıbrıs türk tabibler birliği) are required. The Medical
Association website (http://www.kttb.org/) lists 2577 registered members, with the most
doctors in the four specializations of Dentistry, Gynecologist and Obstetrics Specialist,
General Practitioner and Internal Medicine Specialist. The 2016 Budget documents stipulate
a maximum 261 positions in the “Medical Doctor Service Class”, 115 of which are currently not
filled. Given that there are more than 2500 medical doctors registered in the country, it is
interesting that so many state positions are available. Figure 3.7 illustrates the trend of state
and private physicians (including dentists) in North Cyprus since 1977.
s
figure 3.7 – trend of Medical Doctors (including Dentists)

600
500
400
300
200
100
0
1981
1991
1994
2001
2004
2011
1984
1977
1978
1989
1990
1992
1993
1995
1996
1997
1998
1999
2000
2002
2003
2005
2006
2007
2008
2009
2010
2012
2013
1979
1980
1982
1983
1985
1986
1987
1988
State
State Private
Private
Source: SPo, economic and Social Indicators, table 30.
The backbone of the health care services is the nurse/midwife. There are 594 such positions
allocated by law, 117 of which are currently vacant. The ratio of nurses/midwifes to total
population is seen as an indication of the adequacy of country’s health services workforce.
The World Health Report of 2006 estimates that countries with fewer than 23 nurses and
midwives per 10000 population generally fail to offer adequate health care coverage.31
31 http://apps.who.int/gho/indicatorregistry/App_Main/view_indicator.aspx?iid=102
Assuming a population of 300,000 for north Cyprus, the current maximum number of state
employable medical doctors and nurses/midwives per 10000 population are, respectively, 8.7
and 19.8, significantly less than the recommended numbers.32 Of course these numbers do
not include the nurses working in private sector, but regardless, there a need to increase the
number of health care personnel in state-provided health care facilities.
There are currently five major state hospitals and 18 regional, and smaller, public health
centers in north Cyprus. One of the hospitals (baris ruh hastaliklari hastanesi) caters to the
mentally ill. The other four hospitals are distributed around the country. The hospital in
Pentagiea/Yesilyurt (cengiz topel Hospital) is located between the Lefke and Morphou/
Guzelyurt regions. Table 3.9 below shows the number of physicians and nurses working at
these major hospitals as well as the number of patients treated in 2012.33 As we can see, the
nurse/patient and physician/patient ratios are unfavorable at both the Kyrenia and
Pentagiea/Yesilyurt hospitals.
table 3.9 – Some Statistics at State hospitals (2012)
2012
Nicosia Famagusta Kyrenia Yesilyurt
Physicians 157 43 19 15
Nurses 369 122 48 25
Beds 513 145 56 45
First aid patients 79249 47663 51371 19640

In-patients 17388 3938 4298 1863
Population (2006) 85579 86247 62158 31116
Source: 2012 ministry of health report. Population corresponds to the total population of nicosia, famagusta
(including trikomo/Iskele), kyrenia and morphou/guzelyurt+lefke according to 2006 census. the number of
physicians also include dentists.
Table 3.10 gives similar information for 1997. Although there has been an increase in both the
regional populations and the number of patients at the hospitals over the last 15 years, the
public health service provider numbers have not kept pace with the change. The only
positive improvement has been in the in-patient numbers in Pentagiea/Yesilyurt, but this
could simply be due to the fact that seriously ill patients are being transferred to the Nicosia
state hospital due to other hospitals’ lack of resources.
32 According to World Health Organization data, number of nursing and midwifery personnel per 10000 population in
RoC in 2008 was 42.99.
33 We do not have data for more recent years.
table 3.10 – Some Statistics at State hospitals (1997)
1997
Nicosia Famagusta Kyrenia Pentagiea/
Yesilyurt
Physicians 145 49 30 21
Nurses 211 90 27 20
34
Beds 599 122 48 45
First aid Treatments 35529 20167 18746 2891

In-patients 9345 2506 1463 2005
Population (1996) 62295 72054 38715 27523

Source: 1997 Statistical yearbook
The public health care in north Cyprus has deteriorated over the years. Although the state
provides free public health care to all those who are covered by social security, the facilities
are not impressive. For a long time there was no appointment system in place, requiring
patients to go to the hospital very early in the morning and then wait in line. Furthermore,
although physicians employed in the state hospitals theoretically—and legally—have the
same working hours as other civil servants, in practice they tend to work until noon (except
when they are on-call) and treat patients in their private clinics (or more recently at other
private hospitals) in the afternoon. Although in 2016 the state built a hospital with a special
Oncology unit, there are only four registered specialists in Radiation Oncology in north
Cyprus. Finally, the state has been good at sending patients to Turkey or to local private
hospitals when the state hospitals are unable to treat them, although this does not explain
why they are not working to improve their own public health care. It would be fair to say that
public health care needs further improvements.
3.4.3 public Safety (police protection)

The Police Force and Fire Department in north Cyprus are not managed by civil authorities.
Although the Police Force is under the Prime Ministry, the duties and authorization follow the
regulations of the Armed Forces. On the other hand, the wages and salaries of the staff are
paid through the central budget. There have been previous government programs with the
aim to transfer the control to the public authorities (Diler, 2015), but they have not been able
to do so.35
34 This number is the total bed capacity in the Nicosia region, which also includes the mental hospital. The data source
does not provide the number of beds in each state hospital in Nicosia in 1997.
35 In 1994, DP-CTP coalition government was the first to include in their programs to have the Police Force to be under
Interior Ministry. UBP government program in 2009 talks about transferring the Police Force to be under Prime Ministry,
which does not make sense since legally it is already the status quo.
The law regulating the establishment, duties and authorization of the police in north
Cyprus was enacted in 1984 and has been modified 26 times since. The civil police (discussed
above) have the same responsibilities as the regular police, except they are not required to
wear uniforms (Section 2, article 3(a)). At the same time, the members in this force are
selected by upper-level police authorities and given special training. The same law also
requires three separate commissions and boards to be established, namely, the Police Force
High Council, Police Force Planning Board, Police Force Inspection Board and Police Services
Commission. The law also stipulates requirements for membership in and the duties/responsi-
bilities of these groups. Whether these groups are actually working is another question.
Although police officers are considered civil servants, their working conditions are
different. They are also subject to the same regulations as those employed under the Civil
Servants Law (see Section 2), although some of the rules are different for the police force. For
example, police officers are legally required to work 6 days a week. The head of the police as
well as his first and second assistant are appointed in accordance with the three-signature
rule upon recommendation of the Commander of the Armed Forces.
According to Eurostat Publications (p. 43), the lowest and highest numbers of police
officers per 100,000 population in Europe were, respectively, Finland (151) and Cyprus (631).
The number for Turkey during the same period of 2010-2012 was around 530. The number of
police officers per 100,000 people in north Cyprus during this period was 768 without
including the civil police figures.36 In other words, north Cyprus has the highest number of
police officers per population within Europe.37
3.4.4 public Attitudes towards particular and general civil services

Although a substantial percentage of civil servants work in one of these three occupations,
the general public attitude towards these group of workers is unfavorable. One of the most
highly criticized public service is the state hospitals. Those who can afford it prefer care at
private hospitals even though most qualify for free health care at the state hospitals. The
public criticizes public health care professionals for their limited work hours and unorganized
services. Similarly, elementary and secondary school teachers are criticized for working only
half-day during school term, and not at all during summer (and getting full pay), while
teachers in the private sector work a full day during the school term for a lower salary. Finally,
the police force is also criticized for not providing the necessary services. This author
personally has called the police on several occasions in the middle of the night to report
disturbance in the streets, with little success.
36 This number is the average of three years. For each year we divide the total number of police officers in December of
the year (obtained from the Personnel Office’s website) with the total population (obtained from SPO’s Social and
Economic Indicators) of north Cyprus.
37 As we were writing these lines, there was a job ad placed by police headquarters for 50 additional police officer
positions (http://www.polis.gov.ct.tr/images/duyuru/html/PolisMunhal.htm)
The directors of these three groups, of course, disagree with public opinion, citing the lack
of personnel. As we see in Appendix on Table A2, there are, in fact, fewer employees than
legally stipulated. However, we also showed above that the police and teacher ratios to the
relevant population are favorable compared to other nations, although health care related
ratios are not so favourable. One thing is clear, however: the government and relevant
professional unions should work together to ascertain and address the problems to change
public attitudes.
We finish this section with survey results (EVS 2008) on public confidence in the different
public services (see Table 3.11). Although we noted above that public opinion on the edu-
cation, health and police services is not favorable, the numbers below offer a rather optimistic
picture— especially in that they reveal higher confidence in all areas compared to public
opinion in the RoC (except confidence in Government). This table does not necessarily
contradict our views expressed above, as these numbers are almost 10 years old. In fact, Table
3.12 shows results from a more recent (2011) survey that are more in line with our views.
Regardless, we feel confident in claiming that most civil services provided in north Cyprus
need significant improvement if they are to match European standards.
table 3.11 – percentage of people who have confidence in the following areas
the Social
education trade the Civin Security healthcare
System unions police Service System System Government
N. Cyprus 69.3% 51.3% 80.6% 62.7% 71.8% 60.5% 46.0%

RoC 65.4% 29.1% 59.6% 52.2% 70.4% 54.0% 55.2%
Greece 47.3% 21.1% 53.2% 25.0% 30.8% 38.1% 21.2%
Malta 84.8% 37.7% 79.9% 53.0% 71.6% 81.1% 48.4%
Turkey 73.9% 39.8% 80.1% 62.9% 71.8% 74.2% 49.9%
Source: evS 2008, author’s own calculations
table 3.12 – percentage of people who have confidence in these areas

(north Cyprus only)
evS (2008) CMirS38 (2011)

Health System 60.5% 48.9%
Education System 69.3% 56.5%
Police Force 80.6% 64.6%
38 The Center for Migration, Identity and Rights Studies

3.5 Some demographic characteristics of public Sector employees

There are two surveys in north Cyprus that collect information on labor force statistics. The
Household Labor Force Survey (HLFS) has been conducted annually since 2004 and it is the
major survey that collects detailed information on the labor force in the TRNC. The survey is
conducted every October and participants are asked about their employment/unemploy-
ment details. The results are used to calculate the aggregate employment statistics, which we
used in Figure 3.1. The other survey is the Household Budget Survey (HBS), which is conducted
less frequently. The main goal of the HBS is to collect information on household spending
habits, but there is also a section on employment statistics. We rely on these two surveys to
report some general characteristics of people working in public sector.
The question that identifies whether the respondent works in the public or private sector
is different in the two surveys. In the HLFS, the related question offers only two options,
“public” and “private”. However the question on the HBS has two additional options, “SEE and
local government”. Because in this part of the project we are only analyzing the human
capital in the public sector excluding SEEs, the HBS is the better choice. However, since the
HBS data is from 2008, we also report the more recent HLFS data with the caveat in mind.
We first report the socio-demographic characteristics of the working population
according to the 2008 HBS. To make the comparison with SEEs and private sector, we report
all three types in the same table (Table 3.5). Focusing only on the government institutions,
the public sector employment is male dominated, men accounting for almost 67% of these
employees. This is in contrast to the aggregate Personnel Office numbers in Table 3.1 that
shows more of equal gender distribution. In terms of education, most civil servants (62.6%)
do not have a university education. Although this number is lower compared to the other
two types of employment in the table, it is still a high number compared to other developed
nations. Even for those with a university education, it is not always the case that their degree
is related to their position. This is a consequence of politicians disregarding regulations when
filling positions. In terms of their contract type, 88% are in permanent employment but 11.6%
are in temporary type employment. This shows that working in the government sector is not
as “secure” as one might hope. Although it is illegal for civil servants to take another paying
job, this survey indicates that 4.7% do in fact have a second job. Given that this is a government-
conducted survey, it is highly likely that this number is falsely low.
One final observation is the difference in the average salaries of the employees working
in the public and private sector. Civil servant salaries are 18% higher than those employed in
other public services, and about 88% more than the private sector employees. Obviously
these are raw differences, which do not take into account education, experience, tenure and
industry. But it is still useful to see the wage gap between public and private sector.
table 3.13 – Some characteristics of public and private sector employees (hBS 2008)
GOvernMent See privAte

MALE 66.8% 60.3% 68.1%
FEMALE 33.2% 39.7% 31.9%
PRIMARY 14.7% 20.9% 36.0%

SECONDARY 47.9% 51.5% 48.9%
TERTIARY 37.5% 27.6% 15.1%
PERMANENT EMPLOYMENT 88.3% 76.8% 76.9%

TEMPORARY OR CONTRACT BASED 11.6% 20.5% 17.4%
NO CONTRACT 0.1% 2.7% 5.7%
YES SECOND JOB 4.7% 4,.% 3.3%

NO SECOND JOB 95.3% 96.0% 96.7%
Average Salary 2845 TL 2399 TL 1511 TL

(Standard Deviation) (1476) (1189) (790)
Although only 15.6% of employment in north Cyprus is in civil services (Table 3.4), the per-
centage of households who receive income from the state is a lot larger. In fact, Table 3.14
shows the percentage of households who receive some kind of income from the central
government and other public sector employment. About 75% of the households in north
Cyprus have at least one member currently working as a civil servant or a public employee at
SEE, or receiving a pension from the government. In other words, there is a substantial
proportion of the population that depends financially on the state.
table 3.14 – 2008 household Budget Survey (hBS)
% of households
At least one member currently working as civil servant 24.2%
At least one member currently working for SEEs 8.3%
At least one member receiving pension from the government 11.1%
At least one member currently working as civil servant,
for an SEE or receiving pension from the government 75.7%
The last figure using the HBS sample shows the distribution of government pensioners by
age group. There are about 11% who are younger than 50, and another 15% who are
between 51 and 55. These pensioners represent the “early retirees” from the civil services.
With the changing regulations regarding the mandatory retirement age, the new cohorts of
pensioners will retire at older ages.
figure 3.8 – 2008 hBS Government pensioners by Age Groups
<46
46-50
3%
8%
66+
35% 51-55
15%
56-60
20%
61-65
19%
Table 3.15 includes some numbers based on the 2011 HLFS. As we explained above, this
survey does not distinguish between state institutions and SEEs. Nevertheless it is useful to
see the more general picture. We are also able to add new variables using this survey. For
example, we can identify employees according to their self-reported nationality. The TRNC
laws do not allow anyone who is not a citizen to work in the public sector. And the table 3.15
below mainly confirms this.39 However an interesting finding is that almost 25% of public
sector employees have dual citizenship. These individuals are mainly the first wave of
immigrants who were sent to Cyprus in 1980s and they were given citizenship. The more
recent immigrants are not as lucky; for this reason half those employed in the private sector
are Turkish.
Another interesting number in this table is the percentage of employees who have union
membership. The public sector is well known for having significant ties with labor unions; in
fact, the labor unions have been very effective over the years in negotiating the wages and
working hours of public sector employees. However, according to this table, only 63.5% of
public sector employees belong to a union. This could be due to temporary employment or
decreasing reputation of unions among the public.

39 There is a very small percentage according to the table who are not of TRNC nationality, but these numbers are
negligible.
table 3.15 – 2011 hlfS results on public Sector employees
GenDer
MALE 65.6%
FEMALE 34.4%
NATIONALITY
TRNC 73.5%
TRNC AND OTHER 24.9%
TR 1.3%
OTHER 0.4%
EDUCATION
PRIMARY 16.6%
SECONDARY 44.2%
TERTIARY 39.2%
UNION MEMBER
YES 63.5%
NO 36.5%
LOCATION
NICOSIA 45.5%
FAMAGUSTA 18.6%
KYRENIA 14.4%
GUZELYURT 10.1%
ISKELE 11.5%
Table 3.16 gives the age distribution of public servants in the TRNC, based on information
from the two surveys. Even though the current official retirement age is 65, only around 3%
currently working are older than 55. This is because the retirement laws have changed over
the years, and the new laws only cover those who entered the public sector after 2008.
Therefore most people currently working are eligible to retire before 65. There is also some
concern among the public that, because of constant shuffling of upper level management,
there is reduced institutional memory of the public sector. This concern might be valid if the
upper level management were the sole executer of public laws. However, as we see here, the
average tenure of most public servants is very high which indicates that they have the
necessary knowledge and human capital to run the things in each government office.
Unfortunately, in reality, high-level public officials act like managers in private firms, which
sabotages the work of other public officials.
table 3.16 – Age and tenure of public Sector employees
AGe hlfS hBS Average tenure (in years)

18-25 7.3% 6.6% 1.9
26-30 11.4% 14.6% 4.3
31-35 20.1% 17.8% 7.4
36-40 15.9% 19.0% 11.7
41-45 17.4% 19.1% 15.3
46-50 14.3% 13.2% 17.4
51-55 9.8% 6.6% 20.6
56+ 3.8% 3.2% 22.4
43
4. BUDGETARY FRAMEWORK
4.1 introduction
The Budget Law (bütçenin hazırlanması ve uygulanmasına ilişkin kurallar yasası, 16-1999),
which dictates the rules regarding the preparation and implementation of the state budget
was passed in April 1999. Given that the TRNC was founded in 1983, it is a wonder how the
budget was prepared for more than 15 years without these regulations. Under the “Rules
regarding the preparation of central budget” section of this law, the first rule starts with
stating the following: “the budgets are prepared according to the efficiency principles by
taking into account the cost and benefit calculations of the development plans and
programs.” Legally, the SPO is in charge of preparing development plans and programs in
TRNC, and the last five-year development plan terminated in 1997, and there has since been
no development plan prepared by this organization. In more recent years (2004 onwards),
the so-called Economic Protocols mandated by the Turkish Foreign Aid Office in north Cyprus
have surfaced as a substitute for these development plans. These protocols are prepared
jointly with the Turkish Embassy in Nicosia and include a list of action plans to improve the
public and private sector. However, even these protocols were not executed as they should
have been.
Not only is the budget is approved with no development plan in mind, the execution of
some of the approved items is also questionable. Given that most of the budget is used to
pay for the wages, salaries, and social security contributions of the civil servants along with
the pension payments, the leftover income could hardly be used for “efficient” allocation
among other investments. For example, the Finance Minister announced in September 2016
that they will spend around 2 million TL to buy 18 brand new cars for public authorities in the
central government. This has been heavily criticized by the public for “wasting” the public
resources rather than using it for something more useful. This kind of irresponsible spending
does not in any way represent “efficient allocation”.
There are three authorities that monitor/audit the execution of the state budget. The
Ministry of Finance is responsible for ensuring that all receipts are provided and all expen-
ditures of other ministries and related offices are in accordance with the rules and regulations.
The other two institutions are the Finance Audit and Inspection Board (maliye teftiş ve İnceleme
kurulu) and the Court of Accounts (Sayıştay). The mission of Finance Audit and Inspection
Board is “to inspect and audit the entire public sector in order to ensure transparency and
accountability in this sector, and provide consulting services by preparing reports.” The Court
of Accounts is responsible for “monitoring the public earnings and expenditure” (TRNC
Constitution, Article 132). According to the 2011 Performance Report of the office, it has
audited one Municipality, 13 Public Offices, and has carried out seven “research” studies.
Given that there are 26 municipalities and 70 government offices, these audits are very
limited. On the other hand, the same report indicates that as of 2011 there were 199 reports
waiting to be processed in the Parliament. In other words, even if this office can perform
perfectly and audit every public office, the members of parliament are unfortunately doing a
less than perfect job.
In this section we will discuss the central government budget, focusing on the incomes
and expenditures, and the burden civil servants pose to government finances.
4.2 historical Aggregate Budget data

Like most nations, the TRNC regularly borrows money to finance its expenditures. Figure 4.1
shows the ratio of income to expenditures in the state budget from 1977 to 2013, revealing
that for this period state revenues could finance on average only 80% of total expenditures.
The ratio of the government deficit (the difference between expenditures and income) to
total Gross National Product (GNP) (Figure 4.2) has generally been between 5-10%, except the
period of 1998-2003 during which it exceeded well over 10%.
figure 4.1 – Aggregate State Budget- income/expenditure ratio
100,0%
90,0%
80,0%
70,0%
60,0%
50,0%
40,0%
30,0%
20,0%
10,0%
0,0%
1981
1984
1991
1994
2001
2004
2011
1977
1978
1979
1980
1982
1983
1985
1986
1987
1988
1989
1990
1992
1993
1995
1996
1997
1998
1999
2000
2002
2003
2005
2006
2007
2008
2009
2010
2012
2013
Source: SPo, economic and Social Indicators, table 18

4. budgetary framework 45
figure 4.2 – percentage of Government Deficit to Gnp

F
30,0
25,0
20,0
15,0
10,0
5,0
0,0
1981
1984
1991
1994
2001
2004
2011
1977
1978
1979
1980
1982
1983
1985
1986
1987
1988
1989
1990
1992
1993
1995
1996
1997
1998
1999
2000
2002
2003
2005
2006
2007
2008
2009
2010
2012
2013
:
There are two important issues with these numbers. The first problem with these figures is
that they include “grants from Turkey” as income for the government. Although it is true that
these transfers were donated by the Turkish Republic, they have averaged historically around
20% of the government income and thus constitute a large part of the state’s budget. The
more serious concern is that these loans from Turkey are treated as if they are never going to
be paid back and thus are notGincluded as liabilities in state budget. d The next table shows
o
g
deficit /GNP ratios for the last 10 years using different definitions of government deficit.
D o
Deficit 1: Difference between Total Expenditures and TotaloRevenues
Deficit 2: Difference between Domestic Expenditures and Domestic Revenues
Deficit 3: Difference between Total Expenditures and Total Revenues minus
Loans (Deficit if the government does not borrow any money)
Deficit 4: Difference between Total Expenditures and Domestic Revenues
e G 2

e s 1 2
2

table 4.1 – trnC General Budget (2005-2015)
(million tl) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total Expenditures 1500 1924 2125 2365 2575 2661 2845 2964 3261 3635 3842
local expenditures 1193 1471 1796 2007 2200 2285 2399 2499 2698 3063 3240
tr aid expenditures 307 453 329 358 375 376 445 465 562 571 600
total revenues 1543 1830 2183 2361 2510 2643 2793 3141 3216 3603 3738
local revenues 1042 1216 1628 1635 1578 1791 1952 2339 2287 2709 2916
tr aid revenues 501 614 555 726 932 851 840 802 928 893 820
grants 293 273 338 390 395 430 499 548
loans 433 659 513 450 407 499 395 273
GNP 3144 4101 4671 5128 5415 5649 6559 6916 7579 8840 9636
Deficit 1/ GNP (%) -1.4% 2.3% -1.2% 0.1% 1.2% 0.3% 0.8% -2.6% 0.6% 0.4% 1.1%
Deficit 2/GNP (%) 4.8% 6.2% 3.6% 7.3% 11.5% 8.7% 6.8% 2.3% 5.4% 4.0% 3.4%
Deficit 3/GNP (%) -1.4% 2.3% -1.2% 8.5% 13.4% 9.4% 7.7% 3.3% 7.2% 4.8% 3.9%
Deficit 4/GNP (%) 14.6% 17.3% 10.6% 14.2% 18.4% 15.4% 13.6% 9.0% 12.9% 10.5% 9.6%
Source: tr reports 2010 and 2015
The different parameters for the budget deficit enable us to compare the situation from
various perspectives. One way of looking at the deficits is to see how much of a state’s total
spending can be financed with all sorts of revenues (deficit 1). But some could argue that
grants are given as gifts whereas loans are not given free of charge therefore should not count
as part of state’s revenue (Deficit 3). On the other hand some would argue that neither loans
nor grants should be considered as income. Thus “Deficit 2” calculates north Cyprus’s ability to
finance itself its local expenditure. Finally, some would argue that Turkish financial aid is
necessary for the well-being and existence of north Cyprus, and policymakers should consider
the percentage of domestic income that can be used to finance all expenditure (Deficit 4). All
of these definitions produce a different deficit to GNP ratio, as is clear from the table.
Our main concern in this case is how the aid from Turkey is allocated: almost 47% of all
grants between 2002-2015 were used for military spending, which also includes the salary
payments. On the other hand, 85% of the loans were used to finance public expenditure, and
another 10% used for specific projects to reform the public sector. One could argue therefore
that the grants used for defense spending are not really necessary and should not be used in
deficit calculations. Furthermore around 78% of all the aid is in the form of loans (albeit these
loans are never paid back). There is also the argument that most of the projects financed by
grants are executed by firms from Turkey. This would mean that the money does not really enter
the north Cyprus economy, but we don’t have enough data to defend/reject this argument.
Regardless of which deficit definition one chooses to use for north Cyprus, we report
below the Deficit/GDP ratios for some European countries. With the exception of Estonia and
Luxembourg, all countries in this table have averaged a deficit over the last five years. More
important, almost all countries on the table (except Ireland) have deficits less than 10% of
their GDP. Depending on which deficit measure one uses in Table above, north Cyprus’s
position in relation to other European countries will be different.
table 4.2 – Government Deficit of european Countries as a percentage

of GDp (2010-2015)
2010 2011 2012 2013 2014 2015 Average
Belgium -4.0 -4.1 -4.2 -3.0 -3.1 -2.5 -3.5

Bulgaria -3.1 -2.0 -0.3 -0.4 -5.5 -1.7 -2.2
Czech Republic -4.4 -2.7 -3.9 -1.2 -1.9 -0.6 -2.5
Denmark -2.7 -2.1 -3.5 -1.1 1.5 -1.7 -1.6
Estonia 0.2 1.2 -0.3 -0.2 0.7 0.1 0.3
Ireland -32.1 -12.6 -8.0 -5.7 -3.7 -1.9 -10.7
Greece -11.2 -10.3 -8.8 -13.2 -3.6 -7.5 -9.1
Spain -9.4 -9.6 -10.5 -7.0 -6.0 -5.1 -7.9
France -6.8 -5.1 -4.8 -4.0 -4.0 -3.5 -4.7
Croatia -6.2 -7.8 -5.3 -5.3 -5.4 -3.3 -5.6
Italy -4.2 -3.7 -2.9 -2.7 -3.0 -2.6 -3.2
Cyprus -4.7 -5.7 -5.8 -4.9 -8.8 -1.1 -5.2
Latvia -8.5 -3.4 -0.8 -0.9 -1.6 -1.3 -2.8
Lithuania -6.9 -8.9 -3.1 -2.6 -0.7 -0.2 -3.7
Luxembourg -0.7 0.5 0.3 1.0 1.5 1.6 0.7
Hungary -4.5 -5.5 -2.3 -2.6 -2.1 -1.6 -3.1
Malta -3.2 -2.5 -3.6 -2.6 -2.1 -1.4 -2.6
Netherlands -5.0 -4.3 -3.9 -2.4 -2.3 -1.9 -3.3
Austria -4.5 -2.6 -2.2 -1.4 -2.7 -1.0 -2.4
Poland -7.3 -4.8 -3.7 -4.1 -3.4 -2.6 -4.3
Portugal -11.2 -7.4 -5.7 -4.8 -7.2 -4.4 -6.8
Romania -6.9 -5.4 -3.7 -2.1 -0.8 -0.8 -3.3
Slovenia -5.6 -6.7 -4.1 -15.0 -5.0 -2.7 -6.5
Slovakia -7.5 -4.3 -4.3 -2.7 -2.7 -2.7 -4.0
Finland -2.6 -1.0 -2.2 -2.6 -3.2 -2.8 -2.4
Sweden -0.1 -0.2 -1.0 -1.4 -1.6 0.2 -0.7
United Kingdom -9.6 -7.6 -8.3 -5.7 -5.7 -4.3 -6.9
Source: euroStat. (-) numbers indicate that government is borrowing money to finance its expenditures.
average is the average of 2010-2015.
A more pressing problem for north Cyprus is the amount of public debt. As we mentioned
earlier, the loans are not being paid back—and not even the interest on the loans. The
accumulated amount of debt is called debt stock. We show in the figure below (4.3) the
evolution of debt stock for 2007-2015. The ratios of government debt to GDP for European
countries (2010-2015) are presented in the Appendix (Table A7).
figure 4.3 – public Debt as percentage of Gnp
180,0% 166,6%
154,8%
160,0% 144,0% 148,9%
141,2% 140,2%
132,3%
140,0%
118,0%
120,0%
92,5%
100,0%
80,0%
60,0%
40,0%
20,0%
0,0%
2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: tr nicosia consulate, economic reports 2010, 2015

The total debt shown in Figure 4.3, which also includes the debt relating to loans from Turkey,

is at an alarming level. Total debt surpassed total GNP in 2007 and it has continued to increase
quite substantially.40 Because some of the debt is in foreign currency, the debt stock could
change suddenly due to exchange rate fluctuations. Furthermore, there is no item in the
annual budget to pay back the principal or the interest, as loans from Turkey are usually seen
as “free of charge” by the policymakers in TRNC. The numbers above basically indicate a
bankrupt economy that cannot sustain itself. Unless policymakers take extreme precautions,
north Cyprus will not be able to accommodate a request from Turkey to repay the loans. Since
policymakers are only interested in saving the day and engaging in nepotism, there has been
no such planning in the parliament.
Figures 4.3 and 4.4 illustrate the total public debt stock in terms of different types and
currencies. The part of the public debt held in local currency (Fig 4.3) is almost equally divided
between government’s own borrowing and the other public sector borrowing for which the
central government was a guarantor. A huge percentage (more than 90%) of public debt in
foreign currency accounts (Fig 4.4) is the state’s own borrowings. The government-guaranteed
40 The grants are not included as part of public debt

loans include the borrowing by the state economic enterprises both bankrupt (with debts
still unpaid) and current.41 The major current borrowers of this kind of debt are KIBTEK (Cyprus
Turkish Electric Company) and Social Insurance Office. The smallest portion represents mainly
borrowings by local governments (municipalities). The government-guaranteed loans are
not shown in the central budget as public debt, although they are simply contingent liability
and should be included in government’s debt obligations.

figure 4.4 – public Debt Stock (as of the end of the corresponding year, tl accounts)

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2010 2011 2012 2013 2014 2015
Central Government Debt Central Government Guaranteed Credits

Public Debt without any Government Guarantee
Source: tr nicosia consulate, economic report, 2010-2014

figure
4.5 – public
Debt Stock
(as
of the
end
of the corresponding year, $ accounts)

100%

98%
96%
94%
92%
90%
88%
86%
2010 2011 2012 2013 2014 2015
Public Debt without any Government Guarantee

Central Government Guaranteed Credits
Central Government Debt
Source: tr nicosia consulate, economic report, 2010-2014
41 Cyprus Turkish Airlines (CTA) took on substantial loans before it went bankrupt.
table 4.3 – Domestic and foreign public Debt in tl and $ (2010-2015)
(million) Domestic Debt foreign Debt

2010 TL 2676.1 8.6
$ 223.5 3194.2
2011 TL 3237.1 8.8
$ 295.4 2976.5
2012 TL 3330.2 8.8
$ 349.9 3197.8
2013 TL 3782.7 8.8
$ 258.3 344.5
2014 TL 4131.6 8.8
$ 248.5 3635.9
2015 TL 4442.6 8.8
$ 243.5 3738.7
Source: tr reports 2015, p59
The same report also reveals that 81% of the domestic debt in 2015 is owed to the Providence
Fund and TRNC Cooperative Central Bank (KOOPBANK)42. The rest are relatively smaller
amounts owed to 15 other local banks. The domestic debt also includes the debt of
municipalities. the total debt stock of north Cyprus at the end of 2015 was 16,079.4
Million tl, with 72% of this amount in foreign currency.43 However these numbers highly
fluctuate as the exchange rate increased in 2016. Furthermore assuming 10% and 5% interest
rate on, respectively, local and foreign currency loans,44 the state had to pay at least 644.25
Million TL interest on all the loans, which is about 22% of all local revenues in 2015.
Having shown that the public debt stock is at alarming levels in north Cyprus, we next
look at the distribution of overall budget among different economic functions. As can be
seen in Table 4.4, the highest share of the budget goes to General Public Services and Social
Security. However, since 2005, the share of public service has decreased but the share of
social security has been increasing. But this table does not show the true picture since other
functions also include services provided by public employees. Thus the true burden of public
services on overall budget is substantially larger. In the next section we analyze in detail the
revenues and expenditure of the state.
42 TR Reports 2015, Table 12, p. 59

43 We assume exchange rate of $1=2.92TL for December 2015.
44 The interest rate on most of the loans in local currency are 11-15% thus our estimates are just lower bounds (For interest
rate table, see TR report 2015, Table 13, p60)
table 4.4 – Share of different services in overall budget (2005-2011)
2005 2006 2007 2008 2009 2010 2011

General Public Service 20.4% 13.0% 12.3% 10.1% 9.1% 8.9% 17.1%
Defense Service 5.2% 6.0% 5.9% 5.9% 5.6% 5.8% 5.3%
Public Order and
Security Service 6.3% 6.9% 7.5% 7.7% 10.3% 8.3% 7.9%
Economic Issues and Services 18.4% 24.4% 19.9% 23.1% 19.7% 20.4% 17.9%
Environmental
Protection Services 0.2% 0.2% 0.3% 0.3% 0.2% 0.1% 0.2%
Settlement and
Society Welfare Service 5.7% 5.7% 6.0% 5.5% 6.0% 5.7% 6.8%
Health Service 6.5% 7.2% 8.6% 7.5% 7.4% 7.3% 5.9%
Leisure, Culture and
Religious Services 3.0% 3.7% 3.7% 3.8% 4.0% 4.2% 3.6%
Education Services 14.2% 14.1% 14.4% 13.7% 14.3% 14.5% 13.5%
Social Security and Social
Contribution Service 20.0% 18.9% 21.5% 22.4% 23.3% 24.8% 21.7%
Source: SPo, economic and Social Indicators, table 12.
4.3 trnC State revenues

4.3.1 taxes:
The main sources of income for the TRNC central government are direct and indirect taxes.
Figure 4.6 shows the historic trend for direct and indirect taxes in the TRNC. Indirect taxes
include, among others, value added tax, motor vehicle tax and real estate tax; direct tax is the
tax on earned income. It is interesting to see that until 2002 direct taxes represented a larger
part of the revenues than indirect taxes, while from 2003 onwards the income from indirect
taxes has increased at a steep rate and in fact surpassed the revenues from direct taxation.
Most developed nations try to extract tax revenues from earned or retained earnings rather
than focusing on indirect taxation.
The reason that TRNC governments have focused on indirect taxation is simply because
there is a large “shadow economy” due to unreported income (Besim et al., 2015). Since public
servants’ taxes are deducted at the source,45 it is the self-employed and businesses that are
evading taxes.46 The government simply creates a sense of inequality among the public by
imposing more indirect taxes. In other words those who are paying their income taxes on
time and truthfully are also paying significant indirect taxes because the government is
45 PAYE system (pay as you earn)

46 The second job holders in the public sector also contribute to the shadow economy
incompetent when it comes to collecting taxes from all the relevant parties. However even
passing the burden over to indirect taxes has not helped. In fact, recently the Finance Minister
admitted that they are unable to collect motor vehicle tax from all owners, leading the
government to consider increasing tax on fuel oil (another indirect tax). The inability of the
governments to extract direct taxes effectively has created a shadow economy of 11% of the
size of total tax revenues (Besim and Ekici, 2016).
figure 4.6 – tax revenues of trnC (million tl, 1977 prices)
2.500,0
2.000,0
1.500,0
1.000,0
500,0
0,0
1991
2001
2011
1984
1994
2004
1982
1983
1985
1986
1987
1988
1989
1990
1992
1993
1995
1996
1997
1998
1999
2000
2002
2003
2005
2006
2007
2008
2009
2010
2012
2013
Dir
Direct
ect Tax
Taxes
Taxes Indirect
Indirect T
Taxes
axes
Tax
4
4.3.2 price Stability fund
Another important source of income for the TRNC government is the money accumulated in
the so-called Price Stability Fund. In 1978 the Price Stability Fund legally established, with the
intention of controlling price fluctuations in fuel oil, agricultural products and other consumer
products to protect the consumer. This means that a tax is imposed on imported products,
which is then set used to counteract domestic price increases on products covered by the
Fund. Given that the economy in north Cyprus relies heavily on imports, this fund should be
an important source of income. In fact, in 2015 the revenues collected by this fund equaled
30% of the sum of direct and indirect taxes.
Although the idea of such a fund sounds reasonable, traditionally it has not been used as
the law intended (i.e., the money saved in the fund is to be used such that price fluctuations
are not passed onto consumers). On the contrary, in fact: the Board of Ministers has occa-
sionally increased the percentage of tax to be deducted from the imported products which
also has increased the final product price, in effect doing the opposite of what the law
intended. Thus, the tax is basically just another excise tax. In other words, the politicians have
used this fund as a source of income for the government by regulating the tax percentages
and used the income to fund other expenses of the central government. Another problem is
that this law stipulates that the minister in charge of this fund is to come from an “Economics”
and “Finance” related ministry. However in north Cyprus, ministries are often reshuffled into
different groups whenever the government changes. In fact, under the most recent
government, these two areas are controlled by two different ministries. So the applicability of
the law is questionable in this case.
4.3.3 financial Aid from turkey

The financial aid given to the TRNC is a substantial portion of the total budget, and usually
takes two forms.47 Grants are mainly allocated to defense, infrastructure projects, and some
to the private sector; loans are mainly used to finance the budget deficit through public
sector spending, but also used for private and financial sector development. Figure 4.7 below
a
shows historical ratio of grants and loans to total aid from Turkey. Until 1993, all aid was in the
form of grants; after this date, loans began to count for a substantial portion of the aid. In fact,
between 2000 and 2013 total loans were larger than the total grants.
figure 4.7 – the ratio of Grants and loans to total financial Aid from turkey (1974-2015)
120,0%
100,0%
80,0%
60,0%
40,0%
20,0%
0,0%
Grants tto
Grants oT otal Aid
Total Cr
Credits
edits tto Total Aid
o Total
The percentages of grants allocated to national defense and infrastructure expenses are
shown in Figure 4.8. After 1981 the gap between the proportion allocated to these two areas
widened, with more grants allocated for infrastructure. However, between 1995 and 2010
these two areas received about the same amounts, and after 2010 the private sector started
receiving grants from Turkey. This was due to new initiatives of the Turkish government
aimed at strengthening the private sector and making it competitive with the public sector;
hopefully too this would serve to reduce the financial burden of the public sector on the state
budget by making the private sector more attractive for employees. Finally, the entire TRNC
47 There are also “incentive loans” which were introduced in 2003, but these represent just a small portion of the total aid.
Nevertheless, these amounts are also reflected in the calculation of total aid amounts.
Armed Forces are paid by the central government with these grants. Regardless, it is still
interesting to see that from 2010, 45-50% of grants are still being used for defense expenses,
rather than allocating more on infrastructure.
figure 4.8 – the Distribution of Grants from turkey
990,0%
80,0%
70,0%
60,0%
50,0%
40,0%
30,0%
20,0%
10,0%
0,0%
Defence
D ence
efe Infrastructure
Infrastructure P
Private
rivate sec
sector
tor
The proportion of loans being used to finance the public sector and other areas are shown in
Figure 4.9. As we can observe, a high percentage of the loans are being used to finance the
public sector. Only for 2004-2006 was the percentage of credits used for this purpose below
80%, and for all the years since 1998 it was 80% or more. As we discussed above, the public
debt is more serious than what the policymakers admit publicly, and the reason is simply they
don’t include these loans as part of the total debt.
figure 4.9 – the Distribution of loans from turkey
120,0%
100,0%
80,0%
60,0%
40,0%
20,0%
0,0%
1994
2001
2004
2011
2014
1993
1995
1996
1997
1998
1999
2000
2002
2003
2005
2006
2007
2008
2009
2010
2012
2013
2015
Public SSector
Public ector Private
Private Sector
Sector Financial
Financial Sector
Sector
4.4 General Budget for Civil Servants

4.4.1 Aggregate financial Burden
Having discussed the income of the general budget, we concentrate now on the expenditures;
more specifically we focus on the expenditures on civil servants and government pensioners.
Figure 4.10 below shows the burden of current and retired civil servants on the central
budget. The sum of current wages to civil servants (including overtime payments), their social
security contributions, and all the other household transfers48 make up around 65% of the
total local budget (the proposed value in 2016 is less than 60% but the reality is unknown).
The local budget includes state expenditures using its own resources. In Figure 4.10 we
include the spending by the central government using grants and loans from Turkey as the
percentage of local budget. Such expenditure is around 20% of the total local budget. In
other words if the state wants to finance investments independently, they will need to lower
their spending by at least 20%.
figure 4.10 – ratio of Budget allocated to past and current civil servants
80,0%
67,7% 67,7% 68,0% 66,9%
70,0% 65,8% 64,0% 64,2% 64,1% 65,1%
59,7%
60,0%
50,0%
40,0%
30,0% 21,9%
18,3% 18,5% 18,6% 20,8% 18,6% 18,5%
17,8% 17,0% 16,5%
20,0%
10,0%
0,0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Payments for current civil servants and pensioners Grants/loans from Turkey
Source: tr annual reports, 2010 and 2015. numbers for 2016 are proposed values.
Figure 4.11 shows the distribution of current transfers in the 2015 state budget. Transfers were
38% of total local current expenditures for the year and almost half of this went to payments
to the civil service retirees and other household transfers (such as to veterans, disabled,
unemployed, elderly and widowers). The remaining transfers were allocated to the Social
Insurance Office, municipalities and other state owned institutions (the two state universities
and the national radio and television board).49 If we add current transfers to the payments for
48 The large proportion of household transfers are pensions paid to the retirees from the civil service
49
Bayrak Radyo Televizyon Kurumu, BRTK

the current civil service employees, total expenditure becomes more than 75%, which does
not leave much financial capital for investment expenditures by the state. The ratio of
personnel expenses and social transfers to total budget expenditures were 73.9% in 1997
(SPO Statistical Yearbook, p.262), which indicates that the state has not been successful in
reducing this burden over time.50
figure 4.11 – the distribution of current transfers in state budget (2015)
Other , 9,9% Social Insurance

Office, 21,5%
Other salary
payments, 11,4%
Retiree gratuity
(ikramiye), 2,7%
Municipalities,
12,2%
State Universities,
2,3%
Pensions, 36,1% [KATEGORİ ADI]K,

[DEĞER]
One other very attractive feature of working as a civil servant is the “13th salary”. Every civil
servant receives a bonus at the end of each calendar year equivalent to his/her net salary
regardless of tenure or performance. This benefit has been heavily criticized by the Turkish
Aid Office as well as by those working in the private sector since it is not based on performance.
This, in essence, puts a 5% burden on central budget. This practice has also created bad
feelings among private sector employees who claim it is unfair as they work much harder and
longer hours, and for lower salaries and fewer benefits than civil servants.
Investments have only ever accounted for a small percentage of the overall budget. In fact
since 1977, on average around 10% of all expenditures is allocated for investments. Figure
4.12 below shows the percentage of investment in Public Services. As it can be seen, before
1996, 5-10% of investment was allocated to public services. This percentage doubled by
2000, but since 2004 it has been decreasing. So even the small amount of available
investment on public services has been declining over the last years.
50 According to the source, total expenditures in 1997 include defense expenses as well. Since these expenses have been
covered by grants from Turkey for the last 10 years, the burden of personnel salaries and other transfers have actually
increased over the years.

figure 4.12 – percentage of total fixed investments on public Services
25,0%
20,0%
2
15,0%
10,0%
5,0%
0,0%
1981
1984
1991
1994
2001
2004
2011
1977
1978
1979
1980
1982
1983
1985
1986
1987
1988
1989
1990
1992
1993
1995
1996
1997
1998
1999
2000
2002
2003
2005
2006
2007
2008
2009
2010
2012
2013
Source: SPo, basic economic and Social Indicators, table 11
The next figure, Figure 4.13, shows the ratio of public investments on health and education.
We see that the state has traditionally invested more of its resources on education than
health, except for a few years. Fixed investments include investment in physical and more
durable assets. An important measure of how much a state values public education and
health is the ratio of total expenditure (both physical and human capital) on these public
areas to overall GDP. This ratio for public health is provided in the Appendix Table A8 for some
European countries as well as north Cyprus. We see that north Cyprus has one of the smallest
budgets for public health as a percentage of GDP among the European countries, although
their ratio is slightly higher than RoC.
figure 4.13 – percentage of fixed public investment on health and education
70,0%
60,0%
50,0%
40,0%
30,0%
20,0%
10,0%
0,0%
1981
1984
1991
1994
2001
2004
2011
1977
1978
1979
1980
1982
1983
1985
1986
1987
1988
1989
1990
1992
1993
1995
1996
1997
1998
1999
2000
2002
2003
2005
2006
2007
2008
2009
2010
2012
2013
P
Public
ublic Health P
Public
ublic E
Education
ducation
Source: SPo, basic economic and Social Indicators, table 11

4.4.2 Civil Servant Salaries

The salary scale for central government employees is provided in the Appendix (Table A4).
These salaries include the 3.3% increase in inflation for the January-June 2013 period.
C
Teachers, armed forces personnel, and contract-based public servants are paid on a different
salary scale. There are three criteria that determine salary. class specifies the seniority level
and specialization within a specific service class, with level I representing the most senior

class Scale refers to the salary gradation, and an employee’s initial position on the scale
depends on previous experience and other credentials. Each year of employment equals a
one-step rise (out of 14) on the salary scale automatically regardless of performance.51 If a
civil servant changes his/her scale, then the new corresponding step will be the first one with
larger salary than the last position.52 In 2013, the minimum monthly salary regulated by law
was 1415 TL. Finally these wages do not include 13th salary and overtime payments.
The figure below shows the trend of public servant salaries (in US dollars) between 2004-
2016 for three different scales. Although it seems as though the average salaries of the
highest scale are going down, this is due to the fact that the TL has depreciated after 2010
against US dollar. The other two scales have remained steady during this time period. Although
civil servants are given a salary increase to compensate for inflation, this is not reflected in real
purchasing power as the salaries are rather steady in foreign currency.53
figure 4.14 – Average Monthly Salaries ($) of Civil Servants
$7.000
$6.000
$5.000
$4.000
$3.000
$2.000
$1.000
$0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
LLowest
owest S
Scale
cale M
Medium
edium S
Scale
cale H
Highest
ighest S
Scale
cale
Source: turkish consulate in nicosia. lowest, medium and highest scales refer to, respectively, 4/1, 14/8 and
19/10 before 2011; and 9/1, 14/8 and 19/14 after the changes in 2011.
51
Informal discussions with retired civil service directors revealed that, the step increase used to depend on the
5
performance review by an employee’s immediate chief. Although this rule was later changed, we could not find the
relevant regulation.
52 5For example, if someone goes from scale 9 and step 12 to scale 10, he/she will begin at step 4.
53 Most of the big-ticket items (cars, furniture, construction materials) are usually priced in foreign currency in North Cyprus.

Finally we look at average gross salaries and pension payments for various categories of civil
servants. We obtain these averages simply by dividing the total payment for each category
by the total number of employees in that category. Total payments include overtime and
other extra benefits received in that month. Although this is just a rough figure, without
standard deviations, and should be interpreted cautiously,54 we can still make some observa-
tions. For example, the highest paid public servants are foreign consulates—they are better
paid even than the ministers. This is explained by the fact that their salaries are in foreign
currency. It is also interesting to see that the permanent workers receive on average more
than the permanent civil servants.
table 4.5 – the number of people who receive monthly transfers (wages or pension or
other kind) from the state (2013-2015)
Dec Dec Dec total payments Average

2013 2014 2015 (Dec 2015) payments
Permanent Civil Servants
Politicians 53 53 51 696,355 13,654 TL
Teachers 3,775 3851 3883 25,019,121 6,443 TL
Permanent Staff 5,060 5,045 5,042 29,240,864 5,799 TL
musavir 134 141 129 1,212,688 9,401 TL
Foreign Representatives 64 65 59 833,914 14,134 TL
Police 2,368 2,348 2,323 14,728,934 6,340 TL
Personnel in Civil Defense 85 84 91 510,458,64 5,609 TL
Personnel in Security Forces 685 690 693 4,366,753 6,301 TL
Total 12,224 12,277 12,271 76,609,087
Temporary and Contractual
Contractual Staff 146 180 198 1,386,149 7,001 TL
Temporary Staff 1,208 1,086 1,056 4,250,372 4,025 TL
Temporary Turkish Airline Staff 297 286 284 1,049,113 3,694 TL
Temporary CAS Staff 109 372,618 3,419 TL
Temporary ETİ Staff 45 41 37 129,018 3,487 TL
Contractual Staff (Security Force) 116 113 116 710,481 6,125 TL
Temporary Security Force* 1,103 1,053 1,046 5,240,759 5,010 TL
Ranger 14 11 7 6,055 865 TL
Obligatory Service (Doctors) 36 28 26 158,188 6,084 TL
Disabled Staff 293 287 278 1,292,711 4,650 TL
Total 3,258 3,085 3,157 14,595,466
54 We don’t have the necessary information to calculate standard deviations.

Dec Dec Dec total payments Average

2013 2014 2015 (Dec 2015) payments
penSiOnerS
Government Pensioners 10,992 11,027 11,066 39,975,468 3,612 TL
Municipality Pensioners 311 321 330 1,099,685 3,332 TL
Veteran (mucahit) Pensioners 1,229 1,211 1,184 2,013,145 1,700 TL
Government Pension Fund 453 524 630 2,168,338 3,442 TL
In-Kind Social Support 14 14 13 19,573 1,506 TL
Total 12,999 13,097 13,223 45,276,209
Workers
Permanent Workers 1,246 1,196 1,130 14,173,813** 5,665 TL
Temporary Workers 1,432 1,397 1,355
Disabled Workers 19 18 17
Civil Defense Workers 40 36 34 220,151 6,475 TL
Security Force Workers 473 457 458 2,630,471 5,743 TL
Total 3,210 3,104 2,994 17,024,435
Other State Payments
NEEDY AND POOR 3,367 3,495 3,634 3,134,915 863 TL
FOSTER FAMILIES 31 28 33 44,673 1,354 TL
WAR SURVIVORS1 248 249 247 566,733 2,294 TL
WAR SURVIVORS2 105 103 101 195,143 1,932 TL
MARTYR FAMILIES 410 401 387 1,205,822 3,116 TL
MARTYR PARENTS 124 117 107 125,070 1,169 TL
DISABLED 3,916 4,091 4,176 6,604,274 1,581 TL
TOTAL 8,201 8,484 8,685 11,876,631
GRAND TOTAL 39.892 40.047 40.330 165.381.828

Source: ministry of finance.
* this number includes temporary and Substitute army officers (gecici ve yedek Subay)
** this number is the total amount paid to permanent, temporary and disabled workers. thus the average
payment in the next column is the average among all of these three groups.
4.5 Budgets of individual Ministries

In this section we look at the budgets of individual ministries for the last 10-year period. Tale
4.6 below shows the percentage of total budget allocated to each ministry and independent
government offices between 2006-2016. As we can see, most of the budget is allocated to the
Ministry of Finance. This is because this ministry handles the transfers to households
(including retirees), and as we have seen above this amount is substantial.
table 4.6 – Average of 2006-2016 State Budget Allocation by Ministry
Ombudsman 0.0%
Public Service Commission 0.1%
State Audit Office 0.1%
Attorney General’s Office 0.2%
Civil Defense 0.4%
Parliament 0.5%
Courts 0.6%
Presidency 0.7%
Ministry of Economics, Commerce and Retail 0.9%
Foreign Ministry 1.0%
Cultural and Environmental Ministry 1.5%
Tourism Ministry 1.9%
Prime Ministry 2.0%
Transportation Ministry 4.6%
Agricultural, Natural Resources and Food Ministry 5.1%
Police 5.2%
Armed Forces 5.8%
Health Ministry 6.5%
Labour Ministry 7.7%
Ministry of Education 13,6%
Financial Ministry 41.5%
Total 100%
The state budget is not prepared in the most efficient manner. By law, the individual ministries
are required to plan for their budgets in accordance with State Planning Organization’s general
development plans. Unfortunately this never happens during the end-of-year budget
meetings. First of all, the SPO does not have a general development plan in progress; in fact,
before the 2000s, there was absolutely no plan whatsoever and in recent years economic plans
have been imposed by the Turkish government. The 2008 changes discussed earlier (see
section 2.6) were the result of one of these Turkish economic plans.
So how is the budget prepared? Usually a ministry devises a budget based on the previous
year’s budget, with an increase to cover inflation. If a ministry knows that a significant project
will be undertaken, it will include estimated costs for the project in the budget with the
understanding that if the project exceeds the budget, the ministry can request additional
funds from the Finance Ministry or reallocate the money budgeted for another purpose.
During parliamentary budget meetings policymakers tend to discuss more general issues
related to a ministry’s duties and responsibilities, and when it is time to vote on the budget
government MPs will vote in favor and the rest will reject.55
Budgets often include several suspect items: for example, in 2016 the Health Ministry
allocated 20 million and 10 million TL, respectively, for treatment costs at “domestic” and
“foreign” hospitals.56 The sum of these two figures is 10% of the total budget of this ministry.
Also, in 2015 more than 5 million TL was paid to one private hospital in the TRNC, and the
same hospital received another 5 million for their Nursery School under “transfers to non-
profit organizations”. Considering that the government has money in the budget to pay for
treatment at non-state hospitals, why don’t they use it to invest in improving state hospitals?
Some claim that this is an attempt to manipulate the perception of public services— by
underfunding these services the government is creating poor performance in order to pave
the way for privatization. The 2016 allocated budget for each office is included in the
Appendix (Table A2).
Table 4.4 below shows how much of each individual ministry’s budget is allocated to
paying salaries in 2016 budget. This shows that not every office has the same opportunity in
terms of available budget to spend on improving their services through training or other
means. Ministry of Agriculture for example has the fourth largest budget in this list, but half
of its budget is used for transfers to the agriculture sector as subsidies. It is interesting when
budget of 2016 was prepared, interior affairs and labor were under one ministry. However
when the government coalition changed in April 2016, these two ministries were separated.
The budgets we provide in Table A2, refer to December 2015 whereas the civil servant
numbers correspond to July 2016. Thus the budgets for the Administrative Services of each
ministry should carefully be analyzed.
55 Sometimes the speeches will be on a totally different topic. For example, during the budget talks about the TRNC
Parliament in December 2014, an MP was talking about the importance of Turkey and Turkish soldiers on the island,
and how Turkish protection is needed in the future. (http://www.kibris724.com/2015-butcesi-meclis-genel-
kurulunda-49196h.htm)
56 In 2015 this number was total of 23 million TL.
table 4.7 – percentage of Budget Allocated for Salaries of public Servants (2016)
wages/Salaries total
(tl) (tl) percentage
Presidency 15068800 26913100 56,0%
Parliament 17194100 20963500 82,0%
Prime Ministry 46038400 79378500 58,0%
Foreign Ministry 26114100 41140800 63,5%
Transportation Ministry 81616200 105894000 77,1%
Financial Ministry 91239500 44140600057 20,7%
Labour Ministry 98967800 340363100 29,1%
Ministry of Economics, Commerce
and Retail 13463100 17771400 75,8%
Cultural and Environmental Ministry 43510100 51415200 84,6%
Ministry of Education 404539800 503113200 80,4%
Agricultural, Natural Resources
and Food Ministry 49417200 248256700 19,9%
Health Ministry 143212600 289854700 49,4%
Tourism ministry 21824300 45242300 48,2%
Courts 23566100 26279300 89,7%
Attorney General’s Office 9058400 9814700 92,3%
State Audit Office 3853100 4792900 80,4%
Public Service Commission 3175400 4613400 68,8%
Ombudsman 712700 879000 81,1%
Police 196241300 211356600 92,8%
Armed Forces 165250000 259500000 63,7%
Civil Defense 10000000 15500000 64,5%
Total 1464063000 2744448400 53,3%
The financial burden of public servants on central budget has been a concern for some time.
The government programs have vowed to reduce this burden in the past but have not been
successful. This is because in order to reduce the burden, drastic measures have to be taken
in terms of the salaries and other monetary benefits. But that would have been heavily
opposed by the civil servants that constitute an important pool of voters.
One of the key changes was made in 2008 with the new law that we discussed in Section
2. The law basically lowered the initial salaries of individuals entering the public sector labor
force after 2008 which was hoped to both reduce the immediate burden and provide
disincentives for future workers and maybe force them to seek employment in private sector.
The consequences of this law change will only be fully understood in the years to come.
57 This number does not include the amount allocated to household transfers and “Substitute Payment” (yedek odenek)
4.6 the Court of Accounts

The Court of Accounts is an important organization that is in charge of financial inspection of
the public sector. There are currently 29 state auditors working in TRNC Court of Accounts
although the total number of legally defined staff positions are 92. With limited human capital,
the office is able to make certain inspections and produce some reports. These reports have
some disturbing findings regarding the misuse of public funds. In this section we shall discuss
some of these. [Talk about the working of this office. No right to charge anybody]
In their 2016 report, there are two important findings. After auditing Social Insurance
Office’s 2012 financial year budget, the auditors report several “high risk” accounting mistakes
that was done in the official documents and they suggest that “given the weakening financial
structure of this Office that is visible in 2010-2014 period, it is necessary that the Management
of this Office or the related Ministry should take the necessary precautions immediately” (p. 66).
The financial difficulty of this rather important division in central government has basically
been confirmed with this report.
Another audit in 2014 was made regarding 2010 Budget of Tourism Development and
Promotion Fund (turizm gelistirme ve tanitma fonu). This fund provides rather small income
for the central budget, but it is still important that it is managed properly. Unfortunately the
report reveals many unlawful and financially destructive practices at the office in charge of
this fund. For example, the report finds that the legally required payments from casinos are
being deposited to the fund when they first get their license, but annual renewal fees have
not been paid and thus not deposited into this Fund which amounted to around 17.2million
TL (in 2010) which is about one fourth of “Other Fund Incomes” item in 2016 state budget. In
other words, a significant revenue could have been collected if the civil office in charge
performed its duties correctly.
Finally, two reports in 2012 concluded that some civil servants have caused financial
losses to the state budget due to personal errors. For example due to illegal practices by five
different civil servants, the Employment Office missed an opportunity to collect 91,507 TL in
2011 (SAC Report 2012, p.13). Similarly, the coordinator of Istanbul Tourism Office has
overpaid a private company for its services in the amount of 45,533 TL using funds from the
budget of Ministry of Economics and Tourism. The reports suggest that these losses should
be compensated directly by the civil servants involved in the illicit practices. However we
have no way of knowing if the compensation has actually happened.
Even with their limited human resources, the Court audits several government
departments. Looking at these brief examples above, we can see that there is a significant
mismanagement in the public sector. It is scary to think how much more of public finances
have been mismanaged if all the departments were audited.
65
5. CONCLUSION AND DISCUSSION

This report has produced an overview of the workings of the civil services governed by the
central government. The analysis has focused on three main aspects of civil services, namely
the legal framework, human resources and the budgetary aspects. The local governance
(municipalities) and other semi-state owned public enterprises (SEEs) are not discussed in
this report but they also deserve an in depth seperate analysis.
The legal framework is discussed in Chpater 2. Unfortunately the laws related to civil services
are outdated. Over the years they have been patched up by small modifications but their
applicability in today’s standards are questionable. Some of the regulations are inconsistent
with each other and have been exploited by the policmakers. Over the recent years with the
influence of the Turkish Republic Aid Office in Nicosia in order to reduce the financial burden
of civil services on central government, several serious modifications have been done. However,
the modifications were either not followed through or they just created further inconsis-
tencies. The lawmakers are required to make brave and comprehensive changes in the
related laws if they want to have a more efficient and self sustainable civil service.
The human resources in civil services is explored in Section 3. There are currently 16148
civil servants (15.6% of total employment) working for the state and 45% of those are in
public teaching, health and police force. One of the most discussed issues among public in
north Cyprus is the quality of public services provided by the central government including
public education and health. Even though a substantial portion of human capital working for
the state is employed in these two areas, the public attitude towards those are not very high.
Over the years the policmakers have used public sector employment opportunities for
nepotism, and they have created a cumbersome civil services.
One of the main artifacts of political clientelism has been the creation of musavir title.
These high ranked civil servant positions are only available to the closest supporters of the
governments, but once obtained is just a heaven on earth with financial perks and endless
opportunities. Less lucky supporters received lower ranked but usually undeserved positions
in civil services. This is not to say that all of the civil servants obtained their employment as a
result of nepotism, however the overall sluggish execution of the civil services in north
Cyprus casts a shadow on everybody.
The wages and salaries of the civil servants have been an important part of state’s
expenditure which we explore in section 4. The general expectation is that a state would
spend its revenues on public goods that can be utilized by everybody not only civil servants.
However in north Cyprus, 65% of all local revenues in the state budget are used to compensate
for the wages and the salaries of civil servants and government pensioners. Once we include
other transfers to some enterprises (some providing public services), the total share goes up
to 75%. In other words there is not much money left for investments for goods and services
that could be consumed by the general public. The state has compensated for these deficien-
cies by “borrowing” money from Turkey. The financial aid came as loans and grants but the
loans were never paid back. This has resulted in public debt stock of 169% of GDP at the end
of 2015. This is simply the result of poor planning (or no planning) and irresponsible spending
of state’s resources. Heavy financial dependence on Turkey has resulted in political dependence
as well over the years.
The inefficiency and unsustainability of the public sector in north Cyprus is a common
knowledge. The policymakers have realized the burden of inefficient and underdeveloped
state enterprises and civil services, and they have included in their government programs to
reduce the burden58. Although the policymakers have vowed to fix the problems in the
public sector in the past, it has only gotten worse over the years. The main reason with this
has been the unwillingness and insincerity of the policymakers to actually make the necessary
changes. The laws and regulations are outdated, the budget expenditure is wasteful, and the
planning for the future is absent. Under these circumstances it is unrealistic to expect change
to come from within the current state.
The problems regarding the public sector in TRNC have been outlined in other studies.
TEPAV (2013) reports the three main problems as political, human resources and public
finances. The majority of the report focuses on several reform suggestions that could potentially
improve the functionality and efficiency of the public sector. One of the main suggestions is
the introduction of merit based appointment and promotion criteria as opposed to
automatic promotion. The report also suggests the strengthening of administrative power of
the Public Services Commission. Another reform suggestion is limitation of the appointment
of senior-level Director/Undersecretary positions by three-signature decision, and have
normal appointment criteria regulated by Public Services Commission. Finally, the regulations
regarding the wages and salaries of the civil servants should be updated in such a way that
ensures sustainability of the budget and motivate high productivity. The report includes
several other suggestions on public sector reforms but discussion of those are beyond the
scope of this project.
The public is also to blame for the existing condition. Over the years the policymakers
have used state resources for political clientelism. They have created secure and flexible
public sector employment, and the general public have accepted this without any challenges.
For example it is a wonder why the strong labor unions did not oppose to early retirement
58 The first such promise was made in 1985 government program (Diler, 2015; p. 574) which was only two years after the
establishment of the state
5. conclusion and discussion 67
laws and they stand by when many individuals were employed as civil servants over the
years. According to a survey targeted to businesses in north Cyprus that was administered by
Cyprus Turkish Chamber of Commerce in 2013, 45% of the respondents said they contact the
Minister or another member of the parliament if the tax office or the employment office
requires any additional taxes. Only 22% said they will follow the legal procedures to file a
complaint. This shows that the public also expects something in return from the politicians in
exchange of their votes.
The public have supported the politicians during elections in exchange for jobs and other
benefits. There have been about 35 different governments in the last 35 years. Although not
all of these required a new election, every time a government changes, some people in the
public receives an advantage. Although many civil servants and other public sector employees
witness illegal activities daily in government offices, most of them are afraid to expose their
chiefs, directors or the related ministers. However such topics are always discussed informally.
Labor unions only care about the wages of their own members instead of also focusing on
the bigger picture of state practices. Didn’t anybody anticipate the possible problems that
can be caused by low contribution rates and early retirement on Social Security?
It is not the purpose of this report to provide the necessary policy recommendations to
change the status quo. There are other reports on that topic and policymakers themselves are
aware of those already. What north Cyprus needs is transparent, sincere and accountable
state officials along with more involvement and monitoring from the civil society. One of the
difficulties we had in preparing this report was the lack of reliable and publicly available data.
The unwillingness of the governance to share this kind of information is a strong signal of
their failures.
68
6. REFERENCES
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systems in northern Cyprus,” Journal of Pension economics and finance, 12 (1), pp. 92-110.
Andreou, E. (2015) “€2bn electricity debt for north ‘cannot be resolved by the EAC’.” Cyprus
Mail Ltd., cyprus-mail.com, 22/9/15.
Besim, M. and Ekici, T. (2016). “A Measure of the shadow economy in a small economy:
Evidence from household-level expenditure patterns” Review of Income and Wealth, 62 (1),
March 2016.
Besim, M., Ekici, T., Jenkins, G. P. (2015). “Informality in a Micro Economy: Measurement,
Composition and Consequences” International labour review, Vol. 154, No. 3.
Cooper, C. A. and Reinagel, T. P. (2015). “The Limits of Public Service Motivation: Confidence in
Government Institutions Among Public Servants”, administration and Society, 1-21.
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Turkish] trnc governments’ Promises and fiascos since 1983, Soylem Yayinlari, Soylem Matbaa,
Nicosia.
Eurostat Statistical Books (2015). “Key Figures on Europe”, Luxembourg: Publications Office of
the European Union, 2015 (doi: 10.2785/850110)
Guven, R. (2012). “KKTC KIT Sistemi’nin Fonksiyonel ve Kurumsal Analizi” [in Turkish]
functional and Institutional analysis of trnc’s Sees System, KKTC-FOKUS Project, TEPAV, April
2011-June 2012.
OECD (2015). “Employment in the public sector”, in government at a glance 2015, OECD
Publishing, Paris, DOI: http://dx,doi,org/10,1787/gov_glance-2015-22-en
Sertoglu, K., Besim, M., & Tanova, C. (2015) “Kuzey KIbris Rekabet Edebilirlik Raporu” [in
Turkish], north cyprus competitiveness report, Turkish Cyprus Chamber of Commerce, 2015.
Sonan, Sertac (2014). “In the Grip of Political Clientelism: The Post-1974 Turkish Cypriot Politics
and the Politico-Economic Foundations of Pro-Taksim Consensus, PhD Dissertation.
6. references 69
State Court of Accounts (2012). “Audit Report regarding the Kalecik-II Agreement and
Additional Protocol-I between KIBTEK and AKSA Energy Production Ltd.” [in turkish],
MD.1/2012-EC.1/2012, 02/02/2012.
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KIBTEK Board of Directors and 143,000 Smart Meter Bidding” [in Turkish], MD 7/2014, June
2014.
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Overview of the functions and institutions of TRNC Government, TEPAV Publications, No: 67,
Matsa Publishing, Ankara.
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and Economic Collaboration Office, http://www.yhb.gov.tr/dokumanlar/
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http://devplan.org/Frame-eng.html
Yucel, R. (2015). “kIbtek acil kamulastirilsin” [in Turkish] KIBTEK should immediately be made
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ISSN: 1020-3311
70
7. APPENDICES
AppenDiX A
table A1 – number of public servants receiving wages and salaries
from central budget (May 2015-May 2016)
poisition May Jun Jul Aug Sep Oct nov Dec Jan feb Mar Apr May
Politicians 52 53 53 53 53 52 51 51 51 51 51 51 51
Teachers 3864 3868 3867 3870 3859 3893 3885 3883 3878 3874 3861 3868 3867
Foreign Consulates 64 64 65 52 49 56 58 59 59 63 63 65 65
Permanent Personnel 5209 5205 5197 5188 5192 5166 5164 5171 5187 5185 5174 5163 5195
Disabled 281 280 279 279 278 277 278 278 278 277 275 274 274
Other Permanent
Personnel 3089 3086 3085 3082 3115 3109 3106 3107 3151 3140 3127 3119 3111
Contract Based
Personnel 197 196 195 192 193 193 200 198 204 217 205 207 214
Temporary Personnel 1070 1066 1064 1060 1059 1060 1056 1056 1048 1038 1044 1044 1039
Other Temporary
Personnel 1221 1210 1208 1211 1190 1188 1200 1195 1183 1190 1203 1211 1198
Privatization Law 436 433 433 434 431 430 430 430 430 428 426 423 423
Permanent Worker 1159 1157 1156 1184 1146 1135 1133 1130 1122 1114 1109 1099 1092
Temporary Worker 1377 1375 1373 1369 1365 1360 1358 1355 1351 1346 1341 1334 1344
Disabled Worker 18 18 17 17 17 17 17 17 17 17 17 17 17
Other Worker 500 499 498 462 496 493 492 492 506 508 508 507 507
Total 18537 18510 18490 18453 18443 18429 18428 18422 18465 18448 18404 18382 18397
Source: ministry of finance.

notes: the total number in december 2015 is 18,422 on this table but in table 3.3 it is 16,194. this could be
due to the fact that the personnel of trnc armed forces (temporary, contractual and permanent) are paid by
the ministry of finance, but those numbers are not available in the Personnel office data (the total amount
was 2320 as of december 2015 according to table 4.6)
7. appendices 71
table A2 – the list of government departments under each ministry as of July 2016
total Currently
Department position employed Difference
TRNC Presidency 118 141 23
YODAK 14 6 -8
National Archives Department 25 15 -10
TRNC Parliament 209 104 -105
TRNC Prime Ministry 118 157 39
Board of Ministers Secretary 17 16 -1
Prime Ministry Inspection Board 14 6 -8
Personnel Office 65 62 -3
Coop Firms Registrar 83 40 -43
National Printing Office 82 35 -47
Central Legislation Office 13 3 -10
State Planning Organization 88 50 -38
Youth Office 110 53 -57
Sports Office 76 113 37
Ministry of Economics and Energy 30 61 31
Port Authority 1 1 0
Commerce Office 61 58 -3
Industry Office 32 39 7
Source: the numbers on this table are provided by the Personnel office
Resmi Kabz Memurlugu ve Mukayittlik D. 31 35 4
Customs Office 366 334 -32
Treasury and Accounting Office 181 108 -73
Para Kambiyo ve Inkisaf Sandigi 27 23 -4
Ministry of Foreign Affairs 30 71 41
Foreign Affairs Office 142 64 -78
Promotion Office 60 28 -32
Information Office 58 17 -41
Ministry of Finance 59 94 35
Budget Office 47 34 -13
Maliye Teftis ve Inceleme Board 44 26 -18
Income and Tax Office 507 337 -170
National Estate and Goods Office 105 154 49
total Currently
Ministry of Tourism and Environment 18 68 50
Environment Protection Office 104 75 -29
Forest Office 150 154 4
Tourism Relations and Marketing Office 106 63 -43
Metereology Office 89 111 22
Tourism Planning Office 48 34 -14
City Planning Office 71 65 -6
Historical landmarks and museums Office 197 166 -31
Ministry of Interior 48 190 142
Kaymakamliklar 193 148 -45
Central Prison 298 212 -86
Population Registry Office 29 24 -5
Immigration Office 46 32 -14
Habitation and Rehabilitation Office 302 100 -202
Deeds and Cadaster Office 223 215 -8
Map Office 22 7 -15
Ministry of Bayindirlik and Transportation 15 51 36
Traffic Office 123 12 -111
Road Office 445 267 -178
Postal Office 178 140 -38
Telecommunication Office 655 262 -393
Ports Office 219 102 -117
Civil Aviation Office 374 232 -142
Planning and Buildings Office 238 132 -106
Ministry of National Education and Culture 33 94 61
Talim ve Terbiye Office 13 5 -8
Higher Education Office 25 14 -11
National Education Inspection and Assessment Office 73 19 -54
Elementary Education Office 2090 1868 -222
General Secondary Education Office 2408 1990 -418
Occupational Technical Education Office 839 683 -156
Education Common Services Office 30 9 -21
Culture Office 114 48 -66
Cyprus Turkish National Theaters 71 27 -44
National Symphony Orchestra 10 3 -7
7. appendices 73
total Currently
Ministry of Agriculture and Natural Resources 17 51 34
Agriculture Office 141 127 -14
Water Office 299 150 -149
Animal Office 90 43 -47
Veterinary Office 114 107 -7
Geology and Mine Office 183 72 -111
National Animal Production Farm Office 82 72 -10
Agricultural Research Institute 34 31 -3
Ministry of Health 68 141 73
Office in charge of State Hospitals 1743 1339 -404
National Lab Office 61 35 -26
Medicine and Pharmacy Office 57 18 -39
Basic Health Services Office 515 323 -192
School of Nursery 26 7 -19
Ministry of Labour and Social Security 19 149 130
Employment Office 106 107 1
Social Security Office 225 162 -63
Social Services Office 156 167 11
Gender Equality Office 42 0 -42
Courts 50 41 -9
Supreme Court General Secretary 359 269 -90
Secretariat for High Council of Elections 25 6 -19
Law Department 170 103 -67
Court of Accounts – 1 92 31 -61
Court of Accounts – 2 44 21 -23
Public Services Commission 31 35 4
Ombudsman 22 8 -14
Police 3000 2195 -805
Police (civil) 474 236 -238
Total 20955 15953 -5002
table A3 – Allocated Budget (2016) for each Office in Central Government
Allocated percent of
Department Budget total
TRNC Presidency 25.553.400 0,57%
YODAK
National Archives Office 1.379.700 0,03%
TRNC Parliament 20.963.500 0,47%
TRNC Prime Ministry 26.836.800 0,60%
Board of Ministers Secretary 1.107.900 0,02%
Prime Ministry Inspection Board 748.700 0,02%
Personnel Office 4.761.400 0,11%
Registrar of Coop Firms 3.849.100 0,09%
National Printing Office 3.247.300 0,07%
Central Legislation Office 346.000 0,01%
State Planning Organization 5.437.100 0,12%
Youth Office 5.143.000 0,11%
Sports Office 13.668.200 0,31%
Ministry of Economics and Energy
Port Authority 9.518.000 0,21%
Commerce Office 4.058.700 0,09%
Industry Office 5.433.600 0,12%
Resmi Kabz Memurlugu ve Mukayittlik Office 2.883.400 0,06%
Customs Office 25.507.900 0,57%
Treasury and Accounting Office 848.884.950 18,96%
Para Kambiyo ve Inkisaf Sandigi 1.758.500 0,04%
Ministry of Foreign Affairs
Foreign Affairs Office 7.210.800 0,16%
Office of Public Relations 2.608.100 0,06%
Information Office 1.575.200 0,04%
Ministry of Finance
Budget Office 779.056.950 17,40%
Maliye Teftis ve Inceleme Board 1.905.200 0,04%
Income and Tax Office 29.950.900 0,67%
National Estate and Goods Office 14.373.000 0,32%
7. appendices 75
Ministry of Tourism and Environment
Environment Protection Office 5.809.700 0,13%
Forest Office 13.119.300 0,29%
Tourism Relations and Marketing Office 5.480.200 0,12%
Meteorology Office 7.621.300 0,17%
Tourism Planning Office 13.119.300 0,29%
City Planning Office 5.420.200 0,12%
Historical landmarks and museums Office 10.703.200 0,24%
Ministry of Interior
Kaymakamliklar 10.969.500 0,25%
Central Prison 20.443.800 0,46%
Population Registry Office 1.797.100 0,04%
Immigration Office 3.382.000 0,08%
Habitation and Rehabilitation Office 8.524.200 0,19%
Deeds and Cadaster Office 16.836.900 0,38%
Map Office 639.700 0,01%
Ministry of Bayindirlik and Transportation
Traffic Office 0,00%
Road Office 31.917.400 0,71%
Postal Office 10.675.700 0,24%
Telecommunication Office 25.927.800 0,58%
Ports Office 9.518.000 0,21%
Civil Aviation Office 18.398.600 0,41%
Planning and Buildings Office 10.672.500 0,24%
Ministry of National Education and Culture
Talim ve Terbiye Office 696.400 0,02%
Office of Higher Education 40.181.800 0,90%
National Education Inspection and Assessment Office 2.172.400 0,05%
Elementary Education Office 167.056.700 3,73%
General Secondary Education Office 181.610.400 4,06%
Occupational Technical Education Office 60.597.500 1,35%
Education Common Services Office 1.592.400 0,04%
Culture Office 4.450.700 0,10%
Cyprus Turkish National Theaters 1.975.300 0,04%
National Symphony Orchestra 265.500 0,01%
Ministry of Agriculture and Natural Resources
Agriculture Office 10.176.600 0,23%
Water Office 27.772.000 0,62%
Animal Office 2.944.300 0,07%
Veterinary Office 9.389.600 0,21%
Geology and Mine Office 6.434.600 0,14%
National Animal Production Farm Office 7.662.000 0,17%
Agricultural Research Institute 2.477.000 0,06%
Ministry of Health
Office in charge of State Hospitals 148.038.300 3,31%
National Lab Office 5.105.000 0,11%
Medicine and Pharmacy Office 62.149.200 1,39%
Basic Health Services Office 29.019.200 0,65%
School of Nursery 0,00%
Ministry of Labour and Social Security
Employment Office 70.121.400 1,57%
Social Security Office 0,00%
Social Services Office 86.726.900 1,94%
Gender Equality Office 316.900 0,01%
Courts 28.279.300 0,63%

General Secretary of Supreme Court 0,00%
Secretariat for High Council of Elections 0,00%
Law Department 9.814.700 0,22%
Court of Accounts 4.792.900 0,11%
Public Services Commission 4.613.400 0,10%
Ombudsman 879.000 0,02%
Police (including civil police) 211.356.600 4,72%
Total 4.476.452.000 100%

notes: consulate budgets are not included; ministry administrative services budgets are not included
because some ministries were combined/separated after the new coalition was formed in may 2016; total is
the total 2016 planned budget (not the sum of the numbers on the table)
7. appendices 77
table A4 – Civil Servant net Salaries in tl (as of July 1, 2013)
ClASS SCAle Step

1 (lowest) 7 (middle) 14 (highest)
Middle School Educated IV 1 1638 1945 2251
Service Classes and III 2 2032 2354 2728
Workers II 3 2461 2846 3296
I 4 2974 3412 3922
Middle School IV 5 1872 2174 2525
Educated III 6 2274 2654 3096
Service II 7 2780 3262 3823
Classes I 8 3422 3994 4661
Tertiary III 9 2120 2665 3302
Educated II 10 2847 3474 4205
Service Classes I 11 3683 4409 5257
Physician III 12 3232 3869 4611
Service II 13 4081 4778 5591
Classes I 14 5010 5791 6702
Department Chief III 15 4070 4777 5601
Vice Director 1/III 16 4306 5038 5892
Expert II 17 5032 5825 6751
Director II 18 6203 7038 8012
Undersecretary I 19 7734 8633 9682
Source: ministry of finance
table A5 – number of government retirees (as of 1997)
1991 1992 1993 1994 1995 1996 1997

Grand Total 7478 7807 8123 8426 9368 9775 9983
Civil Servants 5740 5952 6170 6372 6946 7224 7362
Police 990 1037 1086 1126 1268 1341 1378
Teacher 748 818 867 928 1154 1210 1243
Source: 1997 Statistical yearbook, SPo
–the percentage
figure A1 of
students
at private
public
schools
to total

students

(2003-2015)

25,0%
20,0%
15,0%
10,0%
5,0%
0,0%

Source: moe. the schools include all pre-primary, primary and secondary education.

table A6 – Distribution of public Debt Stock (2015)

public Debt (million) tl $
State's own debt 1806,9 3759,5
Loans borrowed by SEEs that are now secured by the state 1909,8 135,6
State secured loans 657,8 83,6
Public debt without state security 76,9 3,5
State Secured loans (million) tl $

KIBTEK 168,5 32
ETI 0 0
SUTEK 10,5 0
TRNC Development Bank 179,9 32,8
Social Insurance Office 281,4 0
Other (CTA related debts) 17,5 18,8
Total 657,8 83,6
Sutek: milk Industrial board, kIbtek: cyprus turkish electricity board, cta: cyprus turkish airlines, etI:

7. appendices 79
table A7 – Government Consolidated Gross Debt as a percentage of GDp
Country 2010 2011 2012 2013 2014 2015

Belgium 99,7 102,3 104,1 105,4 106,5 105,8
Bulgaria 15,3 15,2 16,7 17,0 27,0 26,0
Czech Republic 38,2 39,8 44,5 44,9 42,2 40,3
Denmark 42,9 46,4 45,2 44,7 44,8 40,4
Estonia 6,6 6,1 9,7 10,2 10,7 10,1
Ireland 86,3 109,6 119,5 119,5 105,2 78,6
Greece 146,2 172,1 159,6 177,4 179,7 177,4
Spain 60,1 69,5 85,7 95,4 100,4 99,8
France 81,6 85,2 89,5 92,3 95,3 96,2
Croatia 58,3 65,2 70,7 82,2 86,6 86,7
Italy 115,4 116,5 123,3 129,0 131,9 132,3
Cyprus 55,8 65,2 79,3 102,2 107,1 107,5
Latvia 47,4 42,8 41,3 39,0 40,7 36,3
Lithuania 36,2 37,2 39,8 38,7 40,5 42,7
Luxembourg 19,9 18,8 21,8 23,5 22,7 22,1
Hungary 80,5 80,7 78,2 76,6 75,7 74,7
Malta 67,6 70,0 67,6 68,4 67,0 64,0
Netherlands 59,3 61,6 66,4 67,7 67,9 65,1
Austria 82,8 82,6 82,0 81,3 84,4 85,5
Poland 53,1 54,1 53,7 55,7 50,2 51,1
Portugal 96,2 111,4 126,2 129,0 130,6 129,0
Romania 29,9 34,2 37,3 37,8 39,4 37,9
Slovenia 38,4 46,6 53,9 71,0 80,9 83,1
Slovakia 41,2 43,7 52,2 54,7 53,6 52,5
Finland 47,1 48,5 53,9 56,5 60,2 63,6
Sweden 38,3 37,5 37,8 40,4 45,2 43,9
United Kingdom 76,0 81,6 85,1 86,2 88,1 89,1
Source: euroStat

80
10,00
0,00
1,00
2,00
3,00
4,00
5,00
6,00
7,00
8,00
9,00
Kosovo
Latvia
Albania
Cyprus
North Cyprus
Ukraine
Russian Federation
Belarus
Malta
Lithuania
Romania
Bulgaria
Poland
Hungary
Moldova, Republic of
Estonia
Greece

Turkey
Croatia
Montenegro
2013. for north cyprus, we took average of 2007-2014.

Serbia
Slovenia
Ireland
Luxembourg
Norway
Czech Republic
Slovakia
Switzerland
Germany
Portugal
Bosnia and Herzegovina
Sweden
Iceland
table A8 – public health spending as a percentage of GDp in europe
Spain
Finland
Italy
United Kingdom
Austria
Denmark
Netherlands
France
Source: euroStat. the ratios for each country could correspond to a different year between 2009 and
Belgium
An Overview of Civil Service in North Cyprus
7. appendices 81
AppenDiX B
Some of the problems with the official SPO data
1. The total number of public sector employees estimated by HLFS for 2010 does not match
the actual.
number Source
Civil Servants 15.806 Personnel Office
SEE employees 1.300 TEPAV(2013, pX)
Municipalities 3.272 TEPAV(2013, pX)
Total 20.378
27.244 SPO, 2010
2. The SPO have modified the method for estimating labor force statistics. After 2004, they
have started using household labor force survey (HLFS) whereas before 2004 SPO would
use the value added approach. For 2004 and 2005, we have data from both methods.
Unfortunately there are serious discrepancies between the two methods.
value Added hlfS Discrepancy

2004 104873 86914 17959
2005 109090 85583 23507
3. The tables that show monetary values in REAL prices still correspond to 1977 prices which
is very outdated. They need to update the base year for calculation of real prices for macro-
economic indicators.
4. The population according to 1996 census in SPO’s own 1997 Statistical Yearbook (hardcopy)
was 200587, but on their website, the table showing the social and economic indicators,
the same number is 183290.
5. Some of the education statistics are not the same as the numbers from Ministry of Education
which we use in Section 3 to report the teacher/pupil ratios although SPO claims to have
obtained the data from the same Ministry.
Following the division of the island in 1974, the authorities in northern Cyprus used
public sector employment as a tool to help restore the economy. Over the following
An Overview
decades, many people with limited human capital landed secure jobs with of Civil Service
generous fringe benefits in the civil services. Lawmakers saw this as an opportunity
to enhance their political power and constantly used this tool for their clientelistic
in North Cyprus
objectives. It is, however, not clear if the policymakers have ever considered the
legal and financial aspects of this practice very carefully.
This report analyzes three dimensions of the TRNC’s civil service, namely, the legal
framework, human resources and financial resources. We introduce in Section 2 the Tufan Ekici
basic legal foundation regarding employment in this sector. The laws have been
amended numerous times in order to favor particular groups, and in some cases
there has been almost no change in the laws since 1974. Section 3 talks about the
recent overall number of civil servants and numbers within each ministry of the
government. This section ends with discussion of the three most populous
professions in the civil service, namely, educators, physicians and police. The budget
of the central government is discussed in section 4 of the report, where we
introduce the sources for government revenues, as well as expenditure on current
and retired civil servants.
It is public knowledge that civil service sector employment in the TRNC is a very
weighty burden on the government’s budget. This report is intended to give a
detailed overview of different aspects of this burden.
ISBN 978-82-7288-898-4 (online)
PCC REPORT 3/2018
The report can be ordered from:

PRIO Cyprus Centre
P.O.Box 25157, 1307 Nicosia, Cyprus
Tel: +357 22 456555/4
cypruscentre@prio.org

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5. CONCLUSION AND DISCUSSION ...................................................................................................... 65

LIST OF TABLES AND FIGURES

Table 2.1 Percent contributions of gross salaries

Table 3.1 Number of civil servants 1993-1997

Table 4.1 General budget of TRNC (2005-2015)

Figure 1.1 Share of public who have confidence in civil services

Figure 3.1 Ratio of public sector employment to total employment

Figure 4.1 Aggregate state budget- income/expenditure ratio

Figure A1 Percentage of students at private/ public schools to total students (2003-2015)

1. OVERVIEW AND GUIDELINES

1.2 terminology and general confidence in civil services

table 1.1 – Glossary of terms used most frequently

term used explanation

Chart 1.1 hierarchy of a Ministry in north Cyprus

Musavir Minister Principal Clerk

Director of the Ministry

Office Dicrector Office Dicrector Office Dicrector

figure 1.1 – Share of public who have confidence in civil services

1.3 Data Sources

european values Study (evS, 2008)

State planning Organization (SpO)

personnel Office (pO) Data

individual “Ministry” websites:

2.1 Civil Servants law (Kamu Gorevlileri yasasi, 7-1979)

Original law final version

8 Every 3 years the rank of civil servants increases automatically.

2.2 personnel Office law

2.3 Civil Service Commission establishment law

2.4 law regulating the appointment of senior-level civil servants

2.5 Social Security and retirement laws

table 2.1 – percent Contributions of Gross Salaries

prior to July 1, 198713 1987-2008 After 200814

table 2.2 – the ratio of current/retired civil servants

1993 1994 1995 2013 2014 2015

2.6 recent Changes

3.1 Aggregate number of public Sector employees

Source: SPo hSlf

18 Source: Republic of Cyprus, Ministry of Finance, Statistical Service.

%change (public) %change (t

Source:: SPo, author’s own calculations

Source: SPo, table 4

3.2 number of Civil Servants

table 3.1 – the number of civil servants 1993-1997

1993 1994 1995 199619 1997

Police 1633 1732 1731 1718 1794

table 3.2- Gender distribution of civil servants, 1996-1997

1996 the years 2007-2015.

19 Total population of 15+ in 1996 was 156,317.

table 3.3 – the distribution of civil servants by different categories 2007-2016

3.3 public employees under each Ministry

Maximum Current Current

3.3.1 employment within each Department/Office:

3.4 A closer look at top three groups of civil servants:

3.4.1 public education

table 3.6 – teacher/pupil ratio in public education 1992-997

1992 1993 1994 1995 1996 1997

figure 3.4 – teacher/pupil ratios in various school types (2003-2015)

Source: ministry of education annual Statistics