Employers calls on government to shelve ‘airy fairy projects’ to bring finances back on track

Last Updated on Tuesday, 9 August, 2022 at 7:12 pm by Andre Camilleri

The Malta Employers’ Association (MEA) has called on the government to shelve what they described as “airy fairy projects” and use the money for more pressing infrastructural priorities and to get the country’s finances back on track.

The association said that projects such as the Gozo tunnel and the Metro amongst others should be shelved and that the money should be directed to works on the country’s electricity distribution network, ‘outdated and worn’ drainage systems, and infrastructure for electric mobility.

The call was made in a document published by the MEA outlining their main proposals for the country’s 2023 Budget.

In the proposals, the MEA heavily suggested that “the budget should focus on cutting wasteful government expenditure to bring finances back on track.”

In 2022, Malta’s debt to GDP ratio will reach the maximum of 60%, which is allowed by the EU’s Stability and Growth Pact. In 2019, before the pandemic, the country’s debt to GDP ratio stood at 40.7%.

This became the case after the previous government implemented wage-subsidy schemes and increased expenditure on health to combat the negative effects of the Covid-19 pandemic.

The MEA further stated how there was a “less urgent” increase in expenditure recorded in the private sector in the lead-up to the general election, due to an employment drive.

However, in its report it revealed that this hindered the private sector, especially with the employers who lost human resources to the government, whilst also suffering from wage inflation pressures.

The MEA revealed that with the increased level of expenditure it seems extremely difficult to bring the debt to GDP ratio back down to what it was in 2019.

It also mentioned the “redundancy/redeployment measures promised to hundreds of Air Malta employees will certainly influence this challenge unnecessarily.”

“MEA has also been critical of the shifting of redundant Air Malta employees to the public sector […] many of them can be absorbed in productive jobs in the private sector.”

Furthermore, the MEA said that the government must be more forthcoming when it comes to disclosing information, particular concerning public funds.

“MEA supports government efforts to promote tax compliance and curb evasion. However, these efforts need to be complemented by others to establish more credibility in government”, the association said.

Once again, it asked for there to be better governance and full disclosure of government contracts and expenditure.

“Some minor examples: why is it being refused to disclose the expenditure of the Film Awards event? Is it true that a minister has employed a personal photographer at a package of 32k for a four day week? In addition, there are more serious matters where government should come clean – AUM, Vitals and others.”

MEA added that the “government should publish a list of all persons holding positions of trust and their remuneration packages.”  The association also called on the government to give fiscal morality more importance and stop wasting public funds or abusing social benefits. It is asking for more disclosure so that taxpayers are more aware of how their money is being used. It pointed out that this also applies to political parties who should not be exempted from publishing audited accounts.

“The public needs to be given more confidence that the funds it is contributing by way of taxes are being used wisely, not squandered, but the current lack of transparency in itself is counterproductive to the efficient collection of tax.”

With regards to an economic transformation, the MEA pointed out how there are approximately as many construction workers as there are manufacturing workers, showing a high dependency on construction which is having a negative impact on people’s health and on Malta’s attractiveness.

It proposed that there should be an economic transformation towards “stronger, higher value-added manufacturing and services.” This will create more jobs without compromising the environment. It further added that there is significant growth potential in the maritime and aviation sector.

It observed how, in the case of tourism, Malta has become an unattractive destination, and this is evident from many foreigners leaving to work somewhere else. Additionally, the aviation tax which is being proposed at a European level will have further negative effects on the industry.

The MEA continued to criticise the tourism industry for having a lack of direction and only being “driven by individual interests which are fragmented, and at times, conflicting”. The report is asking for more clarity about where this industry’s future lies.

The MEA is also proposing measures that encourage people to continue working past their pensionable age. Therefore, their pension income will be supplemented and topped up for those aged over 75 to aid with health expenses.

In addition, MEA said that artificial wage increases can add a lot of pressure to the private sector. The expected surge in the Cost of Living Allowance (COLA) is adding a lot of pressure on the private sector, and the MEA said that prices will continue to increase as a result so that employers can maintain their profit margins.

MEA is stressing that wage increases must be matched by productivity; if not then they will sacrifice capital and resources which could be used to invest in long-term prospects for the companies.

MEA also addressed the complaints publicised by food couriers. It suggested setting up “a committee within the Employment Relations Board to address the situation and design a wage regulation order for this sector that seeks a balance between the welfare of the food deliverers, the companies providing the service and the clients”.

With regards to labour supply and skill shortages, MEA referred to a paper it published in August 2021 with “recommendations to reduce skills shortages prevalent in many economic sectors.”

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