The cost of living adjustment will be discussed further on with the social partners and that e7 increase is still premature, said Finance, Economy and Investment Minister Tonio Fenech.
The minister was speaking during a news conference to launch the pre-budge document titled Growth, Jobs and Social Cohesion.
The document is an economic report but it provides the tools to support the sustainability of the individual and collective well-being of the country and to support social cohesion, explained the minister. Criticised for being too wishy-washy, the minister replied that the document is still a work in progress and up for discussions before the actual budget.
The report was drawn up after discussions with the Malta Council for Economic and Social Development (MCESD), business and the public. Formal discussions with MCESD and the public will resume in September.
Mr Fenech went on saying that since inflation is slowing down an increase in the e5 to e6 region would be more reasonable according to the government.
Strengthening Malta’s competitiveness is central to the government’s proposals considering the current economic climate, which impacted all the European economies. The COLA concept is good in itself as wages are comparable with the real prices. The COLA argument may have deflected the issue of competitiveness but although there was a lot of criticism it helped unions to be realistic in their demands,” explained the minister.
The pre-budget document points out identification of areas that need to be strengthened to ensure the achievement of the government’s objectives. “The economy is ultimately a tool to provide a better standard of living,” he added. Mr Fenech insisted that safeguarding and creating new jobs is the key to the government’s policies and decisions. The document focuses on the local and international economic environment. Further on, it focuses on addressing market imperfections, improving labour market conditions, investment, tax policy, productivity, education and skills, and Gozo’s economic development.
Regarding the public deficit he said that measures to reduce costs are not enough and that the government is projecting a deficit of negative 3.8 percent. Public investment had to be sustained but social solidarity, he said, would remain a key factor for government.
In his concluding remarks, Mr Fenech pointed out that for the country to remain competitive, Malta’s ability must not conflict with the longer-term objectives of increasing income levels and converging to average EU income level. He also said that further investment in education, research and development, and attraction of foreign direct investment is required to increase potential output growth. In turn, these would lead to higher productivity levels, sustaining higher wages, a better standard of living and improved social cohesion in our community.
Meanwhile the General Workers’ Union issued a statement to positively remark the government’s position on the COLA adjustment.
GWU said that the COLA is just one of the challenges faced by employers. The formula used to work out the COLA is one that was agreed on by all the social partners and takes into consideration the effects it leaves on companies. In the past months, the union criticised employers who suggested that COLA should not be given to all or to be given partially.
The pre-budget document is downloadable from http://www.budget2010.com.mt. Feedback, suggestions and queries can be addressed by sending an e-mail at [email protected] or by phoning 2599-8888.