As the national Budget approaches, wage inflation, social housing, pensions, and positions of trust – amongst many other subjects – are on the Malta Employers’ Association’s agenda.  The Malta Independent met MEA Director General Joseph Farrugia and discussed the association’s proposals to the government for inclusion within the upcoming Budget.

Wage inflation

One of the prime points of emphasis that the MEA have made in their Budget proposals is once again based on wage inflation. Farrugia explains that in principle, the MEA are never against an increase in wages.  However, he said, these increases correlate with an increase in productivity.  For many companies, which aren’t in real estate or property, raising salaries because of cost-push factors – such as rent – is resulting in wage inflation that is not being reflected in productivity, Farrugia explained.

Therefore one of the things mentioned in the document is that labour costs should be linked to productivity and that employers cannot be expected to compensate for inflation resultant from a property boom. 

Positions of trust

Another notable MEA proposal focuses on governance. It proposal states that when people are employed in positions of trust, they should have their work conditions out in the public domain.  Farrugia explained that this is to make sure that everything is above board and that transparency is maintained. 

The proposal also reads that members of parliament should not be entrusted with positions of trust, and that key positions in authorities should be approved by a two-thirds majority in parliament, and that all persons who did not go through a recruitment process should go through a periodic audit by an independent board to justify their position.

Social housing

The MEA gives special focus on the matter of social housing, saying that first of all a thorough exercise to determine whether the current stock of social housing is being used for its intended purpose needs to be done.  The document says that it is well-known that in the past social housing was allocated more on the basis of political favours than genuine entitlement.

Farrugia noted many other problems with the current situation; perpetual entitlement, sometimes luxurious properties, and even properties which were sold much lower than they should have been.  The MEA propose that social housing units be designed to provide minimum accommodation to encourage people to move out if they have the opportunity and once they get back onto their feet.

Pensions

Another interesting proposal that Farrugia emphasised relates to pensions, and in turn to incentivise employees to stay longer in employment.  It is being proposed that employees who have the option to retire at the age of 61, and whose pensionable age is higher will be given half the pension of they choose to work the period beyond the age of 61 and the retirement age.

Farrugia said that although this will incur a cost, these costs will be neutralised as this will result in a higher retention rate of employees in employment and hence higher N.I. and tax revenues to the government.  In today’s labour shortage situation, Farrugia explained, keeping our older employees in employment reduces the pressure of having to bring in more and more workers from abroad.  “Even if just 2,000 people decide to continue working – 2,000 people is a lot and it means 2,000 less workers coming from abroad having to look for accommodation for example”, Farrugia added.

Collective bargaining in the private sector

There are clear cases wherein the government and unions negotiate conditions in the public sector, which then have enormous repercussions on the private sector, Farrugia said. A classic case of this is involving independent schools who, after salary raises in state schools, have had to drastically raise school fees to compete with the offered rates.

What we are saying is that when there is collective bargaining taking place, the private sector should be on the negotiating table as well, so that at least they can give their views on what the repercussions to the private sector could face.

Other proposals

A raft of other proposals can be found in the MEA’s document relating to various subjects.  Emphasis is put on education, saying that unemployed persons and migrants should be asked to attend mandatory numeracy and literacy courses, while it is also proposed that there is more effort to attract students to participate in apprenticeship schemes. 

Another proposal is to develop further the concept of the Blue Economy, urging the government to allocate more funds to this sector and even take advantage of EU incentives.  In the transport sector meanwhile, the MEA have also proposed that there be further incentives for the take-up of electric cars and called for a long term strategy for transport in Malta. 

More also needs to be done to facilitate the process for the employment of third country nationals; Farrugia cites the example of one employer who employed a driver from the EU, only to learn that for him to be given the same license in Malta, he had to wait six months.  Its things like these that with a bit of thought, can be easily arranged, Farrugia said. 

Child-care facilities should also be extended to cover those workers who, for instance, work night shifts, Farrugia said.  The matter of direct orders is also touched upon within the proposal document, with the MEA saying that a “worrying practice” of the public sector bypassing the tendering process by granting direct orders is taking place, and that this is creating a sense of mistrust towards the public sector and an un-even playing field between businesses.  The MEA called upon the government to commit itself to adhere to the tendering process in its procurement.

Finally, Farrugia puts emphasis on the subject of energy.  Malta’s commercial rates, contrary to other countries, are different to its domestic rates for energy.  The MEA propose that the rates are streamlined over a five year period so to have a uniform rate of energy in Malta.  They also called for night tariffs for businesses to be introduced.