The government has proposed a reduction of 10 days vacation leave over four years, while at the same time committing itself not to raise income tax and VAT over the same period – 2005-2008. Employers have been asked to pay Lm5 for each employee every year to be re-directed into a training fund for workers.
These are some of the proposals made by the government to unions and employers last Wednesday in a last ditch attempt to reach a national agreement aimed at increasing the country’s competitiveness.
Hours after making the proposals, the employers had already informed Prime Minister Lawrence Gonzi that they were in agreement and urged him not to linger anymore over the issue, but the unions were still discussing the matter with him late last night.
The unions held a meeting which lasted nearly seven hours yesterday, but although agreement was reached on basic matters, there were still issues on which they could not find an accord.
Sources involved in the discussions said that the Prime Minister’s proposals cover a four-year time span till 2008. They are contained in a document entitled A National Pact for the Renewal and Boosting of the Maltese Economy.
The package includes a total of 17 clauses and binds the government, employers and unions to work to boost Malta’s productivity and competitiveness.
During the first year (2005) the government is proposing to deduct two days of holiday leave from workers’ annual entitlement. The same applies to the second year (2006). However, during the third (2007) and fourth (2008) years, the government is proposing to deduct three days of holiday entitlement each year, for a total of 10 days in four years.
Dr Gonzi’s proposals also include one whereby employers would pay Lm5 per year per employee to be injected into a re-training fund for employees.
Furthermore, the government also binds itself to consult with the Malta Council for Social and Economic Development before incurring expenses in addition to those established in the budget.
The proposals also include government incentives to utilise unemployed people on an interim basis. Another option in Dr Gonzi’s package is for idle government employees to be reassigned elsewhere, such as in public-private partnerships.
The document also binds the government to curb public spending and to crack down more on tax and benefit fraud, while committing itself not to increase VAT and income tax over the next four years. Another proposal is to issue government wage increases in cash payments, which might later be included as part of the wages, depending on the growth of the Gross Domestic Product.
The government committed itself not to raise its wage bill by more than one per cent per year – the implications of which are that future collective agreements might have to address the ever-increasing wage creep.
Sources within the employers’ group said they were satisfied with the proposals and are deeming the package as final. Although there were aspects with which they did not agree, they had given the government the go-ahead to proceed, urging it to take a decision quickly.
After the marathon seven-hour union meeting, chairman Edward Zammit described it as a “big meeting”.
Giving his comments to the media he said: “The discussion has developed. Now the unions are asking for another meeting with the Prime Minister and employers’ organisations to thrash out the last issues on the agenda in an effort to reach a final agreement, we hope.”
He continued: “The meeting, although intensive, was very cordial. The unions have agreed on basic points, but there are others where they have sought to speak to Prime Minister Lawrence Gonzi.” The unions then requested a meeting with Dr Gonzi at Castille and this started at 8.30pm.