Nearly 10 years ago, the then Malta Council for Economic Development (MCED) was entrusted with a difficult and controversial task: to examine the welfare system in Malta and to analyse those areas that were in need of revision.

The welfare system, set up by the Labour government after the war, culminating in the 1970s with the two-thirds pension, was undoubtedly a master stroke by Labour, in particular by the then Prime Minister Dom Mintoff. Few will deny that the pension system has survived for more than 30 years of political turmoil, pressures of globalisation and changing demographics.

As the main Labour spokesman on social affairs Dr Karl Chircop said in Parliament on Monday evening during the debate on the proposed amendments to the Social Security Act, there is certainly room for improvement in a number of areas. Over the past 10 years, after numerous studies and commission reports, the Nationalist government has finally decided on a strategy that will, hopefully, address the problems that Malta’s welfare state, especially the pension system, will be facing in the next 15 to 20 years.

Both sides of the House agree that the welfare state in Malta will become unsustainable by 2030, however they do not agree on the timeframe that should be adopted to introduce the reforms. The government, on the basis of the conclusions and recommendations of the Pensions Working Group, firmly believes that reforms must take place gradually over the next five years to ensure that tomorrow’s pensioners will receive a pension that is adequate but more importantly that does not have a negative impact on the system.

The Labour Party, on the other hand, believes that the government is too much in a hurry to introduce the reforms and that it is turning a blind eye to many issues such as the state of the economy today and a growth rate of 2.5 per cent today that is not sufficient to sustain the pensions system in 20 years time.

The government is correct in stating that demographics clearly indicate that Malta’s society is growing older every year and that the low birth rate will severely reduce the number of workers contributing to the pension system. Labour, however, consider this argument to be nothing but rhetoric and that every amendment being proposed by the government will result in a new social tax.

Dr Chircop gave a number of examples to show that the proposed reforms will only be of benefit to high wage earners and not the working and middle class. He also criticised the government’s plans to introduce the second and third pillar pension, not the concept per se but rather the lack of details and timeframe when these will be introduced.

The debate on pensions reform was never going to be a smooth process. It has taken 10 years of debate, public consultation, numerous reports, commissions, committees and working groups to reach some sort of final strategy. Family and Social Solidarity Minister Dolores Cristina admitted in Parliament on Monday that it was impossible to reach consensus on everything.

Where does that leave us today?

For a start, we disagree with Labour that it is too early to start addressing a problem that will only “appear” in 2025 or 2030. The government is right to start working on the reforms from now, in a gradual manner, allowing people to slowly get used to the idea that they will be working for a longer period of time.

We do agree with Dr Chircop, who raised 14 important questions during the debate on Monday, that at times the clauses in amended bill are vague and beg clarification. His working examples of how the changes to the national insurance contribution will affect the different social classes are worrying and the government must look into this issue.

The last thing that the country needs is a half-baked reform that instead of guaranteeing an adequate pension for today’s worker and a sustainable pension system, will result in the government having to “reform” what has already been reformed.

The stakes are high. The problem is real. Tackle it now but do listen to Labour’s concerns.