Economic and social development hinges crucially on the activation of human resources, so it is important to invest in further training, life-long learning and similar measures which make work pay and make it more attractive, according to the Malta Federation of Industry (FOI).

This was the central message of the FOI’s document that includes reactions and recommendations to the pre-Budget document 2008, which the federation also discussed in detail with Finance Parliamentary Secretary Tonio Fenech.

Addressing journalists yesterday, FOI president Martin Galea gave a presentation of the federation’s analysis, saying that while economic growth has improved, potential for it to accelerate exists, not only in “new economy” areas, but also in a number of so-called “traditional” areas.

Mr Galea explained that it was important to create incentives for people to work, particularly by providing opportunities for training in more targeted areas, possibly more closely linked to industry.

Moreover, the FOI president said, the federation had also suggested to the government to allocate sufficient resources for the effective implementation of the National Qualifications Framework, which should be set up as soon as possible and which would be an incentive in itself, so that people from all walks of life would be encouraged to achieve more.

Another of FOI’s suggestions with regard to human resource development deals with the strengthening of the student apprenticeships system, rendering it more effective.

Mr Galea said the federation believes that investment in human resources has the potential to be one of the primary pillars through which the government can support enterprise growth.

Presenting statistics that showed that “we really are not in the running” in research and development, Mr Galea said FOI believed in the need to invest further in human resource development, which needs to be directed towards areas that are more likely to engage in research and innovation.

In this regard, the FOI has suggested the setting up of a fund for Research, Technological Development and Innovation (RTDI), together with further support for projects in this field and the granting of a tax relief to businesses making donations to science popularisation and related activities.

In its analysis of the pre-Budget document, FOI provided its feedback on specific proposals. It particularly pointed out that incentives for family-friendly measures should not dent competitiveness.

The federation also proposed that the national insurance basis should be extended to all employment income up to the national ceiling, with a reduction in the contribution rate. Moreover, according to FOI, national insurance contributions by employers and employees should be equal.

FOI is also suggesting that social benefit systems should be reformed to encourage labour market participation and remove distortions and abuse, while targeting genuine poverty. This suggestion was based on the federation’s view that social welfare programmes in Malta are not as efficient at directly targeting poverty as those in other countries.

As regards the government’s mention of measures in the field of housing in the pre-Budget document, FOI said: “Housing affordability is better tackled through a reduction in taxation costs rather than the granting of subsidies.”

In its document, FOI also mentioned the Venture Capital Fund, which it said needs to be expedited and the government needs to put in place arrangements for the provision of micro-credit through EU Structural Funds.

Concluding his presentation, Mr Galea said the pre-Budget document contains a number of worthy initiatives. He did emphasise, however, that improvements to social cohesion should be primarily attained through incentives towards the activation of the labour market, reduction in tax burdens and targeting the genuinely needy.

He also stressed the importance of reducing environmental impacts and energy costs, optimising the results of innovative financing schemes, as well as the continued investment in the upgrading of existing and new industrial zones.