The Malta Federation of Industry, Malta Employers’ Association, the Malta Hotels and Restaurants Association and the Malta Chamber of Commerce and Enterprise yesterday welcomed Budget 2008, saying that it would give the country a sense of continuity to help it progress in its convergence to EU levels of development.

At a press conference held directly after the budget speech was over, MHRA president Josef Formosa Gauci expressed the satisfaction of the four organisations that this year’s deficit is at 2.1 per cent of the Gross Domestic Product that, next year, should be reduced further to 1.2 per cent.

“It is of paramount importance that the government continues to work on decreasing the fiscal deficit while aiming at a surplus within two years,” said Mr Formosa Gauci.

This is extremely important, especially in the light of Malta’s adoption of the euro on 1 January as the national currency and enhancing the efficiency and effectiveness of the country’s resources.

He also expressed satisfaction at the government’s adjustment of the income tax brackets – following suggestions the four associations had made.

“These adjustments should lead to further economic growth,” said Mr Formosa Gauci.

However, he expressed disappointment that the government did not take up the suggestions made by the Malta Council for Social and Economic Development (MCESD) to honour the cost of living adjustment (COLA).

“This is an addition to the 50 cents being awarded by the current mechanism of determining wage increases linked to RPI, and has no correlation to productivity gains,” said Mr Formosa Gauci.

All increases should be closely linked to productivity and not to the COLA mechanism, which has a negative effect on unit labour costs and competitiveness and may jeopardise long-term employment in those sectors which are still undergoing restructuring and facing stiff competition from abroad, he added.

He also expressed the satisfaction of the four constituted bodies at the government’s decision to focus on education, especially through the utilisation of European funds.

Mr Formosa Gauci also welcomed the adjustments in the tax bands which, he added, would increase disposable income and reduce pressure on wage bargaining.

The four organisations were also pleased with a number of measures – among which: the investment of Lm13 million in new factory stock, the National Insurance credit for newly-registered self-employed aged over 45 years and the unemployed, Lm19.3 million incentive under the new Malta Enterprise Act, people can keep on working after 61 years without losing their pension, compulsory Employment and Training Corporation (ETC) training for specific unemployed people, children’s allowance reducing the disincentive for women to work and elimination of succession duty for the surviving spouse.

Mr Formosa Gauci also said that the bodies were encouraged by the increase of Lm10.5 million to the Malta Tourism Authority’s budget and welcomed the allocation of Lm5 million for improving the tourism product.