Malta’s current record number of gainfully occupied workers defied conventional wisdom and was the result of the government’s well-founded economic policies, Prime Minister Lawrence Gonzi told a business breakfast yesterday morning.

With a record 169,000 unique individuals, with no double counting, being gainfully occupied and with unemployment at 12-year lows, the government’s macroeconomic policies were bearing fruit, Dr Gonzi told a room packed with several of Malta’s business leaders.

Dr Gonzi was speaking at a business breakfast organised by The Malta Business Weekly and Le Meridien St Julian’s. The business breakfast was the first and only one of the electoral campaign that was not a party function and which Dr Gonzi addressed in his capacity as Prime Minister.

Conventional wisdom, he said, would dictate that the number of gainfully employed should have fallen drastically over recent years, considering the thousands of baby boomers retiring and the higher number of graduates entering the labour market.

But it was the government’s economic policies, he said, that were generating the amount of labour market openings that the country has seen. 20,000 new jobs, he observed, have been created over the last four years. Malta had also absorbed the imported shocks of globalisation, where 900 workers in the textiles industry had been affected – a figure equivalent, he said, to 30,000 job losses in other EU countries.

Remarking on past successes in the area of public finances, Dr Gonzi explained how fiscal consolidation had laid the groundwork for the economic growth witnessed over the past few years.

Such growth, he said, had also made a reality of the achievement of the government’s 2015 vision, which laid out six areas in which Malta would become a centre of excellence.

Malta, he added, is still committed to achieving the highest standards of fiscal consolidation and debt control, which included the ambitious yet very real target of achieving a budget surplus by 2010.

“It is very worrying,” he remarked, “that the Malta Labour Party leader does not consider the achievement of a budgetary surplus by 2010 as a priority, while the achievement is one of the government’s main targets.

“The fiscal consolidation leading us to that point is, in fact, one of the main reasons behind the country’s successes over the last four years.”

Through fiscal consolidation, he said, Malta’s credit ratings have improved and the country has become a more attractive place to invest in.

“But if we start sowing such doubts, there is a danger our deficit would rise above the three per cent level. Some might say that is what France or Germany are doing, but so what? Our target is to adopt the eurozone’s best practices.”

Dr Gonzi explained how over recent months the government had been exploring bringing in a strategic partner, a third party of international repute, for the superyacht portion of the Malta Shipyards’ business, but the General Workers’ Union had disagreed with the proposal.

“The Drydocks can reach a break even point,” he stressed, “but only if the right levels of productivity are achieved.”

On the electricity surcharge, Dr Gonzi said he could not bind himself to a guarantee that it would not be touched in future.

“It would be most irresponsible of a politician to bind the country in a straitjacket – not even for two weeks, let alone for five years,” he commented. “If we had Lm50 million to spare, I would rather it was spent on the university instead of the surcharge, the latter of which simply incentivises waste.”

The issue of competitiveness, Dr Gonzi said in reply to a question on Malta’s recent slipping in a World Economic Forum survey, was a “crucial factor”. The public service, he said, needed to be made to deliver a more efficient service so that taxpayers get full value for their money.

While the sheer size of the public service has been trimmed over recent years, he observed, more needs to be done along these lines.

“Let’s make life easier for business people,” he said. “We are proud of the fact that over the last two budgets we have not introduced any new taxes, while we have also cut income taxes significantly.”

The policy, he said, had resulted in strong economic growth, which in turn provided more funds for the government’s coffers – a point he said the MLP simply could not understand. The MLP, he said, looked at higher government revenue and simply assumed there were more taxes – not that economic activity had increased at the pace at which it had, providing more public revenue.

The income tax adjustments announced as part of the proposed economic stimulus package, which include a dropping of the 35 per cent maximum tax rate to 25 per cent for those earning up to e60,000 and the upward adjustment of the 15 and 25 per cent tax bands, would see government recuperate its revenue within a maximum of two years, if not earlier.

The government’s strategies toward public finance, he said, were providing the desired results, with Malta’s GDP growth of four per cent being well above the EU average and one of the best in the EU and eurozone. Moreover, Malta’s deficit last year was just 1.8 per cent of gross domestic product and the public deficit stands at just 63 per cent of GDP, down from 75 per cent four years ago. Inflation is also at a low of 0.7 per cent compared with the euro area’s 1.2 per cent.

Malta last year saw a record amount of foreign direct investment, he added, with e650 million having been invested in the country over the first nine months of the year alone. At this rate, Dr Gonzi observed, Malta is very close to reaching the e1 billion mark.

“We are undoubtedly on the right track,” Dr Gonzi said, “but more needs to be done and 2008 needs to be another successful year.”

He described the proposal to turn Gozo into an eco-island – self-sufficient for its energy supply and waste management – as the “most ambitious” of the 353 proposals laid out in the PN’s electoral manifesto.

Dr Gonzi said he was “convinced” the 2015 vision announced last year is the way forward for the country. The vision statement had laid out six areas – information technology, the financial sector, manufacturing services, health, education, and tourism – in which Malta is to become centres of excellence in the EU and the Mediterranean region.

In terms of health, he said Malta now has the new Mater Dei hospital and the most professional doctors and nurses. Maltese doctors, he said, were so good that there is the danger of them moving overseas.

“We are extremely proud of them and want them to have these opportunities,” he remarked, “but you can go elsewhere and earn even three times the salary, but you cannot enjoy the same quality of life as you do in Malta”.

He observed how many had wondered why an election had not been called before 1 January, right after having announced a good budget for all and sundry. The answer, he said, was that the government was not there simply to win an election, but rather to ensure the country is run in the best way possible.

Referring to the 26,000 part time workers registering less than 20 hours of work per week, Dr Gonzi recalled how the government had regularised their situation in terms of leave, sick leave and pro rata salaries, but abuses, he said, had cropped up as a result.

Some employers, he explained, had found a legal loophole through which part time workers were stricken from companies’ books. The workers then registered themselves as self-employed and the company bought their services – and there was nothing illegal about it.

Dr Gonzi observed how the PN’s electoral manifesto clearly stated that the situation would no longer be tolerated.

“We will address the law and make the necessary changes,” he said.

Additionally, he added, when issuing government tenders in the future, the government will inspect how a company’s workers are treated, and place the factor as a decisive one when awarding contracts.