Malta performed worst in the macroeconomic environment, labour market efficiency, and innovation “pillars” of the report. Do you agree with this assessment and what steps do you feel are needed in these areas?

The negative ranking attained for the macroeconomic environment pillar was mainly triggered by a low saving rate and high government debt.  It is a known fact that the Maltese savings ratio is low.  The GWU concurs with the relevance of savings to build the capital base of Malta and drive higher economic growth.  In this regard, the GWU acknowledges the Employment Policy which aims to stimulate activation of inactive people into employment.  The policy is also focused on upgrading the skills base of the Maltese workforce.  The GWU believes that through a) more employment and b) higher skills that attract higher remuneration, the Maltese population will be able to save more.  However, the Union urges Government to promote higher savings through effective fiscal incentives for example for the third pillar pension scheme so that this will be a success.

The second trigger to the negative ranking in the macroeconomic environment perspective is raised from a high government debt.  The Union is of the opinion that despite the considerable level of debt, this is well within Government’s control and is expected to take a downward trajectory as highlighted within the Pre-budget document.

In the case of labour market efficiency, the worst performance was recorded in the ratio of women into the labour force to men (0.61). However more women are now being encouraged to remain or join the labour market after a series of family friendly measures have been recently adopted by Government (Skola Sajf, Free Childcare, payment of maternity leave, etc) to facilitate the activation of women into employment.  The Union also urges the Government to encourage more flexible measures, especially for women in order to achieve a better work-life balance and raise the ratio of females to males in the labour market. 

The Union concurs with the low score attained for the innovation pillar. Building a knowledge-based economy should be top priority for the government.  More efforts should be targeted towards upgrading the quality of the research.  One way of doing that is to produce more scientists and engineers in order to extend the size and quality of the pool of resources at hand.  In tandem, measures should be introduced to attract high quality research from multinational companies to Malta.  Moreover, government should attract research from local companies through more effective fiscal incentives.

Examining “Goods market efficiency” Malta is again ranked poorly for the number of procedures to start a business and the number of days to start a business. Do you share these concerns and, if so then what should be done to address them?

The Union shares these concerns and is highly aware of the bureaucratic limitations imposed on Maltese businesses.  It is beyond unacceptable for the public sector to act as deterrent to the business environment.  Bureaucratic factors can severely influence the attractiveness of Malta as a high quality business hub and have repercussions on economic growth and employment.  On a positive note we were informed at the MCESD that Government has set up a special committee under the Ministry of Finance to start to tackle this issue.    

In the pillar of “Financial market development” Malta is scored badly against the “Legal rights index”. Are you confident that suitable legislation exists to protect investors and other market participants?

While suitable legislation exists to protect investors, the main problem with our legal system is the time taken for the courts to decide. One hopes that the reforms proposed by the government which include both legislative as well as administrative changes to speed up procedures are implemented as soon as possible.

The WEF invited respondents to select from a list of 16 items the five most problematic factors for doing business in their country, and then rank the five most problematic factors between 1 (most problematic) and 5:

1.       Inefficient government bureaucracy 2.       Access to financing 3.       Inadequate supply of infrastructure (…..high energy costs for industry) 4.       Insufficient capacity to innovate 5.       Poor work ethic in national labor force

On Thursday the government also published its pre-budget report. Do you agree with the government’s analysis?

Malta has weathered the storm of the global recession rather successfully, especially when compared to other European counterparts. Statistic such as the GDP growth rates and low unemployment levels, two very important indicators prove this.  Government’s efforts to eradicate unintended consequences of social benefits (dependency and passivity) are a step in the right direction.  This makes sense in the case of an ageing population where benefit dependents are expected to increase as a ratio of the working population.  Moreover, activation of inactive persons into the labour market should lead to a lower incidence of poverty and higher standard of living.  With this measure government is expected to save tax payers money from lower benefit expenses.  This coupled with SSC payable and other taxes (from higher consumption etc) should increase revenue flows to government.  All in all, the Government will have more cash to spend on upgrading the skill base of employees as well as focus on specific target groups that are truly in need of benefits.

Is there anything that you would like to see the government include or change in its final budget?

The Union will be publishing its reactions and proposals to the pre-budget document over the coming days.  However we can give some initial comments and proposals as follows:

Despite efforts currently being undertaken by the government to drive employment and raise the pool of skills of employees, these are of a long-term nature and will take time to translate to positive outcomes within the labour market.  Hence, the GWU proposes to the Government to adopt more short-term measures (as already implemented) that will activate inactive employees as soon as possible. 

Furthermore Government  should also:

Attracting High Value Added Manufacturing in Malta & Gozo; Continue on its path to stimulate more Green Jobs in Malta; Introduce additional measures that contain costs of business operating in Malta; Focus on a new niche of tourism (high quality tourism) in Malta and Gozo;