The Malta Independent 3 June 2020, Wednesday

Watch: New economic measures - government to pay €800 per month for employees of worst hit sectors

Tuesday, 24 March 2020, 19:55 Last update: about 3 months ago

Prime Minister Robert Abela has announced a new economic package to help businesses survive the current economic situation brought about by the COVID-19 outbreak on the island.

The measures include the government paying the equivalent of the minimum wage for workers in certain economic sectors and in total will cost between €65 to €70 million per month.

The package was approved by Cabinet last Monday and by all MCESD members on Tuesday.

ADVERTISEMENT

Abela described the agreement with the social partners as "a historic social pact, one that is unprecedented."

"We came together, the unions, government, employers, in national unity to get Malta out of the situation we are in."

This was the third set of economic measures announced by the government thus far.

Abela spoke of the 'war chest'. "We are at war, a different kind of war than the traditional sense. Every country has a war chest - the funds available for use that they can use in the war to bring their country out from the pandemic. We have this war chest and we must be prudent in its division. We could have been populist and said that we would use the whole chest in the first set of measures, but we would have risked a moment where we would require more financial incentives but not have the funds to do so."

 

He spoke of the importance of planning for what might be needed in the next week. He said that the government decided to gradually issue incentives, along the same way measures in the country from a health perspective were taken gradually.

The package announced mainly addresses the hardest hit sectors, and will be in place for a three-month period. It is not, however, excluded that there will be adjustments made as time goes on.

The aim of this package is to help businesses stay afloat during this crisis, so that they can recover once it passes.

The government has announced that it will be paying the equivalent of the full minimum wage for employees in the following sectors:  outlets in the wholesale and retail sectors that have been banned from opening through government directives, accommodation, restaurants, rentals of motor vehicles, employment activities, travel agents, security and investigation activities, service to building activities, transport, entertainment and personal activities (barbers, beauticians etc.). this will cost government €44 million per month

This, the government said, will affect some 60,000 people. Full-time employees will be given €800 per month. This benefit will apply for self-employed people in these categories as well.

"We are doing more than other countries: this measure means that for employees on the minimum wage in these sectors, the government will be paying more than their whole wage," Abela said. This benefit will be retroactive to 9 March as long as the employer re-hires the employees who were made redundant in that period.

If an employee earns more than the €800, the government will still pay the €800 in these sectors, and the employer would pay the difference for these employees, up to an income of €1,200 per month. "If there is a person being employed with a higher salary my appeal is that the business pay what they can to pay the full salary but if the circumstances do permit, then I appeal for flexibility even on the side of the employee." He also appealed for flexibility when it comes to people earning €1,200 highlighting that some businesses will struggle to pay the €400 over and above what government will be paying, and said that in this circumstance the unions and employer will sit down with the department for industrial relations and come to an agreement case by case.

In terms of part-time workers in the aforementioned sectors, the measure apply at a reduced €500 rate.

For the following sectors, the government will be paying one day's salary a week (which could go up to two), capped at €800 a month: Manufacturing; part of wholesale; part of retail; warehousing; information. businesses will be able to check what benefit they are entitled to on a website. This will affect around 50,000 workers. In the case of Gozitans in this particular measure, the government said that it will be paying the payment equivalent to 2 days' salary.

Those who are self-employed and who employ workers with them will be eligible to pay covering three days weekly. 

All the measures apply for part-timers pro-rata and the figure or rate we will be working on, calculating on, will be €500 per month.

The other sectors, comprising around 94,000 workers, are not yet being affected so measures are not being envisaged for them at this stage.

During Tuesday's meeting, the social partners agreed to guarantee an additional minimum €400, over and above the €800 the government will be forking out. This means that workers should receive at least €1,200 per month. If employers cannot afford this, they have to write to the industrial and employment relations department.

With regards to the state of the economy, the country will borrow seven times more than it would in normal times. The Surplus is being ring-fenced and will be used to cover bank guarantees so the companies can maintain their liquidity for the economy.

Public sector salaries will remain unchanged.

People are being urged to allow Malta Enterprise some time to clarify which jobs fall under which category. Payments will be effective from 9 March but some delays are to be expected.

Abela concluded his speech by once again appealing for flexibility, saying that to preserve jobs one had tobe reasonable.  Employers need to do everything to safeguard jobs, but employees also need to understand that these are very particular times where a sacrifice is needed, he said.  He said that employers need not worry because the good times will return, and they will not take long to return.

"In this moment of difficulty, let us pull the same rope.  Everyone has to make sacrifices, and a lot of sacrifices have already been made.  We need to get out of this problem together", he said.                     

These economic measures are in addition to the measures that were already previously announced by the government. Last week, the government announced that there would be €700 million in tax deferrals. It had also announced that families where both parents work in the private sector but where one has to stay home to look after the children will be given €800 in a form of special leave while schools remain closed. This will cost €19 million over two months and affect 12,000 families. The same amount will be given to disabled persons who are employed in the private sector and registered with JobsPlus who, choose to stay home due to their vulnerability because of health concerns. This will cost €2 million. These measures will remain in place.

It had also previously announced that From 9 March, anyone who was and will be made redundant as a result of the Covid-19 situation are to be given a benefit of €800 (which includes the unemployment benefit and a special COVID-19 benefit). People can apply for this with the Social Security department. This applies for both employees and the self-employed.

Prime Minister Abela said that this package will result in a strong cash injection in the country. "I am convinced that this is the best investment we could have made in our country."

Asked about pensions he said that pensions will not be affected by the current situation, adding that the government will keep working to increase pensions and improve their quality of life.

Asked about the country's national debt levels, Abela said that they may exceed 50%, and that he was likely to be the Prime Minister to have to announce a deficit in next year's Budget.  He noted however that he prefers this course, than having to compromise on the public's health.

Asked whether civil servants including himself, earning over €40,000 a year are willing to give up part of their salary, he said that he is ready to offer up a month's salary.

Asked how the government will fund the measures announced, whether it will be through a bank loan or otherwise, Abela said that everything is costed and the finances are there. "There is a financial plan for us not to run out of breath quickly," he said, adding that the economic impact could last for months "and so we are planning for mechanisms to keep strengthening the war chest. The government does not have infinite resources, but we will continue being aggressive in our incentives to preserve trust in the sector."

Regarding when the government will re-open the airport, it does not only depend on the situation in Malta but also abroad. He says that he envisages local businesses opening before the airport does. The decision would need to be taken based on a number of situations, but stressed that it cannot take too long.

  • don't miss