Wage inflation, social housing, pensions, and positions of trust on MEA’s agenda as Budget approaches Other proposals

As the national Budget approaches, wage inflation, social housing, pensions, and positions of trust – among many other subjects – are on the Malta Employers’ Association’s agenda. The Malta Independent met MEA director-general JOSEPH

FARRUGIA and discussed the association’s proposals to the government for inclusion within the upcoming Budget.

Wage inflation

One of the prime points of emphasis that the MEA has made in its Budget proposals is once again based on wage inflation. Farrugia explains that, in principle, the MEA is never against an increase in wages. However, he says, these increases correlate with an increase in productivity. For many companies, which aren’t in real estate or property, raising salaries because of cost-push factors – such as rent – is resulting in wage inflation that is not being reflected in productivity.

Therefore one of the things mentioned in the document is that labour costs should be linked to productivity and that employers cannot be expected to compensate for inflation resulting from a property boom.

Positions of trust

Another notable MEA proposal focuses on governance. The proposal states that when people are employed in positions of trust, they should have their work conditions published in the public domain. Farrugia explains that this is to make sure that everything is above board and that transparency is maintained.

The proposal also reads that members of parliament should not be entrusted with positions of trust, that key positions in authorities should be approved by a two-thirds majority in parliament, and that all persons who do not go through a recruitment process should go through a periodic audit by an independent board to justify their position.

Social housing

The MEA also places a particular focus on the matter of social housing, saying that, first of all, a thorough exercise to determine whether the current stock of social housing is being used for its intended purpose needs to be carried out. The document says that it is wellknown that in the past social housing was allocated more on the basis of political favours than genuine entitlement.

Farrugia notes many other problems with the current situation; perpetual entitlement, sometimes luxurious properties, and even properties which were sold for much less than they should have been. The MEA proposes that social housing units be designed to provide minimum accommodation to encourage people to move out if they have the opportunity and once they are back on their feet.

Pensions

Another interesting proposal that Farrugia emphasises relates to pensions and, in turn, to incentivising employees to stay in employment longer. It is being proposed that employees who have the option to retire at the age of 61, and whose pensionable age is higher, will be given half the pension if they choose to work the period beyond the age of 61 and the retirement age.

Farrugia said that although this will incur a cost, these costs will be neutralised as this will result in a higher employee retention rate and, hence, higher NI and tax revenue collection. Considering today’s labour shortage , Farrugia explains, keeping older employees in employment reduces the pressure of having to bring in more and more workers from abroad. “Even if just 2,000 people decide to continue working, that means 2,000 less foreign workers having to look for accommodation, for example,” Farrugia adds.

Collective bargaining in the private sector

There are clear cases of the government and unions negotiating conditions in the public sector which then have enormous repercussions on the private sector, Farrugia says. A classic case in point involves independent schools, which have had to drastically raise school fees to compete with improved state school salaries.

The MEA says that when collective bargaining takes place, the private sector should also be at the negotiating table, so that it can at least give its views on what the repercussions could be. A raft of other proposals relating to various subjects can be found in the MEA’s document . Emphasis is placed on education, whereby migrants and the unemployed should be asked to attend mandatory numeracy and literacy courses. It is also proposed that more effort should be made to attract students to participate in apprenticeship schemes.

Another proposal is to develop further the concept of the ‘blue economy’, urging the government to allocate more funds to this sector and even take advantage of EU incentives. In the transport sector, meanwhile, the MEA proposes further incentives for the take-up of electric cars and a longterm transport strategy in Malta.

More also needs to be done to facilitate the employment of third-country nationals. Farrugia cites the example of one employer who employed a driver from the EU (not a third-country national), only to learn that for him to be given a licence in Malta, he would have to wait six months. It is things like these that, with a bit of thought, can be easily arranged, Farrugia says.

Child care facilities should also be extended to cover those workers who, for instance, work night shifts, Farrugia says. The matter of direct orders is also touched upon within the proposal document, with the MEA saying that a “worrying practice” of the public sector bypassing the tendering process by granting direct orders is taking place, and that this is creating a sense of mistrust towards the public sector and an un-even playing field between businesses. The MEA is calling on the government to commit itself to adhering to the tendering process in its procurement.

Finally, Farrugia emphasises the importance of energy. Malta’s commercial rates, contrary to other countries, are different to its domestic rates for energy. The MEA proposes that the rates are streamlined over a five-year period so as to have a uniform rate of energy. They also calls for night tariffs for businesses to be introduced.