Chamber: Government announced measures will not stop job losses

The Malta Chamber of Commerce, Enterprise and Industry said in a statement it regards the measures announced earlier by the Prime Minister as very disappointing.

They certainly fall short of the responsible calls made by the Chamber to government in a repeated fashion over the past two weeks. The prime minister declared that these measures were intended to protect jobs and ensure that employees suffer no reductions in their salaries. In reality, the Chamber can responsibly declare that the employees will be the biggest loser from the support package announced. The Chamber is in a central position to make this claim because it is in touch with the needs and pains of businesses during these challenging times.

The subsidies on salaries was the priority measure for the Chamber on behalf of members. The Chamber is convinced that there are valid socioeconomic justifications for government to extend temporary support to ensure that affected companies maintain employees on their books while business is at a standstill. Such support would serve to avoid largescale redundancies which would inflict social hardship on affected families and increased recurrent expenditure for government by way of unemployment benefits.

At the same time, such assistance would ensure Maltese companies’ strong competitiveness position upon resumption of business. To this end, the Chamber had suggested that in cases of companies suffering in excess of 25% loss in turnover, government should pay 50% of the employee’s salary up to a maximum of the average salary with the employer covering a further 25%. The announcement made earlier is equivalent to a mere subsidy of 20% of the employee’s salary at the level of the minimum wage.

Consequently, the Chamber is convinced that the announced measures will make it impossible for employers to avoid significant redundancies. In a scenario of looming mass layoffs, even the deferment of payment of payroll taxes and VAT, which accounts for the bulk of the package, becomes a redundant measure. This amount will not be paid after recovery but lost forever if there are significant job losses and declines in local sales.

The Chamber is also disappointed to note that no reference was made to the fact that government will be implementing measures to reduce public sector spending.

The Chamber, on the other hand, noted that almost one-half of government’s €1.8bn stimulus package is composed of loan guarantees for businesses which may be leveraged to €4.5bn via the banking system. Indeed, government-guaranteed loans were an integral part of the Chamber’s proposals for business. Nevertheless, the Chamber fears that their potential effectiveness has been placed into serious doubt by the insufficiency of the wage subsidy measure.

On a more positive note, the Chamber noted government’s longawaited announcement to partially offset employers’ cost for quarantine leave at a rate almost equivalent to the minimum wage (or €350 per employee). Even this, however, will not fully compensate employers for abuse by those employees who intentionally self-inflict quarantine.

The Chamber also noted a comment made during the press conference by the Minister for the Economy to the effect that government may announce further incentives in the coming days, however, it fears that any further announcements may now be too late to avoid any undesirable consequences on the economy.