Budget 2021: Fostering social and sustainable growth

“Equitable growth is not only more sustainable, as it leads to less adjustment costs, but it also realises further the inherent potential of each citizen.”

Never has there been a budget which places greater emphasis on the importance of the social fabric and its constituting elements, including at this important juncture: the health, wealth, employability and education levels of the family unit and the workforce.

This Government understands that the current economic reality requires addressing the social needs of our people first and thereby continuing to place the individual at the centre of policy making. This allows for a more equitable distribution of economic benefits. Equitable growth is not only more sustainable, as it leads to less adjustment costs, but it also realises further the inherent potential of each citizen.

The aim for the 2021 budget in this regard is that of strengthening the social foundations of our economy, which is a pre-requisite for any resilient small state, for an easier and potentially faster route to economic growth.

This strategic direction has been especially important in dealing and slowly emerging from the blow dealt by the COVID19 pandemic, as evidenced by four stimulus packages which were the preamble to this October budget.

Since March, the Government has made it possible for 100,000 of 260,000 jobs in our labour market to be saved. The repercussions of the vast unemployment levels without this direct and timely intervention would have made it very difficult for any economy to look ahead at any sectoral growth, let alone a transition to a more diversified economy based on green and digital sectors.

The extension, to March 2021 at minimum, of the Covid wage supplement for those businesses affected by the pandemic, together with another year of tax refunds, an additional day of vacation leave and the extension of the In Work benefit are all testaments to this strategic direction. When this peace of mind and security of income is coupled with other measures, such as the re-issuing of the €100 vouchers to every person above 16 years of age, workers can make sustained consumption and investment decisions, in support for a healthy economic demandside.

Sustaining incomes is nonetheless only one of the key elements of this budget.

The Government recognises that the economy requires also improved and more equitable access to the labour market and that the workforce delivers as effectively and efficiently as possible for the fulfilment of productive value added. Hereby the Budget for 2021, shall be introducing additional measures to incentivise employers to assist their employees in achieving a work-life balance and to support male participation in family life. This effects the increase of labour force participation rates of women, which over the past five years has been a catalyst to growth.

The Government shall also pursue investments in the skills of the workforce such that the investment decisions being made today in new economic areas are sustainable also from this perceptive and remain viable in the long run.

Lastly, we are obliged to put this budget into context and come to realise that this budget, the best budget by far, was delivered during a global pandemic and with the Government running a sustainable deficit as a result of the large amount of spend which continues to be channelled towards the health of the population and the stimulating of the economy.

This budget is the result of continuous and effective discussions with social partners, meticulous planning, and the fulfilment of the essential principle of economics of making the best use of limited resources. Given such financial restrictions, Government has once again refrained from introducing new taxes and has opted instead for the further generation of economic activity and the boosting of consumer confidence.