Salaries and productivity on a collision course, PD warns

The recent survey published by the Malta Employers Association is an eye-opener, according to Partit Demokratiku, since it determined that the increase in salaries of highly skilled and senior management personnel in the private sector is not linked to a rise in productivity. This, the party said, is leading to wage inflation and a loss of competitiveness.

The analysis, the part observed yesterday, tallies with what has occurred in government’s public sector.

“In fact,” the party said, “it is government that has instigated this ripple effect that has hit the private sector lately. The government has increased its current expenditure by employing hundreds of persons of trust with inflated salaries when their need is highly questionable.”

This, according to PD, has depleted Malta’s limited human resource and is creating a further need to seek the employment of foreign professionals.

“Fingers point to bad governance as this administration has opened its doors wide open to a system that favours patronage by employing hundreds of persons of trust in top positions. This has created a snowball effect leading to a market shortage and skills mismatch, when Malta has an educational system that falls short in providing the much need technical and managerial work force,” said deputy leader Timothy Alden.

PD stressed it is not in favour of curtailing wage growth, but that “it is high time that those enterprises which are struggling to make sufficient profit due to wage costs, look inwardly and innovate their business to make better use of scarce labour and to ask government to downsize its work force.”

On the other hand, PD notes that the low-wage income bracket has remained stagnant based on the Retail Price Index, which measures inflation.

“This is alarming as the RPI is not frequently calibrated and this means that low income workers are, in fact, suffering from a major reduction in real income despite the much praised surplus.

“It is a known fact that the RPI underestimates the impact of long term disproportionate growth in rents,” stated PD’s PRO Marcus Lauri.

PD insisted that Malta’s wealth is not being evenly distributed and said it expects that in the next budget government positively addresses this socio-economic issue.