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Julian Manduca
In his first speech in his capacity as finance minister, Prime Minister Lawrence Gonzi told his audience Tuesday that his “Government is committed to bring back public finances in order over the medium term”. Without elaborating on what that might involve or waiting for a reaction as to whether the medium term may be too late, the Prime Minister’s words hung in mid-air.
The new Prime Minister was addressing a conference organised by the Federation of Industry Tuesday on ‘Repositioning our SMEs in the Global Market’.
In his speech, Gonzi outlined government’s commitment to assist SMEs in the global environment and said he would “personally be launching an initiative geared towards the consolidation of regulatory processes to make it easier for SMEs to manage their obligations at a reduced cost.”
The new Prime Minister did, however, emphasise the importance of working with the social partners, and, commenting on FOI President Anton Borg’s speech, said that it was important to recognise that the way ahead must involve all the social partners.
Gonzi told his audience that he did not agree with everything said in Borg’s speech and intimated that he would like the opportunity to discuss some of the issues raised in the FOI president’s speech.
Borg had reminded his audience of the warnings the Federation have been making for years about the unsustainability of government finances, our social security and health system, and an over-employed public sector. He said the government had not listened and only now when the problems had been exacerbated, have the problems been recognised.
Borg also complained of added burdens on business and accused freshly-formed regulatory authorities of increasing business costs. He mentioned the new fees related to the Data Protection registration – which could run into thousands of liri; the health ministry imposed fees on food manufacturers for stamping export licences; and trading operations licences previously applicable to the retail sector that have been extended to the manufacturing industry.
Borg warned against environment related taxes and said “Malta had now reached the European average ratio to GDP that is pushed in the region of 42 percent by such high taxation countries as those in Scandinavia; France and Germany.”
Indeed the thrust of the entire conference pointed towards lower taxes for business and three British guests spoke about the Thatcher era and how the former British premier had pulled the country out of economic doldrums.
Sir John Egan, the President of the Confederation of British Industry, pointed to lower taxes, a more flexible labour market and creating an atmosphere where it would be easy to set up business, as the ways forward. Egan also pointed to possible business opportunities in Libya, and the example of the Italian economy based almost entirely on SMEs as leads to follow.
This was music to the ears of the conference delegates, barring a few. Certainly the GWU’s union Secretary General was not impressed.
While the FOI has made consistent claims to assist industry – not through subsidies – but by creating the right conditions for enterprise including lower taxation and a more flexible workforce, the GWU has shown resilience to change and Tony Zarb said a clear “no thank you,” to Thatcherite policies.
In what was probably one of the most controversial statements of the day, Zarb also let his audience know that when it came to cost cutting, those costs that should be cut should not include wages, but should include the costs related to the villas of managers and those that run business enterprises.
Tony Zarb also reminded his audience of the General Workers Union’s contribution to improve productivity and thereby competitiveness and called for more importance to be given to training the workforce. But he warned against the temptation to become more competitive through lower wages. “The GWU believes that basing our competitiveness on cheap labour can only bring limited results for a short period of time.”
One union which does seem to be showing the way is the UHM and Bruce Warman, one of the invited speakers, representing the Confederation of British Industry, said that listening to UHM’s Gejtu Vella was similar to listening to what the forward looking union bosses are saying in the UK.
Vella said the UHM “is prepared to enter into a contract at MCESD level on an agreed percentage wage increase which should also include the cost of living adjustment for the next two years.”
Vella added: “wage increases for the third year should be tied to sectoral productivity rates,” and suggested: “the yard stick to establish the sectoral productivity rates should be agreed upon between the social partners in the next two years.”
Vella said however that: “on its part Government will support these measures by undertaking a firm commitment not to increase both direct and indirect taxation over the coming three years thus continuing to safeguard workers’ real disposable income as well as keeping the cost of business down.”
ETC’s CEO, John P Camilleri spoke about narrowing the labour market mismatch and said that a lack of the required skills in the work force was leading to a slow down of business operations. Camilleri said that in its latest survey the ETC learned that a full 34 percent of employers that were facing skill shortages did not solve their problems, while the remaining 66 percent either opted for longer recruitment procedures; an internal redistribution of work; the recruitment of foreigners or outsourced their work. Camilleri told his audience what the ETC was doing to solve the problem, but called for greater communication between all players in the labour market and appealed to employers to make better use of ETC schemes and programmes. Camilleri called for more investment in human capital; making our workplaces more gender friendly; using the full spectrum of our labour force and consider training as an investment and not as a cost. He also called for a war on illiteracy – sixteen percent of job seekers declare themselves as illiterate.
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