David Darmanin At a public debate on the cost of living organised yesterday morning by left-wing movement Żminijietna, GWU secretary-general Tony Zarb, UĦM secretary-general Gejtu Vella and industrial relations expert Saviour Rizzo warned of dire consequences should government opt out of applying the cost of living adjustment (COLA) mechanism in the next budget.
The COLA increase this year is expected to amount €5 to €7 weekly, putting great pressure on a large number of employers.
Laying blame on the government decision to spike utility tariffs “on the eve of an economic crisis” for the sudden inflationary rise in Malta, Zarb said: “The finance minister did not deny that there may be another rise in water and electricity tariffs. This may very well be yet another surprise which comes in parallel to the upcoming 2010 budget.”
Defending the application of the COLA mechanism, Zarb said that the finance minister himself was in a recent interview quoted as saying that this mechanism helps competitiveness and leads to harmony in the industry.
“Had there not been this mechanism, we would not be able to negotiate with each and every employer to issue a cost of living adjustment in the salaries of its employees.”
Hitting out at excessive government expenditure leading to inflation, Zarb said that the Shipyards employees should not be blamed for the losses incurred in the Fairmount project, as this was an issue of “sheer mismanagement”.
“Instead of pointing our fingers at workers, we should see how a person appointed to head the project got paid and left the island without doing his job,” he said. “In the next few days, we will be disclosing proof that much more than €37 million were lost in this project – the figure amounts closer to €80 million.”
On government expenditure, UĦM’s Gejtu Vella said that as much as social welfare is often perceived as a free service, it should be viewed as one that comes in a package after we pay our taxes.
“We should be asking ourselves the question of whether we are happy with the way our taxes are being administered,” he said. “The office of the Attorney General should come down like a ton of bricks on whoever abuses of public funds, instead of allowing investigations to remain pending for years.”
Vella hit out at wastage of resources at Mater Dei hospital, pointing out that “leaving the lights on in full daylight on a sunny day counts as unacceptable squandering of public funds.”
With regard to COLA, Vella said that the agreement with government is loud and clear. “Whatever happens in the market, there will always be a contingency for employees – this is what has been agreed on,” he said.
“Last year, COLA was higher than what is being proposed for this year, when one factors in the additional Lm1 given in advance. I am worried about employers saying that employees will have to be sacked if COLA comes into force this year. This is a sort of threat. Workers can’t always be the ones suffering whenever there is a crisis.”
Meanwhile, university lecturer and industrial relations expert Saviour Rizzo said that cost of living is very much linked to purchasing power, which is ultimately tied to the workers’ lifestyle.
“According to statistics, the purchasing power of the Maltese stands at 67% of the European average. This means that for every 100 products purchased by an average European, the Maltese can only afford 67. It is ultimately within the responsibility of unions not to allow purchasing power to go down.”
Rizzo said that with the exception of 2001, rise in salaries never exceeded the rate of productivity.
“Company profits did not go down that much anyway,” he continued. “What has gone down is the dividend share received by company owners at the end of the year, that yes, but profit – not that much. Meanwhile, performance related pay, profit sharing and such schemes are practically unheard of in Malta.”
While discussing methods of curbing inflation, Rizzo mentioned that, due to the small size of the Maltese market, market liberalisation may not be as effective for competitiveness as it has been in other markets.
“For instance, how can one expect the two big banks to apply competitive charges when what they offer is practically the same? The role of government is in this case very important. Deregulation is in crisis. It was the greed of extreme capitalism that got us to where we are now,” he said.
Agreeing, Gejtu Vella said that in theory, “liberalisation should bring more competition to the market, but Malta is far too small. If I had to buy medicines privately, I would have to pay through the nose. Instead of wasting time discussing the prices of medicines, why doesn’t government make an arrangement with other countries to order our national supply through a larger country?”
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