MEA’s proposals to increase Malta’s competitiveness

The Malta Employers’ Association presented several proposals in a bid to increase Malta’s competitiveness. Among its proposals, the association urges government to reduce its expenditure by decreasing the number of public service employees from 33% to 27% over a period of five years.

Within a span of two months the Malta Employers’ Association (MEA) issued two documents in which it made its proposals to increase Malta’s competitiveness. The first document, entitled [National Budget Proposals 2006](http://www.maltaemployers.com/Portals/22/Budget Proposals 2006.PDF), was released on 27 July and comprises 15 recommendations for the state budget 2006. The second document - [part1](http://www.maltaemployers.com/Portals/22/For a better quality of life & the NRP - part 1.PDF), [part2](http://www.maltaemployers.com/Portals/22/For a better quality of life & the NRP - part 2.PDF), issued on the 27 September, is a wide-ranging position paper detailing the association’s reactions to the government’s pre-budget document and the consultation document of the National Reform Programme.

Out of the areas of improvement required to reach the Lisbon objectives, MEA argues that competitiveness is the most pressing one. The Maltese economy is struggling to hold its ground in difficult global economic conditions and its economic growth lags behind many EU countries. MEA maintains that in its effort to tackle the fiscal deficit, the government may be hindering economic growth.

One of the main proposals of MEA is the reduction of public sector employees from 33% to 27% of those gainfully employed over the next five years in order to reduce government expenditure. MEA is in favour of the privatisation process as a way of increasing the profitability of organisations. However, it warns government to ensure that such process does not disrupt the smooth operation of the private sector. In particular, it recommends that government should strive to reduce expenses to industry by making the Maltese ports more efficient and their operations less costly.

In line with other employers’ organisations, MEA recommends the containment of wages and states that the existing statutory annual cost of living increase should only be given to those on a minimum wage, while all the other wage increases should reflect productivity.

MEA also stresses that when trying to identify investment targets, government should clearly quantify the net benefits and costs of such investments. In its bid to boost the tourism sector, MEA is of the opinion that among others, government ought to consider permitting low cost airlines to fly to Malta while at same time continue upgrading Malta’s heritage sites.

According to MEA, curtailing abuses of the unemployment benefits should be high on government’s agenda. Towards this end, it recommends that retraining through which the unemployed would acquire new skills, should be compulsory. Government should also consider reducing unemployment benefits in order to increase the incentive for the unemployed to seek work.

MEA is concerned about the current matching of skills and employment opportunities, and proposes a reform in the grants given to students in order to incentivise them to follow courses that are in demand. It believes that the apprenticeship schemes should become more focused on areas where there are skill shortages. Government should also invest in better career guidance services to reduce the mismatch between labour supply and demand.

MEA urges government to update and speed up the processing of employment applications from foreigners and suggests that government should consider granting temporary work permits to refugees who can contribute to the Maltese economy. In line with other social partners, MEA also recommends the revision of the national insurance contribution system of part-timers which discourages many persons from working in the formal economy.

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