Social partners happy with 2014 budget proposals

A number of initiatives to get people back to work in Malta were included in the country’s 2014 budget, presented in parliament on 4 November 2013. This is the first budget presented by the Labour Party since its general election victory in March 2013, and it includes many of the promises made in the party’s election manifesto. These include proposals to help women return to work, and to help make the transition from unemployment to work smoother for long-term unemployed people.

Background

On 5 November 2013, Malta’s budget for 2014 was presented to the Parliament of Malta. It was the first budget presented by the Maltese Labour Party (Partit Laburista) after its victory in the general election held in March 2013. The budget included a number of employment and labour market measures which by and large were welcomed by all the social partners.

Employers’ reactions

One of the measures was targeted at people who have been out of a job for two years or more. Currently those out of work are entitled to benefits for a maximum of three years. The new initiative guarantees that long-term unemployed people will continue to receive some of the benefits for a certain period after they find a job.

The President of the Malta Employers’ Association (MEA), Joe Farrugia, opposed the measure. He said once a person had found a job, they should no longer be entitled to any unemployment benefits.

However, he was happy with the way the country’s debt problem had been tackled in the budget and by the government’s efforts to keep the deficit under control. The MEA also welcomed measures to increase levels of participation in the labour market through incentives such as a free childcare.

The President of the Malta Chamber of Commerce, Enterprise and Industry, David Curmi, welcomed the introduction of a voluntary ‘third pillar’ pension to supplement the existing pension system. He called for a review of the cost of living allowance, saying there was a need for ‘a system which is more sustainable’.

Paul Abela, President of Malta’s Chamber for Small and Medium Enterprises (GRTU), praised the government’s budget. He said it would give a stronger voice to the Malta Council for Economic and Social Development (MCESD), Malta’s national tripartite institution for social dialogue.

Union reaction

The General Workers’ Union (GWU) General Secretary, Tony Zarb, defined the budget as built on social justice, aimed at boosting economic growth and fiscal stability while fighting precarious work, waste and abuse. He said that some of the measures announced in the budget, such as the reduction in water and electricity tariffs, as well as investment in education, health and the environment, have been included in the proposals submitted by the GWU in its pre-budget consultation. He predicted that the measures to combat precarious work would be so effective that this type of work would be completely eliminated.

The General Secretary of the United Workers’ Union (UĦM), Josef Vella, expressed his satisfaction at the inclusion of many active labour market policy measures. He said the UHM had proposed many of these in its Jobs Plus document which proposed a number of strategies to make active labour market policies more effective and provide more ‘family-friendly’ initiatives.

These included free childcare provision and a one-off payment of €900 to those who make the transition from ‘inactivity’ to being active in the labour market. He also praised the ‘making work pay’ measure that gives married women over the age of 40 who have not worked for five years a financial incentive to return to the labour market. Their tax will be calculated independently of their husbands’ for a maximum of five years, and this should translate into an annual tax saving of about €800.

The President of the independent union confederation Forum Unions Maltin (FORUM), Paul Pace, praised the measures to create jobs, reduce tax, expand the education sector and tackle tax evasion. FORUM had called for these in its pre-budget proposals. However, he expressed his disappointment that the problem of a shortage of beds at the national hospital, which is hampering the work of nurses, had not been addressed.

The Malta Union of Teachers (MUT), while welcoming the introduction of sabbatical leave for teachers, has called for further consultation about the operation of the new scheme. It also felt the success and effectiveness of the proposed free childcare centres would only be possible with substantial investment in professional staff and improved working conditions.

Commentary

The measures announced in the budget were included in Partit Laburista’s manifesto which helped it win the March 2013 election by a large majority. They were introduced in the first budget, rather than staggered over its five-year term as many political commentators had expected. Perhaps the Labour Party, after almost 25 years in opposition, was keen to affirm its social democratic credentials to gain a higher level of legitimacy.

Saviour Rizzo, Centre for Labour Studies

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