BUDGET 2008 | Tuesday, 16 October 2007

Budget 2008 provides a “sense of continuity” – FOI, COC, MEA, MHRA

Charlot Zahra

In a joint press conference yesterday evening, four employers’ organisations described the 2008 Budget as one “which provides a sense of continuity for the country to progress in its convergence to EU levels of development in the medium term”.
The organisations – the Malta Federation of Industry (FOI), the Malta Chamber of Commerce and Enterprise (CoCE), the Malta Employers’ Association (MEA) and the Malta Hotels and Restaurants’ Association (MHRA) - noted with satisfaction the ongoing recovery in economic activity over the past year, based on business investment.
They also reiterated the need to continue focusing on the imperatives of increasing the resources available in the economy and their productivity as the only viable means to secure continued economic growth.
The four organisations expressed their satisfaction that this year’s deficit is at 2.1 per cent of Gross Domestic Product; and next year this should be reduced to 1.2 per cent in 2008.
“It is of paramount importance that government continues to maintain the trend of decreasing the fiscal deficit and indeed aiming at a surplus within two years. All this is very important when one puts it in the perspective of Malta’s adoption of the euro as national currency and enhancing the efficiency and effectiveness of resource use in our country,” said MHRA President Josef Formosa-Gauci, who addressed the press on behalf of the four employers’ organisations.
They said they were also encouraged by the fact that the above mentioned consolidation in public finances has allowed government to once again – as they had suggested – to alleviate personal income taxation through adjustments in the income tax brackets which the bodies consider as a measure which should lead to further economic growth.
However, the organisations expressed their disappointment that “government has once again opted to ignore their representations within the MCESD to honour the COLA agreement between the social partners by awarding an additional Lm1 in advance of next year.
“This is an addition to the 50c being awarded by the current mechanism of determining wage increases is linked to RPI, and has no correlation to productivity gains.
“The bodies believe that all increases should be linked to productivity and not to the COLA mechanism which has a negative effect on unit labour costs and competitiveness and may jeopardise long-term employment in those sectors which are still undergoing restructuring and facing stiff competition from abroad,” Formosa-Gauci insisted.
The four employers’ bodies reiterated that the policy of granting cost of living increases across the board should be reviewed, and appeal to all involved in the decision making process to facilitate all measures leading to enhancements in labour and capital productivity.
In line with their recommendations to government, they welcomed the budget measures announced, especially the adjustment in the tax bands, which will result in increasing disposable income and consequentially should reduce pressure on wage bargaining.
On tourism, the CoCE, FOI, MEA and MHRA were also encouraged by the announced increase in the MTA’s budget to Lm10.5 million which include incentives for low-cost operations to fund the new routes as well as an increase in marketing funds.
Indeed, they are still of the opinion that the tourism industry deserves continuous attention in terms of ascertaining the quality of the product on offer. “In this regard, the allocation of Lm5 million for improvements to the tourism product is very welcome,” Formosa-Gauci said.

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