Busuttil: pandering to populism?

In the labour market women are often discriminated against at hiring stage. Some employers prefer employing males simply because these do not incur them any maternity leave costs and the inconvenience of having to occupy someone else as a temporary replacement.

The new employment policy proposes that government should pay for the entire period of maternity leave, thus relieving employers of the extra expense whenever a women gives birth. But employers would still finance this scheme through higher NI contributions. This in itself is a disincentive for employers who only employ males as these will end up paying more NI without reaping any benefit. 

On the other hand employers who hire women will be more than compensated by saving on maternity leave.

In this way, a state-financed maternity leave system socialises a risk factor, which contributes to low female employment by creating a fund to finance maternity leave.

The PN leader has gone on record saying that his party is opposed to any increase in the employers’ national insurance contributions.

“Retail trade is down and business is already bad as it is, let alone if you increase NI contributions for employers, especially the self employed and small businesses,” he said.

While the government has yet to explain how this measure will be implemented, Busuttil knee jerk opposition smacks of conservative populism, the kind which exploits the myopia of sectors of the local business class, which is more inclined to prioritise short term, gain over long term sustainability. 

This is reminiscent to Labour’s appeal to the same instincts in its energy policies. 

A recent advert inviting the public to “go ahead” and switch on the light comes to mind.

In some ways Busuttil may see this as an opportunity to restore his party’s credentials among the business class but in so doing he risks further alienating the party’s dormant social democratic wing. Displaced by the PL from the right on so many other issues, Busuttil may be rushing in to opposing a sensible middle of the road policy.

For in reality this particular measure is a positive trade-off for employers who will pay of bit more in NI for each worker they employ while paying zilch for maternity leave.

The main concern I have on this scheme is one of sustainability. That is why it is imperative that the measure is self-financed through an increase in the employers’ NI contributions. It is also impetrative that NI contributions are collected in a reasonable time.

Coupled with free childcare the socialisation of maternity leave strengthens the government’s social democratic credentials, which are lacking in so many other areas, which are dominated by a neo liberal approach. It also addresses one key problem affecting the country’s development: the low participation of women.

What I find objectionable in the new employment policy is the idea of a top up for minimum wage earners. This proposal may well fall under the “privatise profits and socialise costs” category. For while the top up amount to the socialisation of labour costs, it allows employers to continue saving by offering low wages. A top-up would mean that taxpayers will have to foot the bill for employers who are unwilling to pay for a decent wage for their employees.

From a social justice perspective, a ‘top-up’ is a poor substitute for an increase in the hourly minimum wage. Moreover it is not clear whether the top up will be a temporary adjustment or a permanent feature of the welfare state. Neither is it clear whether the top up will be restricted to full timers (which number around 2,000) only or will also be given to part timers (who number around 9,000). 

Moreover as long as the minimum wage is not raised, the top up will remain conditional on the willingness of tax payers to pay for it. Surely the proposed policy fits in with the government’s ideology; that of improving living standards in the absence of any redistribution of income and preferably through market mechanisms. It remains to be seen how long this government will be able to go ahead without making any hard fiscal choices.