Employers describe Budget 2018 as one of ‘fiscal manoeuvrability’

Budget 2018 is a reflection of a growing economy and a fiscal situation which is allowing government more manoeuvrability to introduce a range of targeted measures to seek a better balance between economic social and environmental objectives, the Malta Employers Association said in a statement.

According to the MEA, the increase in the number of persons in employment, the reduction in public debt to  57% of GDP, real GDP growth in excess of 5%, record low unemployment and inflation below 1.5% were all positive macro-economic indicators which enabled government to introduce a number of measures to benefit various sectors of the economy.

“This is occurring against a background of global economic growth, but with the projected growth in Malta, at 5.6%, expected to be in excess of global growth and ahead of economic growth in the Eurozone, crawling at 1.8%,” the MEA noted.

On the additional one day leave to employees, the MEA said this should give sufficient breathing space for the social partners to address the strain on competitiveness which a reduction in productive days entail, and design compensatory measures.

The MEA welcomed the increase in the VAT thresholds from €14,000 to €20,000 for SMEs, together with the increase of the Microinvest funds. It also welcomed the measure whereby employers can offset outstanding balances with amounts owed by government to improve liquidity.

The MEA welcomed the numerous benefits aimed at improving the situation of pensioners, and addressing the property and rental markets without destabilising such markets.

“The budget also looks ahead of the one year term of the budget and addresses longer term issues such as transport, the gas pipeline and the setting up of a committee to analyse the impact of Brexit on the Maltese economy,” it said.

The MEA however criticised the budget for the lack of new sectors of investment, “although the idea of setting Malta as a centre of excellence for blockchain carries considerable potential”.

The MEA criticised the budget speech as being “a bit hazy about Air Malta’s future”.

The association said that the general thrust of the current economic growth seemed to stem from an increase in the number of persons in employment, which is in itself the source of demographic, social and environmental challenges.

“In fact, one of the main issues facing employers in Malta is the shortage of manpower. In the near future, we need to focus on how economic growth can be generated through a stronger emphasis on increased output per person by shifting to higher value added activities through new economic sectors and also by upgrading existing ones.

“This will be conducive to a growth which is more sustainable. Government should also push for more control of its own spending to maintain a healthy fiscal balance in the years to come which in turn, will allow for even further fiscal space for sound economic management.”