Employers want population strategy to cool down overheating economy

Malta’s employers have called for a Budget that will cool down an overheating economy that could be posing a threat to sustainability, well-being and distribution.

The Malta Employers Association said “some population segments may actually end up worse off in spite of a growing economy” and called for a mitigation of the negative impact of growth.

The MEA said that rising demand for labour was being matched by imported human resources, now exceeding 30% of the total workforce, possibly up to 50% within the private sector.

It said government should consider setting up a task force to look into the population situation and recommend short and longer-term demographic strategies for Malta. “This is a fundamental proposal as there are growing signs that, for example, the infrastructure is not coping with more people living on the island. Power cuts, waste generation, traffic issues, drainage overflow are just a few symptoms of this situation.”

The MEA said Malta’s public sector workforce should be rationalised following a skills audit, to channel workers towards health, and reduce them from wasteful practices. “In Gozo, the labour resource has been depleted due to unproductive employment in the public sector. The Community Work Scheme should be discontinued and employees channelled into productive work in the private sector.”

The MEA said Malta was suffering from a ‘leaking bucket’ of employees leaving the island and replaced by foreign labour, while industry was experiencing a chronic shortage of people holding technical qualifications and graduates in STEM subjects.

It said the addition of public holidays falling on weekends had resulted in an average reduction of 650,000 man days per annum – the equivalence of more than 3,000 full time employee. “Given the shortage of manpower, these have to be imported. This reduction in man days would have been better utilised if they were channelled into family-friendly measures,” the MEA said. =

The lobby also reiterated its call for an immediate fiscal intervention that could increase the supply of labour hours by incentivising the elderly to remain in the labour force on a voluntary basis. “Currently there is a waste of labour as thousands of persons reach retirement age stop working because they forfeit their pension, or because of the tax disincentive.”

The MEA said persons who reach the age of 61 and have sufficient social security contributions can still be entitled to 50% of their pension if they continue working till 65. Persons who work beyond the retirement age will have their pensions tax exempt.

“Although prima facie this appears to be a cost to government, in reality the added output, and the tax revenue generated, will compensate for the tax deductions,” the MEA said. “Given that Malta has an ageing labour force, these measures are necessary and will reduce dependency on foreign labour.”

“Such measures will also provide options for employees to manage their retirement and also reduce the risks of poverty for this age group. The legislation on zero hours needs to be re-visited to allow more flexibility to pensioners who may prefer to be engaged on a zero-hour basis.”

The MEA also said the projected increase of €13 per week in COLA is unprecedented and will severely impact some businesses. “For 2024, it is recommended further adjust tax bands in order that €3 of the full COLA will be compensated through tax deductions. Low income earners who do not reach the taxable threshold will be awarded a cash handout. This handout will be incorporated in the basic wage in 2025.”

The MEA also reiterated its appeal to remove MPs from positions of trust, or any appointment on government entities. It called for public disclosure of contracts, remuneration conditions, including bonuses and perks, of persons occupying positions of trust; proper parameters that regulate direct orders, saying that the rules of public procurement were being flagrantly ignored; and for state funding for political parties.