Employers’ association dubs 2012 a ‘business as usual’ budget

The Malta Employers Association welcomed the budget's spread of incentives to various sectors but said it lacked any substantial initiatives to stimulate economic activity.

On the positive side, the MEA said Malta had managed to sustain a level of economic growth, at 2.6% of GDP which is higher than the EU and Eurozone average. It also noted the moderate success in the tourism industry, and an expansion in financial services which have sustained low levels of unemployment.

"The Maltese economy has shown clear signs of resilience in the face of global challenges but the warnings given by the EU make the control of the fiscal deficit a priority which the government cannot ignore, and which seriously handicaps room for fiscal maneuverability. The budget is a delicate balancing act between the imperative of fiscal consolidation and a tweaking of targeted expenditure and revenues aimed at different segments of industry and the population," the MEA said.

But it also said the budget had not proposed bold actions that really address the country's underlying challenges.

"As was stated in the budget speech, government preferred not to take risks that could destabilise the economy," the MEA said.

To this end, the MEA said there was no direct interventions to address Malta's competitiveness and that employers will be "burdened" with an automatic increase of €4.66 per week cost of living allowance to all employees irrespective of the enterprise's financial situation. "In the forecasted international scenario, this puts many companies at a serious risk."

It also said the budgeted allocation to Air Malta of €20 million needs to be supported by strict performance indicators to guarantee that taxpayers money will return the airline to a profitable path.

"Basically, rather spreading limited expenditure over a wide range of targets, we would have preferred a more focused approach to prioritise issues for a better impact," the MEA said.

The MEA welcomed the extension of schemes to stimulate investment by SMEs and the introduction of the bank guarantee scheme; the income tax adjustments for families with children; the investment in Bio Malta campus the increased allocation to attract more tourists during 2012; the incentives to increase female participation.

MEA said it supported the increase in education spending, but that this had to be accompanied by audits to maximise the effectiveness of this investment. "The enhanced allocation to MCAST and University is laudable as long as this is supported with initiatives to continue to reduce the number of school leavers, while ensuring that systems like the student stipends are sustainable."