MEA proposes phasing out of maternity leave

Pointing out that the main burden of maternity leave still falls on employers, the Malta Employers Association proposed the phasing out of the 13-week maternity leave paid by private companies.

In its proposals for the 2014 Budget, the association said: "Unlike many other EU countries, the main burden of maternity leave still falls on employers. This is also affecting women of childbearing age in finding employment as they have a competitive disadvantage with male applicants. MEA is proposing phasing out the expense of the thirteen weeks maternity leave that is currently being paid by employers."

MEA also underlined the need to curtail the fiscal deficit and the public debt, which it said, was "pivotal for the sustainability of our welfare systems, including health and education."

In its nine-page document, the association expressed its concern that public sector employment increased by more than 1,000 persons between June 2012 and June 2013, at an estimated cost of €25m.

The inflated workforce, combined with wage inflation resulting from collective agreements creates serious constraints on government expenditure and fiscal targets, MEA said.

It said this was reflected in the recent credit ratings issued by international agencies Moody's and Fitch, in which both agencies highlighted the importance of the outcome of the government's fiscal policies in maintaining a deficit below 3% of GDP and to reduce public debt.

However MEW added that fiscal consolidation was not only dependent on the curtailment of expenditure reductions or controls, but also on wealth generation in the private sector.

MEA explained that it supports the reduction in income tax rates on "as long as these do not jeopardise the targets of deficit reduction."

Although these reductions waere labeled as anti-social by some quarters, MEA said that a good proportion of income falling under the brackets which are affected is overtime.

"Many employees complain to their employers that overtime is taxed at 35% whereas income from part-time employment is taxed at 15%," the association said.

MEA also proposed an adjustment in the VAT registration thresholds which were first established in 1995.

"Eighteen years have passed since then and the entry and exit thresholds have not changed since. Taking inflation into consideration, the figures established in 1995 have little relevance today. It is therefore recommended that these thresholds are adjusted upwards at least by the inflation experienced during this span of years and that these are automatically increased annually by the inflation rate."

Another proposal floated by MEA is the introduction of a system which facilitates a set off for companies which are owed money by one government department while owing money to another department.

"This often creates a strain on the cash flow of the company concerned as in many instances the Department who is owed money will insist to be paid together with penalties and interest - even to the point of instituting criminal proceedings - while at the same time the Department who is owed money simply claims that it has run of budget and therefore is unable to settle outstanding amounts."

MEA said the Government should set up an ad hoc Unit through which each case can be managed and administered.

"This will be a big relief to many businesses as it will ease liquidity issues."

Moreover, MEA proposed a number of measures effecting small businesses, including a revision in the procedure in which small businesses upgrade their electricity supply, which it said were "excessive."

It also proposed a revision of permits allowing shops to open on Sundays and public holidays in tourist zones.

The eco tax also needs to be revised, MEA said, pointing out that many businesses complain of an uneven playing field in the manner in which the system works and is administered.

It also urged the government to fine-tune the parking and traffic restrictions being currently imposed are in some cases unnecessary and a hindrance to business.

On energy, MEA advocates the introduction of night rates for commercial entities and called on the government to give priority to commercial rates first in its plans to reduce energy tariffs.

In regards to the memorandum of understanding signed with China for collaboration in the generation of energy and in the production of photovoltaic systems, MEA said that upcoming negotiations "need to strike a delicate balance between protecting Malta's sovereignty and accommodating China's business (and political) interests."

MEA also called on government to set up a unit as a specialised agency to look into the specific needs energy of SMEs and reintroduce alternative energy programmes.

Furthermore, MEA said that the sustainability and adequacy of pensions requires proactivity and long-term planning to avoid sudden shocks in future.

The MEA reiterated its call for a reform of the first pillar - which is underway through a graded increase in retirement age and a reform in contributions and benefits - together with incentives to invest in voluntary third pillar pensions.

The Association said it always cautioned against the mandatory introduction of second pillar schemes as this can be prohibitive both for businesses and employees. It added that second pillar pensions also carry various risks which can be avoided through a strategy to re-enforce the first and third pillars.

For the coming budget, MEA proposed tax benefits to employees who invest in third pillar schemes.