Unions, employers in MCESD showdown

As the General Workers’ Union and the Union Ħaddiema Maqgħudin (UĦM) will push for a change in the Cost of Living Adjustment (COLA) to counter the burdens workers are facing,  in the wake of the €1.16 inflationary compensation given in the budget.

While the General Worker’s Union will be recommending “both short and long term proposals” to government during tomorrow’s MCESD to address the recent gas and fuel price hikes.

Friday’s Malta Council for Economic and Social Development (MCESD) meeting was hastily called by government following pressures trade unions in the wake of the sudden hike in fuel costs announced on 1 January.

One of the long-term proposals that the GWU will be tabling during the council meeting, representing the FOR.U.M of unions that does not enjoy representation on the council,  is a call for the cost of living increase (COLA) to be calculated based on the national average wage.

Zarb said the GWU would also be recommending that government commissions another Household Budgetary Survey that gives more weighting to fuel and energy prices than it currently does.

He added that the union would also be calling on government to take “concrete action” on measures guaranteeing effective regulation of the spiralling cost of living, adding that “government needs to be a part of the system.”

The short-term proposal that will be tabled during the MCESD meeting will also include a one-time compensation amounting to not less than that given to consumers last year, Zarb said, explaining that the long-term proposals includes a call for a revision in the way the COLA is calculated.

Employers have reacted immediately to the statements by Tony Zarb and similar comments by UHM’s Gejtu Vella, warning that they will instruct their members not to pay out any additional cost of living increases even if it is enforced on them by government.

The Malta Employers Association has blasted a call by General Workers Union and Forum to revise the cost of living allowance, by saying any revision to the mechanism was “out of the question”.

In a statement, the MEA said that companies were also hit hard by the increases in fuel prices, and that besides COLA, employers are also facing higher social security contributions as part of the pension reform.

“Raising COLA at this stage will only create further inflationary pressures and will contribute towards a wage price spiral that will have a negative effect on the country’s competitiveness,” the MEA said.

The MEA warned it will instruct its members not to pay out any additional cost of living increases even if it is enforced on them by government. “There have already been precedents in the recent past when employers were forced to pay more than what was stipulated in the COLA agreement.”

The MEA added that unions were always inflexible whenever employers wanted to discuss a revision of the COLA mechanism. “In fact, unions refused to discuss a revision in the COLA increase of €5.82 which was given in 2010, even though this could have resulted in job layoffs during a period of recession. The reason given by the unions at the time is that COLA is an agreement which was reached years ago and that employers are bound to honour that agreement.”

The MEA said unions believe the COLA contributes to social harmony and stable industrial relations, however they could not pick and choose the time and terms under which such agreements should be broken. “Unions are also represented on the retail price index board, which is the body that measures inflation, so they know only too well that the computation of €1.16 for 2011 was based on agreed parameters and objective computation, a fact known since September 2010.”

Meanwhile, FOR.U.M president John Bencini accused government of indulging in “misguided priorities”, pointing out that multimillion expenditures such as the City Gate project, and the introduction of Smart Meters – as well as the €600 increase per week to Ministers - jarred completely with the austerity measures that the people are facing every day.

He dismissed government’s boasts that it has refrained from carrying out austerity measures. “If these aren’t austerity measures, then what are,” he asked, referring to the inferior COLA of €1.16 as compared to last year’s €5.82 and the gas and fuel price hikes.

“Government should stop hiding behind words, call a spade a spade, and admit these austerity measures for what they are” Bencini said.

Bencini also hit out at Malta Resources Authority - supposedly responsible for regulating the gas prices and their effect on consumers – for failing to regulate prices properly. He argued that it was anomalous that gas companies were in the position to be able to issue prices lower than those approved by the MRA.

“This shows that the MRA clearly did not do its calculations properly in approving prices that the gas companies could afford to undercut,” Bencini maintained. “What sort of regulators approves prices that are too high?”

In his address, Bencini also called for a united front among all unions. “If government faced a united front of all Maltese unions, it would be acting very differently and stepping more cautiously than it is now,” he said.

In conclusion, Zarb emphasised that “tomorrow, government has an opportunity to reach an agreement with unions on an issue of national importance. It should not squander it.”

Asked whether the GWU or FOR.U.M would be participating in the national protest announced by the Labour Party, Zarb was non-committal, answering simply that “members are free to attend or not as they wish.”

Bencini maintained that, according to FOR.U.M’s statute, the organisations cannot participate in political demonstration.