Foolish madness

Who is kidding whom? Strong signals were drummed out that the social partners were making steady progress towards a social pact. Now, it is brutally clear that there was a divide between employers and the unions so deep that it could not be bridged.

A pact was never really on. It certainly could not be achieved against a background of a government boasting that the economy was doing well, and in a context where the weight of the pact was to be specifically on the workers' back.

The core divisive ingredients were a reduction in public holidays, a flat rather than a premium rate for a given number of hours, restricting statutory cost-of-living increases to those on the minimum wage, leaving other workers to negotiate their package, revising the public sector timetable to address the half-days factor and capping the sectors wages and salaries bill.

The unions worked out how much that would cost their members. They paled at the prospect, especially given that it included no counterweight.

Viewing the reality picture with detachment, one could make the following points:

1: A total of seven-and-a-half weeks of holidays (24 optional, subject to shutdowns, and 13 public holidays, compensated by an extra day when they fall on a non-working day) is too high. The excess equates to lost output which, if essential to the supplier, has to be made up at overtime rates.

2: Adjusting for cost-of-living increases automatically spins the inflationary wheel further without any compensating rise in productivity.

3: Restricting an automatic CoL adjustment to those on the minimum wage protects the weak and prods other workers to join unions to gain strength in collective bargaining.

Talking to employees and their representatives frankly, one can also emphasise the following:

¤ It's getting brutally harsh where the private sector operates. Even enterprises with strong proactive relations between employers and the unions, state-of-the art equipment, high employee efficiency and productivity, good management, and all-round commitment are finding it hard to withstand foreign competition.

¤ A phenomenon of clients demanding lower and lower supply prices is at large which, even if set against only moderately rising costs, leads inexorably to one conclusion.

¤ When an enterprise cannot compete, everybody loses out. But, the burden weighs most heavily on those who lose their job.

¤ There is an economic and social imbalance in Malta - those who work in the private sector, susceptible to the grinding pressures synthesised above; those in the public sector sanitised bubble are immune to job losses and cost-pressures.

For such facts to sink home, for any misconception that economic reality will not catch up and lead to harsh social consequences for those least able to bear the outcome, discussions and perceptions cannot be cluttered up with contradictions, and unbalanced proposals. And where the present contradicts the past, that had better be admitted to draw the pus and bind the wound.

For instance - holidays are excessive because, after a Labour government had increased optional holidays but compensated with reduced public holidays in the Seventies, a Nationalist government had restored public holidays in the late eighties, and also added to optional holidays. This government cannot tackle the holidays issues credibly unless it owns up to its past errors.

Nor can employers, large or small, or the self-employed, refuse to really commit to paying a little more in taxes, while insisting that employees must take cuts in earnings. Cheek has its limits. Addressing evasion would not solve the fundamental economic problems, though it would ease the fiscal deficit if the government did not squander the proceeds. But if there is not equity in the way we approach our range of problems, workers called to make sacrifices are hardly likely to respond with enthusiasm.

If they are to ask anyone to walk through a dark tunnel, those who lead have to try to show what light to expect at the end of it. It is not enough to tell workers to enter into a pact to forego part of their earnings, irrespective of government waste and what might be in it for employers and the economy in general. Apart from persuading them that to do so might - just about might - safeguard and possibly increase jobs, those who lead should try to come up with some clear bargain.

Achievement should be shared. Such as, to try out one example, by starting to build up with an employers' add-up to social security contribution a new national fund to be the basis for more secure pension arrangements.

Now that the chasm between the social partners is in the open, the government has to decide what to announce in the budget speech on Wednesday. My view remains that governments should not renege on their obligation to govern, and to take decisions, including about taxation. But the worst thing this government can do at this stage, against such a distorted backdrop, is to heed those who are telling it to impose dilutions in working conditions.

Those who built up expectations of an early social pact, when no real basis existed, were foolish. It is a short step in politics to translate foolishness into madness.