Updated 10.22pm with opposition reaction below
The government will be subsidising private companies in sectors hardest hit by the Coronavirus outbreak to the tune of €800 per month per employee, with employers agreeing to fork out a further €400 per worker as part of a new financial aid package for businesses rolled out on Wednesday evening.
“We have reached a historic pact with the social partners that defines the greatness of the Maltese people in unprecedented circumstances,” Prime Minister Robert Abela told a press conference attended by the social partners.
“We have agreed a package not only to fight coronavirus from a health point of view but also to counter the economic impact. This is a package which injects hope, confidence and courage for the future.”
He said the measure will ensure that private-sector workers in critical sectors which have been most affected, will get a €1,200 salary rather than suffering layoffs.
Workers on a minimum wage would actually see a raise, Abela observed.
This is a package which injects hope, confidence and courage for the future.- Robert Abela
The €800 government subsidy will be paid to the workers through their employers. Those companies that cannot afford to pay the additional €400 to their employees because they would have been too badly impacted by the current situation are to register with the Department of Industrial Relations.
The critical sectors are: wholesale, retail, accommodation, food and beverage service activities, vehicle rentals, employment activities, tour operators, travel agencies and other related enterprises, security companies, building services companies, transport companies, creative, arts, and entertainment activities, personal activities – such as barbers, beauticians, and other similar enterprises.
The new measure will impact some 60,000 workers, costing €44million every month.
Abela, flanked by representatives of the social partners, said that for other sectors, such as manufacturing and warehousing, the government will pay for one day of work based on €800 per employee, with the possibility of this increasing to two days further down the line. This measure will benefit around 50,000 workers and cost some €17million every month.
This is the second major financial aid mechanism rolled out by the government and builds upon a €1.8billion package announced by Abela last week.
The new package was negotiated between the government, the central bank, and the social partners over the past few days. The measures were unanimously approved by Cabinet on Monday night and the Malta Council for Economic and Social Development on Tuesday afternoon.
The government last week also announced a postponement of income tax, national insurance, and VAT, payments for March and April.
The government will consider extending this postponement further, at a later date.
The main aim of this aid package is to save jobs and keep businesses alive and ready to return to full activity- Robert Abela
All measures will be administered by Malta Enterprise and the Department of Social Security.
Abela described the measures as a 'war chest' which the country needed to spend prudently. He said the government could not be populist in its earlier aid package only to later find it needed to inject more cash.
"The main aim of this aid package is to save jobs and keep businesses alive and ready to return to full activity as soon as this crisis passes."
He said the government had full confidence in Malta's workers and it was confident that this confidence would be repaid through a strong economic rebound.
When replying to questions, Abela said he could guarantee that pensions would be untouched and pensioners would not lose a cent as a result of the current circumstances.
"This package is an all-round effort by everyone, not just the government. I even called on the Opposition leader at his office in parliament to discuss the current situation," he said.
Utility tariffs: PN almost €5m in arrears
He said this package did not include any reductions to the utility tariffs - as proposed by the opposition, although that could be considered in the future.
The opposition would only be credible in its speeches on the utility rates when it paid its own bill of nearly €5m, he said. (The PN said it would take legal action against Abela for breach of data protection, see below)
Abela regretted that he might end up presenting a budget with a deficit, rather than a surplus, but said the workers' welfare came first.
He said those who criticised employers for not doing enough were being unfair. Everyone was doing his bit, and everyone was making sacrifices, he said.
Abela giving up a month's salary
The prime minister also revealed that he will forfeit a month's salary as a gesture, with the funds going to the aid package. He hoped other workers in a good financial position would do the same.
He said he did not know how long the economic impact of coronavirus would last. The government did not have infinite resources, he said, but it was prepared and it would be aggressive in its incentives as necessary to ensure that the economy recovered quickly.
Asked if the government would impose a windfall tax on the banks, given their big profits, Abela said this was not the time to talk about raising taxes, although he did not rule out anything for the future.
Asked about Steward Healthcare, Abela said this was not a priority at the moment. He said he had ordered a stocktake and one now would see whether to keep the current contract, move to a new one, or cancel everything.
What are the full measures in place now?
Parents who both work in the private sector and who have decided that one of them will stay at home to look after their children, will receive a payment of €800 monthly. This will benefit 12,000 families and cost around €19million over two months.
Disabled persons who work in the private sector and are registered with JobsPlus and chose to stay home during the outbreak because they are more vulnerable to COVID-19 due to their condition, will benefit from €800 monthly. This will cost around €2million over two months.
Private sector employees who have been let go with effect from March 9, 2020 onwards due to the COVID-19 pandemic will receive €800 monthly.
Measures to employees and self-employed, including those who work part-time
The government will be giving €800 every month to every worker who works in one of the industries that have been hardest hit by the pandemic, including tourism-related businesses and those that have had to shut their doors because of government instructions.
The original financial aid package had stipulated that the government would pay workers two days wage based on an €800 monthly wage. But under the new package, the government will be paying five days based on the €800 monthly wage.
For other sectors, such as manufacturing and warehousing, the government will pay one day of work based on a salary of €800 per month, with the possibility of this increasing to two days further down the line. this measure will impact around 50,000 workers and cost some €17million every month.
For Gozitans working in these sectors, the payout mechanism will go straight to two days
Those who are self-employed and who employ workers with them will be eligible to pay covering three days weekly.
Applications for eligible businesses can be downloaded from covid19.maltaenterprise.com
Malta’s debt ratio will increase to just under 50%
Aaron Grech, from the Central Bank, explained that the government’s debt to GDP ratio will increase by some 7 per cent through these measures, bringing it to just under 50%.
This, he said, was a sustainable figure to be at. By comparison, back in 2013, the ratio was at around 70 per cent.
Grech said Malta will have to borrow around €1billion to finance these measures.
The government, he explained, was opting not to dig into its savings to finance these measures, but instead would use them as a guarantee for banks to allow them to extend liquidity to businesses.
Opposition: The government can do more
In a reaction to the prime minister's press conference. the Nationalist Party said the government could, and should, do more.
It said that the fact that this was the government's third financial package was a reflection of how the government was reactive and acted too slowly. The first two packages had been ineffective and actually fuelled uncertainty, the PN said.
The new package was better than the previous two, but much more could have been done.
The PN said the new measures included items it had proposed and the government had initially criticised.
The new measures, however, did not cover all those adversely affected by the economic impact of coronavirus. Of 164,000 private sector workers directly affected, the government would help 60,000, with the rest receiving weaker assistance or nothing at all.
The PN reiterated its call for the government to reduce utility tariffs at a time when oil prices were at their lowest and many people were using more electricity as they were at home,
It was arrogant of the prime minister, the PN said, to avoid a question on this issue, by referring to the PN's own unpaid electricity bills, in what the party said was a breach of data protection. Legal action would be taken over the prime minister's comments.
The PN also urged the government to suspend rent collections in the current situation.