Labour costs havebecome the number one challenge for most businesses operating in Malta, according to the Malta Chamber of Commerce, Enterprise and Industry.
Rising employment costs are impacting businesses’ competitiveness, especially those sectors which are competing on the international market it said on Monday.
The continuous extension of leave allowances, increased labour mobility and shortage of labour are all having a negative impact on increased labour costs, it said.
In a document with proposals for the 2020 Budget, the Chamber warned that increase labour costs are one of six issues of crucial importance which warrant the government’s immediate attention.
Other issues are alternative modes of transport, rental market reform and the state of the construction industry, the reputation of the financial services sector and research, development and innovation.
Chamber president David Xuereb said the Chamber had chosen to focus its attention on six main issues which it was most concerned about.
He said the chamber was recommending a thorough analysis of labour-cost inflation when compared to productivity. With a view of the long-term, the Chamber said that Malta needs to aspire to an educational system which prepares students for the jobs expected to be available in the future.
The chamber also reiterated the importance of alternative modes of transport. While welcoming the government’s drive to invest heavily in the country’s infrastructure, the chamber pointed out that more needed to be done to encourage alternative ways of transport other than the one-car-one-driver model.
The chamber also underlined the need for holistic reform of the rental market. Having already gone on record saying that proposed amendments fall short of solving any of the issues faced in the accommodation market, the chamber said that the rental market needs a holistic approach which can tackle residential commercial leases and leases which pre-date the 1995 liberalisation of the rental market.
Turning to the financial services sector, the chamber underlines the need for this sector to restore its image and reputation internationally. The document recommends the immediate implementation of the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) strategy, coupled with adequate human and financial resources to make sure that due diligence is carried out by all financial operators.
On the construction and development sector, the chamber said that recent accidents on building sites could not be ignored as they were seen as the ultimate proof that the sector needed to be addressed.
The chamber in its document also recommended the establishment of a new Maltese Research Fund for competitive funding of basic and applied research, to be managed by the Malta Council for Science and Technology. It also suggested “a serious and tangible increase in budget” for the MCST-run programme ‘Fusion’ so it could attain the desired results.