MCESD role still unclear, ex-chairman says

Members of the Malta Council for Economic and Social Development recently spent two days in Gozo for a pre-budget debate. In the end, the Finance Minister went ahead with his plans to raise VAT by three percentage points, in spite of the members' vociferous warnings of the detrimental effect this would have.

Vanessa Macdonald has spoken to former MCESD chairman Edward Scicluna about what role is left for the council...

The impression people have of the MCESD is that it is just a forum to appease the participants. Does it have any impact or are decisions taken before they are even presented to the MCESD: like port reform, pension reform, the budget?

Well, I don't think we are yet clear what role the MCESD should take, even though there is agreement within the council.

For example, in Italy, anything agreed by its counterpart, the CNEL, becomes law. Their power is unbelievable.

Our version is that the council always wants the minister to be present, in order to negotiate, which is a union approach.

But in most of the economic councils within the EU, negotiation is not allowed. In the EU, councils are there to give an opinion. How effective is that opinion? I think that if it is published, people will know about it.

And that is another thing, the council is not allowed to vote. The law asks for consensus...on things which, because of the make-up of the council, you can hardly ever have consensus...

In the EU, there is a vote and then the government or parliament takes note of the outcome. Obviously, the higher the percentage, the more pressure it puts to bear.

The role of the MCESD would be simply to give an opinion, whether asked for one or whether self-generated. If you were to ask how many opinions the MCESD has given, you would have to see how many it has been asked by the government to give.

But its role should be giving opinions to the government relating to a document, such as a white paper. It would be written, normally drafted by a rapporteur, either voted on, or passed by consensus. It would then be sent to the government.

It only happened once, on the question of privatisation.

With regard to the industrial relations bill, which had a 10-year history, there was eventually no opinion given. So you are right...

Why was a welfare reform commission set up to do something which could have been done by MCESD? And the same with the port reform commission.

I don't know. I cannot answer for the government. I think if the MCESD was functioning properly, as a well-oiled machinery, with people representing all the institutions working on a daily basis, it could have done it...

All other EU economic and social committees have people working there permanently, whether they are paid for by the government or the institutions.

There are corridors for the unions and for the employers' associations. So we are smaller and would have a room, but the principle would be the same.

They would be there working, researching and inputting into the document. Even, say, two people for the unions and two for the employers would be enough. But they could be working on pensions, health, inflation, wage determination, there are so many subjects...

The secretariat would have help from them and the opinion would only need minor changes after negotiation. As much as 60 per cent of the opinion seeps through into the legislation in many leading countries.

If unions and employers' associations have been instrumental in drafting the legislation, it must make it easier in terms of compliance and industrial peace, when there is restructuring etc.

As an economist, and not as the former chairman, I wouldn't want any agreements to be binding.

What the employers and the unions agree on might not be in the public interest. Let us say they decide that certain activities should be subsidised. That is what I call a "cosy" agreement but as a taxpayer - who is not represented on the MCESD - you could not automatically accept it.

In labour relations, industrial relations, wage determination, there is no problem with that. But beyond that... no.

That is why the government cannot be bound to take on every agreement in the council. But it would be foolish not to take on some of it.

So from what you say, the MCESD is pointless, as it is not being used properly. So it should either be given a more consultative role or call it a day and dismantle it.

This debate goes on it most countries, all the time. Finally it is down to political responsibility and if the council says that it is not being heeded, then the electorate would know.

You would not say it is useless and do away with it. In the first place, it brings the sides together...

What has the MCESD achieved under your chairmanship?

There was the industrial relations bill - we would not take full credit for it because it was pushed by the social policy minister. But, obviously, we cooperated and there were many hitches. With the doctors, we found a solution. There were also last minute issues about members of the essential services, for example.

The problems we were expecting from the unions also did not materialise.

Insofar as persuading the finance minister with regard to the budget, it is worth going through the budget speech seeing how many ideas came from the MCESD.

You were notorious for saying very little while you were chairman of the MCESD. What has changed?

Actually, at that time I was also director of the Central Bank and it was that rather than the chairmanship which stopped me from coming up with opinions on the economy and so forth. My opinion was given at the end of the month on the bank's monetary policy council and so it would not be prudent for me to have criticised or commented in public.