Social pact proves elusive despite long talks

Social partners left a government minister waiting for at least half an hour yesterday in order to carry on with a meeting on the draft social pact but still failed to reach agreement.

Sources said they registered some progress but were still poles apart on crucial issues.

There is now no chance that a social pact will be drawn up before next Wednesday's budget, as had been the goal. The social partners agreed to reconvene on Saturday but only to discuss the budget and a proposed electricity surcharge.

The draft was presented to them last Monday by the chairman of the Malta Council for Economic and Social Development, Victor Scicluna. It contains proposals such as a cut in vacation leave and overtime pay.

The plan yesterday was to discuss it for two hours and then hear a presentation by Government Investments Minister Austin Gatt on proposals for a surcharge to be slapped on electricity consumption.

Dr Gatt, accompanied by Enemalta chairman Tancred Tabone, arrived at the MCSED offices in Floriana shortly before 10 a.m., as scheduled, but left about half an hour later when the social partners decided to carry on discussing the social pact in a bid to conclude talks. An 8 a.m. meeting that was meant to have lasted two hours ended up finishing at 12.15 p.m., inconclusively.

The government has already declared it would still be "taking the measures that have to be taken".

In yesterday's meeting, the GRTU - which had declared there would not be a social pact with its signature on it if benchmarking for income tax purposes was included - accepted a watered down, re-worded version referring to the need to strengthen the Tax Compliance Unit and to minimise tax evasion across the board.

GRTU director general Vince Farrugia had labelled benchmarking as "an abuse".

Representatives of the Confederation of Malta Trade Unions were willing to continue discussions and sources said more than one union within the CMTU was not in favour of the text proposed on Monday night.

Unions were uncomfortable with accepting the loss of seven days vacation leave over the next three years and losing overtime pay for the first four hours of overtime worked in a week.

The Malta Union of Midwives and Nurses, the Malta Union of Teachers and the Malta Union of Bank Employees do not attend MCESD meetings.

The presentation on the surcharge has now been put off to Saturday at 8 a.m. at the Crowne Plaza, in Sliema. At 10 a.m. the social partners will then discuss the budget proposals.

The government has declared that because of the higher cost of oil, a surcharge will be imposed on electricity rates to recoup some Lm9 million in Enemalta losses. The surcharge would be removed or adjusted if oil prices were to fall to normal levels.

Sources said the government has continued to work on a number of options for implementing the surcharge. It is known that there are five or six permutations being considered of how to recoup the money from a set number of consumers while keeping in mind those who cannot afford to pay steeper bills.

It looks certain that the surcharge will only be imposed on electricity rates, leaving water rates untouched, even though the electricity bill for the production of water is substantial.

The Federation of Industry last night expressed its disappointment at what it called the collapse of negotiations, blaming one of the social partners and urging that urgent decisions now be taken by the government.

It said there had been encouraging indications over the past few months that the social partners had developed common ideas on how to lead the country out of economic stagnation to prosperity.

"Only a few days ago the talks reached a stage where employer organisations and the government had found converging views for a final agreement on a number of measures to be taken. These were clearly listed in a document that only needed the unions' consent. It is indeed a pity that at this late stage one of the social partners wanted to make new conditions that could only mean that there wasn't enough courage to take the plunge in the interest of the country's future.

"The short-term marginal sacrifices demanded from the workers' side seemed to have been considered more important than the need to stabilise the employment situation and to stimulate economic growth in the coming years."

The federation said it now expected the government to take the same decisions it had agreed upon with employer organisations yesterday, if the country was to stand a chance of moving forward "to a new era of prosperity".

In a statement late yesterday, the Malta Hotels and Restaurants Association said failure to reach agreement on the social pact was a missed golden opportunity for the island to start addressing its problems with competitiveness.

MHRA president Winston J. Zahra, said: "It is a great shame that on this island everyone insists on fighting for one's own little patch as opposed to collectively fighting for the national interest.

"Agreement on a social pact would have given a clear message to the country that all the social partners within the MCESD are willing to make sacrifices and fight for the overall national interest. Unfortunately this was not to be and we will end up paying the price of not reaching a consensus over the years to come.

"The MHRA now has no alternative but to encourage the government to make the necessary tough decisions that the country needs in order to address the main problem of our lack of competitiveness," Mr Zahra said.