Tony Zarb hits out at VAT increase

The one-time payment of Lm39 to each employee would not be enough to compensate for the impact of the increase in VAT, said Tony Zarb, general secretary of the General Workers' Union, in his first comments on the budget.

"It will definitely not help the economy. The GWU had made this very clear in talks before the budget but it was ignored."

He also expressed disappointment that so little was done to create jobs, especially in view of the steady stream of layoffs.

When asked whether the announced investment in factories could have a positive effect on job creation, Mr Zarb stressed that building factories was a long term proposition and that it would be useless to build them unless there was a climate which encouraged investment.

On a positive note, Mr Zarb remarked that the government was allocating money to specific funds, such as health, which would make them easier to monitor.

He issued a warning to the government about its use of the term "social pact": "We want to ensure that this is not just a smokescreen to hide the fact that workers' conditions are being eroded.

"The union will continue to have its own agenda and it will make sure that it can promote it."

In a statement later, the GWU said the budget measures placed a heavier burden on workers and pensioners, and there were no measures to eliminate tax evasion.

It also appeared that new measures would be announced next year that would have an impact on the welfare system, the union noted, saying this meant the budget held further measures that would hit even harder.