Admittedly, I was expecting that the budget speech would make reference to or, at least, a mention of the sterling service the social partners have extended to the Maltese public with regard to economic and social development!
I recall the Prime Minister stressing the importance of securing a social pact in order to achieve our targets in meeting the Maastricht criteria in terms of the national deficit, economic growth and job creation. But that was only meant for the previous budgets whereby John Citizen had to carry the economic burdens that outweighed the financial and social benefits announced in the past budget speeches. This year's budget is a different story altogether. The social partners are left out of the equation for the simple reason that the government wanted to make sure no one else would share the privilege of getting the merit and credit for a "positive" budget.
It seems that all the stakeholders at the Malta Council for Economic and Social Development were all keen to analyse the budget on the basis of their respective particular interest and to what degree their pre-budget proposals were somehow reflected in the final version of this year's budget speech.
For once, all trade unions and all employers' organisations were tuned to the same frequency: overall it is a positive budget that will lead us to joining the eurozone from a position of strength; that will contribute towards generating more disposable income for the workers and more incentives for the self-employed; and that will ensure the upward trend in economic growth.
This time, in their first reactions to the budget, the leaders of the constituted bodies and the workers' organisations did not lament the lack of proper consultation even though their meeting at MCESD took place only a few days before Budget Day. Perhaps there was too much of good music to their ears or else they have learnt the lesson that, after all, the government could do without them.
The truth is that once the social pact negotiations had failed, the government had managed to take drastic measures - obviously at a high political risk - that are now yielding results.
However, it would be a gross mistake if the government does not attempt once again to reach some form of a national agreement between the social partners for the coming years. Likewise, the social partners would be jeopardising their own mission if they fail to come up with a common stand on issues of national interest.
What is the official reaction of the MCESD as a national institution?
In this budget there is recognition that the lower- and middle-income earners were those who carried the heaviest burden in the past two years. The government is reacting by providing benefits through the adjustment of tax bands and other incentives such as the fuel surcharge subsidy for families with relatively very low income.
On the other hand, however, the rate of inflation is on the high side and unless measures are taken immediately to control this inflationary upward trend, there will be little effect on the citizens' pocket as a result of these incentives, including the cost of living adjustment of Lm1.75.
Small businesses and shop owners are also provided with new fiscal incentives, which in normal circumstances would serve to regenerate wealth within our domestic economic activities. This is a move in the right direction but it is not the main contributory factor towards gaining our targets of economic growth.
The millions of liri voted for major projects and the possible capital injection needed in upgrading and improving our standard of living are commendable, especially those related to education, research and innovation. But, again, the main thrust in terms of economic growth is the short- to-medium term attraction of local and foreign direct investment. If we just mention the investment in Smart City, which would be completed in two to three years' time, and we do not maintain high standards of operations, our manufacturing industry, our services industry, our pharmaceutical firms and other emerging industries, then this budget would have been a cosmetic exercise with no vision at all.
In certain aspects, such as tourism, I do not see the same level of commitment by the government towards a holistic approach in search of the right solutions that could save us from the present crisis.
Then there is the question of unemployment. Notwithstanding the creation of more jobs, most of them on part-time basis, the level of unemployment was still high considering our population. Hence, the adverse impact of the unemployment level (even if it is lower than the European average) is much higher both in economic terms and even more in terms of social cohesion.
These are all issues we have to face later on this year and next year. With all the pluses in the budget, there are still grey areas or very difficult targets to meet.
In such circumstances, it is of utmost importance that the social partners effectively participate not only in pre-budget consultations but throughout the whole post-budget process of enforcement. This would justify the significance of having a Malta Council for Economic and Social Development that is worth its salt.
But, with all due respect, before taking up any challenges of this sort, the MCESD should first put its house in order. It needs to implement immediately the recommendations made recently by economist J.F.X. Zahra in his report to MCESD.
That would be the first step towards setting the stage to get the full benefits of this year's budget and to get closer to the possibility of securing a national agreement between all social partners.
But could the MCESD, as a national institution, make the Zahra Report available for the general public? I doubt it... as much as I doubt that this budget is the election budget!
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