The government should offer a half pension to workers who choose to stay in employment between the pensionable and retirement age, thus making hundreds of experienced workers available to the country, the Malta Employers' Association said on Tuesday.

The pensionable age is the age at which a worker qualifies for a pension, which depends on age and length of payment of social security contributions.

Retirement age is the age when workers are required to retire unless they have an arrangement with their employers, usually between 61 and 65.

Workers who qualify for a pension but stay on until retirement age currently lose the pension for the years in between.

Conversely, workers who retire on reaching pensionable age but before retirement age receive their pension but cannot work. Workers past retirement age can work and still receive their pension.   

The MEA proposal is one of several made in a position paper in the context of private sector concerns about a labour shortage.  The association said the shortage of employees is being felt across most economic sectors and at all levels of skills, from unskilled people, tradesmen and also professionals. 

"The labour market can retain experienced human resources by encouraging employees to remain in the labour force beyond pensionable age," the association said. 

"Government should take up MEA’s proposal to give employees who choose to remain in employment between the pensionable and retirement age half the pension."

It estimated the incentive would keep "hundreds" of people in labour fource in theprivate sector. 

"Workers of pensionable age are especially valuable for the purposes of training and mentoring new-entrants to the workforce," it added.

"In any case, this recommendation is compatible with the National Strategic Policy for Active Ageing: Malta 2014-20202, through which the government committed itself to achieve a society for all ages by adopting specific measures to transform the country into an age-friendly nation."

Besides fiscal assistance for workers through the pension reform, financial assistance should be made available to enterprises implementing such mentoring structures as part of the country’s National Active Ageing Strategy, the association added.

In other recommendations, the association said the Community Work Scheme, which helps unemployed people gain work experiece and currently caters for a thousand workers, should be phased out. 

"Many of these people are underemployed and there is no reason why they should not be channelled into relatively low skilled jobs in the private sector," the association said.

Foreign labour

In another recommendation, the MEA said Identity Malta needs to review some of its processes to facilitate the legal engagement of third-country nationals in the private sector.

"For example, the regulation that TCNs applying to work in Malta cannot bring family members with them creates a disadvantage to attract many professionals to come to work in Malta."

Jobs for the boys

The association expressed its concern about pre-election government employment draining the private sector.  The government, it said, should stop any recruitment six months prior to an election except in critical professions like teaching and care and health professionals.

"This drain is leading companies to resort to foreign labour, resulting in inefficiencies together with an unnecessary increase in population. Similarly, the practice of engaging persons of trust needs to be rendered more restrictive, controlled and transparent," it added.

In medium-term recommendations, the MEA said the public sector needs to be reformed to reflect economic and labour market realities.   Shortages of skills, especially those in management, regulatory, law and order, care and health categories should be rectified. Similarly, situations of over-manning need to be resolved by allowing a redistribution of resources to the private sector.

The MEA also called for support of fiscal incentives to encourage people to shift to private employment where their skills may be utilised more productively and more efficiently from a macroeconomic point of view.   

Education Reform

The association said the education system requires further transformation in order to render it more flexible and dynamic towards reacting more nimbly to today’s and future demands of the economy. The reform must address shortcomings leading to Malta’s early school leaving results which are currently the highest in the EU. The reform must also afford enhanced focus on entrepreneurship, work ethic and soft skills from a tender age.  

The association said the issue of labour shortages needs to be approached in a holistic manner and without any pre-conceptions. F

"For example, there is no reliable data to suggest that the number of foreign employees is on the increase because they are paid lower wages than Maltese workers. Rather, MEA members consistently report that they prefer engaging Maltese or Malta-based workers because the process and risks involved are far simpler whilst employing foreign employees often tends to entail higher turnover as well as greater recruitment and training costs," the association said.

"What is required is a national commitment to utilise this scarce resource far more efficiently to obtain the highest output possible, in the knowledge that our human resources are limited, and are about to become scarcer in the coming years. This is deemed as the way forward in harnessing Malta’s full economic potential in the coming years within the highest levels of sustainability for the generation of wealth and prosperity its citizens deserve.".

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