A week ago, our prime minister announced the third iteration of the COVID-19 financial aid package aimed at rescuing the Maltese economy. There is no doubt that this third iteration is a step in the right direction but a few steps too short.
While I truly understand and appreciate why the government is using an agile approach towards its COVID-19 financial aid package, I firmly believe the government made some fundamental mistakes.
We all know that this COVID-19 pandemic is no storm in a teacup. The government always knew that the pandemic was going to reach our shores.
In the beginning of March the government should have immediately announced that all industries will be protected and that financial aid will be provided in an incremental manner to all businesses. In other words, the government should have immediately offered peace of mind to our business community and to our 173,000 private sector employees.
When UK Chancellor Rishi Sunak announced the UK’s COVID-19 financial aid package he on reassured all industries, businesses and private sector employees.
He did so by using a positive body language, a tone of hope and these bold words: “Whatever it takes, whatever it takes, whatever it takes”.
In announcing its measures our government differentiated between those industries and businesses who in the government’s opinion have been impacted directly or not by COVID-19.
Those private sector employees that fall within this safe net amount to 60,000 people.
Is this it? Is no one realising that people started losing their jobs? Is no one realising that people are starting to break down as their financial vulnerability is exposed?
So far, the government has failed to provide financial aid to several private sector industries such as financial and insurance – 10,590 employees, information and communication – 7,350 employees, administrative and support services – 18,200 employees, professional, scientific and technological – 15,900 employees, real estate – 1,900 employees and many others.
Between all those industries and businesses that have been excluded from the government’s aid package approximately 50,000 employees will receive financial aid amounting to a mere €160 per month. Others, amounting to 63,000 employees have been completely excluded.
Rightfully so, these individuals, all these 113,000 employees are asking the obvious question, “Why me?”
In real terms, this means that in Malta and Gozo we have businesses that between them employ approximately 113,000 people who are receiving no aid from our government. The government seems to be completely oblivious to the fact that this situation is not tenable.
Business owners cannot be expected to continue operating their business with a business as usual mindset.
Normality as we know it has ceased to exist and, in many ways, it is something of the past.
Economists refer to this meltdown as a market failure, calling for government intervention.
My own business experience taught me that there is always a cost. There is a cost for not incurring cost versus a cost for incurring it.
The government must calculate the cost of including the excluded 113,000 people working in the private sector.
At €800 per person per month, based on quarter two of 2020, the additional cost will amount to €271 million.
Our economy must be in a good state of health so it will pick up momentum sooner and faster
Based on the full private sector workforce of 173,000 people, the total cost for three months based on €800 per month per person amounts to € 415 million.
What will it cost our economy if 25 per cent of private sector businesses go bust and close?
What will it cost our government if 25 per cent of the excluded workforce (28,250 people) are made redundant?
With businesses closing and people being made redundant, how much longer will it take us to witness our economy recover and what will the slow recovery cost us?
What is the hidden cost of reduced confidence in those people losing their job and having their well-being threatened?
Is there a cost to be borne due to mental health sickness as people lose their jobs?
Is the government seriously indifferent that we can potentially end up in a bitter economic situation of higher debt and higher unemployment?
Which cost does the government wish to deal with? The known or the unknown?
The government must quickly decide on a fourth COVID-19 financial aid package.
It must have the courage to announce such a decision.
Business owners and the people working with them need to know the government’s intents as crucial business decisions cannot wait anymore. In April, many businesses are going to have to bite the bullet.
Those of us that want to simply consider the facts, it is that people are being made redundant and the government is simply doing nothing about it.
On March 21, the UK Sunday Times published a piece by David Smith entitled ‘The deeper the dive, the longer the way back’.
In this article, the author says that the further the economy falls now, the longer it will take to recover once this COVID-19 crisis is over.
The argument is solid and makes business sense.
What will be the cost of economic recovery against the cost of investing in the economy now not to allow it to drown?
The conclusion is that it makes more sense to pour money into the economy now, borrow funds and just do it.
The Maltese government must ensure that once the pandemic is manageable and our economic activity can be resumed, our economy must be in a good state of health so it will pick up momentum sooner and faster.
My plea to the government is not to let businesses drown and people lose their jobs.
Our government must not procrastinate.
To procrastinate is no doubt an expensive decision both for the government and our excluded businesses.
Ivan Bartolo, Nationalist MP