A sociology professor has suggested a 20 per cent pay cut for all employees and early retirement for all workers older than 59 as a way of countering the negative effects the COVID-19 pandemic is having on the local economy. 

Mass redundancies, Godfrey Badacchino said, were a short-term strategy that would backfire in the long run since they will undermine Malta's long-term competitiveness.

“The local economy needs to be ready to pick up the slack and get back to full capacity when the COVID-19 pandemic has taken its course. To protect our competitive edge, employers need to protect and hold on to their employees,” he said in a post on Facebook.

A professor of sociology at the University of Malta and the chair of the Centre of Labour Studies, Baldacchino stressed that the country was a critical juncture. He said that until a few weeks ago, employers were still concerned by the lack of local, skilled human resources.

"Now, overall demand in most sectors is down; tourism is in free fall; sales of certain products are down 80-90%. This situation is likely to last at least for another 3 months; probably longer," he wrote.

With that in mind, the country had to "bite the bullet". 

Baldacchino argued that mass redundancies would lead to many foreign workers leaving. Instead, the country should take on some "short-term pain" to benefit in the longer term. 

Professor Godfrey Baldacchino

Employers and unions were in rare agreement in their disappointment over the multi-million euro aid package announced by the government this week, saying it was not enough to stop job losses and companies from going bankrupt. The verdict was unanimous: the €1.8 billion package would not solve the problems and hardships employers and workers were facing as a result of the coronavirus outbreak.

The package includes €700 million in tax deferrals for companies, €900 million in loan guarantees and a €210 million injection to assist the economy, which includes €35 million for health authorities to fight COVID-19. Employers will also to be given €350 for every employee on quarantine leave and there will be special measures to cover leave for families and the wage bill of businesses that have.

But Baldacchino went further. He suggested that from April 1 and for an initial period of three months, there will be no redundancies but a reduction of 20 per cent in all wages and salaries, inclusive of all cash bonuses and allowances, for all employees on a contract of service and earning €20,000 or more a year.

He said employees in the health sector and any other essential service grades should be exempted from this. 

Baldacchino also suggested shifting to a three-day week, by reducing regular working hours by 40%. On its part, the government should refund 10 per cent of the wages and salaries of private-sector employees working on reduced hours and employees aged 59 or over are to be offered early retirement packages.

“In this way, we all give our share to help transition this crisis while safeguarding our ability to 'bounce back' into action when that time comes ... and it will,” he said.