The elderly

How will pensioners and the elderly be affected by membership?

Looking at the EU from a broad perspective, one must say that it is of more direct relevance to the younger generation. However, this does not mean that the EU will not affect the elderly. The elderly will be affected as a result of the possible impact on the cost of living and on their standard of living.

So far as the cost of living is concerned, this may be affected because EU membership means more competition. More competition leads to a wider choice, a better service and lower prices.

There are a number of food products, including fruit and vegetables, where prices will go down as a result of the removal of levies which will take place by membership at the latest. Prices will go down on both imported products and on locally produced products.

For instance, a 500g packet of imported spaghetti will cost 22c5 less. Prices will also go down on pork, chicken and eggs.

Apart from food, prices should also go down (as a result of competition) on services such as telephone and air travel. We have already seen the price of mobile telephone calls go down significantly over the past two years.

Prices will also go down on products where levies were removed, such as furniture and paint. Prices should go down not just on imported products but also on Maltese products because the price of Maltese products will have to be adjusted downwards to compete with imported products.

During negotiations, Malta identified two cases where the price of food products could go up because of membership. And it sought to negotiate so that this negative impact could be cushioned.

One of them concerned certain food products such as sugar and wheat (from which bread is made) and some meat and dairy products. As a result of negotiations, Malta will be able to subsidise the price difference on these products to cushion the impact on prices. The impact of membership on the price of these products will therefore be negligible.

The second case concerns VAT on food and medicines. This is of direct relevance to the elderly. Currently, in Malta, these two items are exempt from VAT. But under EU law, they should be charged VAT at a reduced rate of five per cent.

During negotiations, Malta requested that these items should remain exempt from VAT after we join, for as long as they remain exempt in the UK and Ireland, which are also EU members. An agreement was reached that Malta can continue to exempt them until January 1, 2010.

In addition, a declaration will be attached to the accession treaty stating that Malta agreed to this arrangement on condition that by 2010 no other country would still apply an exemption.

In other words, if by 2010, the UK and Ireland would still exempt VAT on food and pharmaceuticals, Malta may consider the basis for the agreement to have changed and request an extension beyond 2010.

This notwithstanding, the Maltese government declared that, should VAT be introduced in 2010 on food and medicines, it would be prepared to provide a cost of living compensation. A special retail price index has also been introduced for calculating the cost-of-living allowance specifically for pensioners and old people. This means that, even if VAT at five per cent is eventually imposed on food and medicines in 2010, or at any time after that, you will get a cost-of-living compensation.

So far as subsidies on water and electricity are concerned, these are allowed under EU law so long as they are given on social grounds and are passed on directly to consumers. In Malta, subsidies on electricity and water fall within this category and, therefore, may be granted.

So far as pensions are concerned, this is not directly affected by EU membership. Our pension system and pension rates will continue to be decided at national level, not by the EU. In fact, pension rates are different in different EU countries.

On hospital care, it is up to the Maltese government to decide whether medical treatment and care should be available free of charge. The EU does not get into this and every EU member state has its own health care system.

But if we join the EU and you are on holiday abroad and require medical or hospital treatment, this must be given to you on the same conditions as nationals of that country. If you are a pensioner, you are entitled to any kind of medical or hospital treatment, even if the case is not urgent and not an emergency.

Finally, on retirement age, it has long been confirmed that the EU does not regulate the retirement age and it is up to individual member countries to decide. What the EU is doing is to try and get its member countries to encourage workers to stay on in the labour market. This does not mean forcing them to work beyond retirement age or raising the legal retirement age.

In fact, although most EU countries have already individually set their legal retirement age at 65, in practice, EU workers stop working at an average age of 58. This is largely due to workers taking up early retirement schemes. There is therefore the political commitment to give workers incentives to stay on at work rather than opt for early retirement.

Readers wishing to put questions to Dr Busuttil may do so directly with the centre or through The Times.

Malta-EU Information Centre: Tel: 25909192; Fax: 21227580; E-mail address: euinfo.mic@magnet.mt; Website: www.mic.org.mt