Hopes that social pact talks would end this year

The chairman of the Malta Council for Economic and Social Development has expressed the hope that the discussion on a tripartite social pact will be concluded this year.

Victor Scicluna said the time had come to move to recommendations for action on a number of issues among which were competitiveness, an oversized public service and unsustainable welfare services.

He was speaking on the priorities for discussion when he received a copy of the Malta Employers' Association's proposals from its president Arthur Muscat in Floriana, yesterday.

The document proposes cutting the public sector workforce by 12,000 by 2008, giving wage increases as bonuses linked to GDP growth and ruling out early retirement in favour of late retirement incentives.

Mr Muscat said he anticipated the social pact would not be easy to arrive at, although it was not an impossible feat.

In drawing up the proposals, the MEA concentrated on the need to generate more work. The document has been called Generating Productive Employment - A National Priority.

Mr Muscat expects a complicated debate but hopes it will be calm. "It is very important that the debate on such a delicate matter is carried out by the social partners within the MCESD."

He touched on the economic situation, mentioning unemployment, the need for foreign investment and an unsustainable welfare system.

Another problem was a public sector burdened with personnel who could be deployed in more productive work with the private sector.

Mr Muscat said businessmen were prepared to invest, so long as there existed the right environment. The two determining factors were labour costs and the containment of government-induced costs.

The MEA wants to see a reduction in public sector employees from over 34 to 27 per cent of the workforce by 2008. This could reduce the wage outlay by about Lm50 million.

The association also looks at competitiveness and says that wage increases in the public sector should be in the form of bonuses linked to employment levels, the fiscal situation and GDP growth. Apart from ruling out early retirement as having any place in the social pact, the MEA's proposals for pension reform include introducing incentives, in the form of enhanced pensions, for later retirement.

The document says overtime in manufacturing and the hotel industry should be paid at a flat rate but taxed at a maximum of 15 per cent.

It also suggests a reduction in the corporate tax rate from 35 to 20 per cent.

The MEA is proposing that public holidays falling on weekends should not be added to the annual leave entitlement.

Proposals for a social pact have also been put forward by the Union Haddiema Maghqudin.