Reforming the pensions system

Surely the question of pensions reform must interest not only the political parties and the social partners but more directly every Maltese living here.

Like many other problems, one government after another ignored this important reform and now radical measures must be taken to sustain the pensions and guarantee a decent living to tomorrow's pensioners.

The World Bank report is recommending certain measures to sustain the pensions. Naturally, all measures will hurt a bit if implemented, but something must be done, and soon, if we do not want the situation to get worse, when it would be much more difficult to control.

Some of the measures being recommended have already been accepted and are being implemented by other European countries. One such measure which looks like a decision to be agreed upon by the social partners is that regarding the retirement age. Although 68 years was suggested, 65 would probably be more acceptable. This would be reached after a number of years.

If my memory serves me right, the increase in retirement age was once included in an MLP electoral programme under Dom Mintoff but it was never introduced. It also looks like the government may oblige all workers under a certain age to take an insurance policy to back up their pension which by their retirement would not be enough to cover all their expenses. The national insurance contributions may also be increased.

If the social partners do not agree on the essentials regarding future pensions so that the government can start implementing the necessary decisions, then the problem may escalate.

Today, we all agree that the welfare services are unsustainable and urgent action needs to be taken.

Recently, the Malta Employers' Association made a number of proposals for discussion, such as late retirement incentives, reducing the public sector, giving wage increases as bonuses, overtime paid at a flat rate in certain industries and for public holidays falling on weekends not to be added to the annual leave entitlement.

There is no harm done for the social partners to make their proposals to be included in a social pact. But one has to find a balance between taking the necessary measures to reach the final aim and solve the problem and taking drastic measures which would eat away all the benefits and conditions of work won over many years of hard work by the unions. I am sure both the GWU and the UHM are going to be on guard not to lose any rights or benefits, if not as a last resort to save jobs.

I am not sure whether or not certain proposals, like that of overtime being paid at a flat rate, is compatible with our industrial legislation and the rules of the EU and confederations like the ICFTU. As far as I know, overtime is always paid at time and a half, double time, etc according to when it is worked. Many entities pay time and a half for work on Saturdays and double time for Sundays and public holidays. There are other rates for working during the night.

Even wage increases such as bonuses could disregard certain principles. I cannot imagine the unions giving up the right of a wage increase for the cost of living according to the Retail Price Index.

Finally, the social partners should start tackling first things first. The first problem to clear on the agenda should be to guarantee the pensions and all other basic benefits to those pensioners receiving it today and shortly. The government always argues that the problem is not about those who are receiving the pension today and the opposition many a time argued that the problem of pensions reform could wait.

Well, I am afraid that it is already overdue and a safety net should be put in place so that nobody will suffer the humiliation of not receiving an adequate pension to live on decently until death.