The Malta Employers' Association yesterday welcomed the convergence plan presented to the Malta Council of Economic and Social Development by Prime Minister Lawrence Gonzi on Wednesday.
The MEA reacted a day after the unions said the MCESD had been reduced to a rubber stamping exercise because the council should have been consulted before the government actually presented the plan at the Ecofin meeting in Brussels.
The association said the report was proof of the government's determination to come to terms with economic problems through concrete actions: addressing the fiscal deficit and generating employment, while safeguarding the welfare system.
The MEA said employment figures were unlikely to rise by 2007 unless there was a sufficient effort to increase jobs in the private sector.
While Prime Minister Lawrence Gonzi said the social partners had reacted "positively" to the convergence plan, the unions expressed disappointment at a "lack of consultation".
"The gist of the report puts too much emphasis on the notion that the Maltese economy will pick up as the economies of other EU countries experience a recovery.
Although this is highly possible, it is not an automatic development, particularly if Malta fails to attract sufficient foreign direct investment and boost tourism revenue because other countries, among them new member countries, are more competitive," the MEA said, echoing comments by former MCESD chairman Edward Scicluna.
The MEA said the convergence document needed more exposition on domestic, pro-active measures if the country was to make the best of the international recovery.
The MEA warned the government that new taxes at this point in time meant increased costs for employers.
The convergence plan, presented by the government at an EU finance minister's meeting recently, provides for reducing the current deficit to lower than three per cent, a government debt whose ratio to GDP must not exceed 60 per cent and with inflation and interest rates close to the EU average.
The report is based on the assumption that government employment will remain the same during the period, although it mentions that the share of government expenditure to GDP is expected to decrease from 52.4 per cent to 44.4 per cent by 2007, the MEA pointed out.
The MEA recommended that the government should further reduce its number of employees, along with other cost cutting measures, as a means of addressing the deficit without resorting to added taxation.
The MEA noted that the capital expenditure on the Mater Dei Hospital would not yield a return for the government because the recurrent expenditure of the new hospital would, once in operation, be much higher than what is yearly budgeted for the running of St Luke's Hospital.
When contacted, the president of the Malta Hotels and Restaurants Association, Winston J. Zahra defined the MCESD meeting as a "positive" one because all parties spoke "in a frank and open manner".
During the meeting, the MHRA forwarded a document with suggestions to the Prime Minister. "We think the government's targets for tourism growth should be more aggressive. The deficit could be further reduced if the dynamics of tourism are better understood and the industry is given more importance," Mr Zahra said.