Proposal to cut leave, overtime hours

A draft social pact to be discussed this morning proposes a seven-day reduction in vacation leave over three years and giving workers normal pay for the first four hours of overtime every week until 2007.

Social partners meeting at the Malta Council for Economic and Social Development are set to convene at eight this morning to discuss the proposed draft, sent to them by MCSED chairman Victor Scicluna on Monday night.

At 10 am. they will then be given a presentation on the electricity surcharge options by Investments Minster Austin Gatt and the Parliamentary Secretary in the Finance Ministry, Tonio Fenech.

The six-page draft document was last night discussed by the unions within the Confederation of Malta Trade Unions while employers also met in preparation for this morning's meeting.

In a nutshell, the proposals, aimed at stimulating the economy, would mean a reduction of seven days in workers' vacation leave between 2005 and 2007, when the pact would expire. Two days would be lost in each of 2005 and 2006 and three in 2007.

Until 2007, no overtime rates would be paid for the first four hours of overtime worked in a week; the extra hours worked would be paid for at the normal rate. This would be capped to a maximum of 100 hours per year per employee.

Another proposal is to substitute a number of public holidays by optional vacation leave following consultation with political parties and the ecclesiastical authorities.

To eliminate distortions in the income tax system, it is proposed that part-time tax benefits shall be available to both members of a married couple in cases of joint computation.

To improve participation of women in the labour force, the government would implement measures to enable quality child-care to be provided.

The government would also implement measures to effectively eliminate abuse in invalidity benefits.

Regarding the wages policy, the text proposes that as from January 2006, wage increases in excess of the cost-of-living adjustment would be in the form of non-cumulative cash payments. This should also apply to existing and prospective collective agreements signed throughout the duration of the pact. The draft pact proposes a complicated system of cash payments, parts of which would be incorporated in the wages according to GDP growth.

The proposed pact says that unemployment benefits should be transformed to effectively lead to participation in the labour market. Unemployed persons aged 25 or under should be requested to take six-month placements with firms in the private sector. Older persons would be given training to acquire skills that could lead to employment. Unemployment benefits would be conditional on participation in courses.

Private sector employers would contribute to a fund for the retraining of workers, amounting to 1c per hour per employee - 8c per employee in the private sector per day or 40c per employee a week.

The document also speaks of a reform of the student stipends system, through which a differentiated system of stipends would be introduced, providing incentives for studies in areas of major need.

In the case of taxation, the draft pact says the government should commit itself not to increase income tax and VAT rates.

The government should also extend the voluntary tax agreements systems based on benchmarking to all self-employed.

The proposed pact also speaks about the need to reduce excess government employment through public-private partnerships and incentivise re-deployment.

It also proposes that increases in government expenditure on its wage bill should not exceed one per cent annually for the duration of the social pact.

Finally, it proposes more effective scrutiny of developments in government recurrent and capital expenditure programmes by a working group of the MCESD.