AD criticises draft social pact

Alternattiva Demokratika said yesterday it was disappointed that the draft social pact which was presented to the Malta Council for Economic and Social Development (MCESD) fell very short of tackling Malta's competitiveness because it addressed the cost of labour and very little else.

AD's spokesperson on finance, tourism and economic affairs, Edward Fenech, said that competitiveness depended on an array of other factors.

"AD believes that without a clear commitment to reduce the fiscal deficit and to control inflation the draft social pact is not worthy of its name and is at best a half-baked national collective agreement. A social pact cannot exist in an economic vacuum and the formulation of a national industrial policy is vital for its success".

He said the social partners could not realistically agree to a social pact without knowing, for example, the government's short-term intentions on pension reform, health care reform and education reform.

He said the country could not focus resources if it did not prioritise those sectors and industries in which it could gain long-term competitive advantage.

"Malta needs a plan in which individual initiatives can be inserted and directed into a known direction to maximise the benefits of any available synergies.

"It is ironic that some of the most successful economies in the EU, such as Sweden, Finland and Denmark, have among the highest labour costs. This is because labour productivity depends on two major factors, namely: capital intensity and the skills base of the workforce. In the long term we cannot compete downward with cheap labour locations."

In the same statement, party social affairs spokesman Mario Mallia said the need for investment in education could not be overstated, with Malta having the lowest rate of students who continues their studies after the secondary level in the EU.