Holidays amendment 'here to stay'

The budget measure whereby public holidays falling on weekends will not be added to workers' vacation leave is "here to stay", according to Tonio Fenech, Parliamentary Secretary in the Finance Ministry.

After prolonged negotiations on a social pact failed last month, the government announced it would amend the law so that public holidays falling on weekends would not be deemed public holidays for the purposes of entitling a person to an additional day of vacation leave.

Speaking to The Times minutes before presenting the measure in Parliament on Tuesday, Mr Fenech said the government intended to keep the amendment until it "deems fit". He said the amendment would not be removed in the near future.

Mr Fenech said that thanks to the measure, industry would get an extra half an hour of work a week.

"We have too many holidays," Mr Fenech said, adding that Malta has 38 vacation days a year, an "astronomical" figure when compared to other European countries.

After talks on the social pact failed, much blame had been placed on the General Workers' Union as it emerged that whereas the Confederation of Maltese Trade Unions (CMTU) and the Union Haddiema Maghqudin (UHM) were ready to budge, the GWU made it clear it was not "giving in".

The GWU disagreed mainly with the duration of the social pact which the government wanted to fix at four years.

Asked why the GWU had insisted the pact should be set for three years, Mr Fenech said the union wanted a three-year agreement because a clause on cash payments proposed in the pact would have affected all standing collective agreements.

When the unions gave in to their original proposal of a two-year pact conceding another year, the GWU proposed that workers should receive a Lm52 cheque this year, one next year and another one in 2007. This meant that employers would have forked out Lm156 in three years. They also proposed that payments should be made in a staggered manner so that employers would not become cash strapped.

The social partners agreed that cash payments would be made in the case of outstanding collective agreements only and, according to Mr Fenech, a four-year agreement would have affected all collective agreements. "The GWU did not want that," he said.

That the government was ready to bind itself not to increase VAT and income tax were not to be taken lightly, Mr Fenech said.

The GWU's general secretary, Tony Zarb, replied: "The main reason why we objected to the pact was because the government's proposals meant workers were going to carry the greatest burdens and that was not acceptable to us as a start. The union did not want to agree just for the sake of having a social pact".

Mr Zarb said the collective agreement "excuse" mentioned by Mr Fenech was a "gimmick".

Accepting a four-year agreement meant that the unions would have parted from their original stand completely. "That was our mandate and, unlike representatives of other unions, we were not prepared to go back on the promise we had made to workers," Mr Zarb said.

The GWU and the government also disagreed on the cash payments issue. While accepting that employers should give bonuses as cash payments, the government said the Lm52 yearly bonus should not be granted to workers automatically but depending on the economy's performance this year and next year and during 2007 and 2008 respectively.

The government proposed that cash payments would be given to workers on January 1, 2008 and January 1, 2009. If in the two years preceding the two payment dates the GDP had grown by less than one per cent, no bonuses would be paid to employees.

If the GDP were to grow by one to two per cent, workers would get one fourth of the cash payments. If a two to three per cent GDP growth were registered, workers would get half their bonuses, whereas if growth were to be between three to four per cent, workers would get 75 per cent of Lm52. They would only get full bonuses if the economy reaches a four per cent growth rate or more.

At one point during the talks, the government conceded half a percentage point, stating that workers would get their cash payments if the growth registered was 3.5 per cent or more.

"Clearly, this was not acceptable to us," Mr Zarb said. "How could we accept this if the government itself had declared that the four days' leave measure would only result in a GDP growth that is less than two per cent?" he asked.

Mr Zarb said the cash payments proposal would have suited employers because they would have forked out Lm52 a year for every worker, only adding the amount to the workers' pay after the social pact expired.

The unions had also told the government the yearly Lm52 bonus should be tax free. They suggested the cash payments given during the years covered by the agreement should be accounted for when the workers' pension entitlement is calculated. The government only partially conceded the tax exemption request, proposing that the first Lm26 of the yearly bonus should be tax free. The proposal was resisted by the GWU.

As expected, disagreement reigned when it came to the reduction of vacation leave as proposed by the government, namely the loss of 10 days over four years.

Another thorny issue was a suggestion made by the unions that public recurrent expenditure should be "scrutinised and controlled" by the MCESD. The government inserted the clause in its proposal but removed the word "controlled", a decision that met Mr Zarb's objection even though the UHM and the CMTU had "given in".

The government also slashed the rate of contribution to a fund that the employers themselves had agreed to at the MCESD. Employers had agreed to pay Lm20.80 a year for each employee towards a fund to be used for training, research and innovation but the government reduced this to Lm5 per employee per year.

Mr Zarb said the government's proposal meant that the total fund for R&D of all Maltese industry would have been just Lm300,000 a year.

"In other countries, the social pact cost governments millions of liri. But the Maltese government was not committed to fork out enough with the result that there was no equal burden-sharing," Mr Zarb said.

UHM general secretary Gejtu Vella said it would have been better had an agreement been reached as the unions would have been part of the government's decision. "The fact that we did not agree means that workers will lose double the number of leave days proposed in the pact. Therefore does it make sense to stamp your feet till the end?" Mr Vella wondered.

The UHM believed that as had happened in other countries, striking an agreement in Malta was possible, Mr Vella said. "A social pact would have been successful because it would have paved the way for industrial peace which is conducive to economic growth," he added.