Parliament approves reduction of workers' leave

The measure for public holidays falling on weekends not to be added to vacation leave was approved through all stages in parliament yesterday.

The debate on the controversial measure, announced in the budget, started late on Tuesday and ended with a vote yesterday, when the opposition voted against.

The debate was wholly taken up by opposition speakers, with only Parliamentary Secretary Tonio Fenech speaking for the government.

Mr Fenech insisted this measure was needed for Malta to keep up in the race for competitiveness. He pointed out that the number of holidays in Malta was higher than in most competing investment destinations. The opposition speakers argued that the government could have taken far more effective measures to improve competitiveness, such as by reducing spending and costs.

Labour MP Evarist Bartolo observed that in other countries the issue was about reducing working days in order to employ more workers. And it had been found that workers were more productive when they worked for fewer hours. He also asked what sense it made that workers' leave was to fluctuate according to the number of holidays which fell on weekends.

Early in yesterday's debate, Joseph Cuschieri (MLP) said the reduction in public holidays was yet anther example of deteriorating working conditions.

The fact that Malta was no longer competitive was the government's fault. The debt burden was being shifted on those who could least resist them - the workers and the pensioners.

When a former Labour government had struck off a number of feasts, it was part of a package, through which the worker still got something back. What was the worker going to gain in return today?

Marie-Louise Coleiro (MLP) said the same strata of society was being targeted by the government measures.

The dockyard, Kalaxlokk, Air Malta, PBS were all examples that showed that during its 17 years in power, the PN did not do anything to alleviate workers' conditions. It was not only the opposition that was accusing the government of incompetence but also the constituted bodies.

The government's irresponsibility would lead to industrial instability. Many workers on definite contracts were being exploited.

What the government needed to do was reduce its spending. She complained that Lm78 million allocated under the last budget would go to agencies which the government had set up and which did not make any difference in efficiency.

Mr Fenech said the state of public finances was well under the government's control and the deficit was falling, confirming how right the PN was before the last elections to have promised that public finances would be put on a sound footing.

Mr Fenech said the national debt currently stood at Lm1.4 billion, or 72 per cent of the gross national product, compared to over 100 per cent in Italy and Greece, for instance.

Even if one were to wrongly assume that all that borrowing was made by Nationalist governments since 1987, it was worth noting that during the same period the government had spent Lm2.5 billion on the social sector, Lm104 million on education, Lm50 million on sewage, Lm100 million on tourism, Lm105 million on roads, Lm100 million on factories, Lm130 million on the freeport, Lm36 million on the Gozo ferries, Lm200 million on health, Lm20 million on the reverse osmosis plants, Lm18 million on the airport, Lm35 million on the power station and Lm14 million on the telephones system.

During the same period, the minimum wage had risen from Lm29.88 to over Lm55 per week. The average salary had risen from Lm43 weekly in 1987 to Lm123 at the end of last year, and during the same period 20,000 new jobs were created.

Mr Fenech insisted that reducing vacation leave was necessary to raise productivity and protect jobs. The race for competititivess was a tough one and the Maltese government could not bury its head in the sand. Indeed, other countries were taking even tougher measures. Singapore had reduced salaries and the Netherlands had said there would be no wage increases for the coming two years. Malta, like other countries, was competing with China, India and other emerging economies. It was also competing with the other nine new EU member states for investment.

When, in 1977, the Labour government removed nine public holidays, then Prime Minister Dom Mintoff had told Parliament that one needed to be courageous. Unless production rose, one could not hope for increases in salaries, pensions and children's allowances, he had said. The government would have been failing in its duty had it not acted in this way, he had said.

But, Mr Fenech said, what was sacred for the MLP in 1977 was being ridiculed now.

Mr Mintoff had also said that the government had a duty to seek agreement on its measures. His government, he said, had a "perfect" agreement with the GWU and a not perfect agreement with the other unions. But he had still implemented his measure. Had he been "steamrolling" then, as the government was being accused of doing now?

Mr Fenech insisted that the measure on pubic holidays could not be seen in isolation because it was part of a package aimed at boosting the economy and competitiveness.

The package included incentives for research and development, incentives for SMEs and measures to encourage worker training.

Joe Debono Grech (MLP) said the parliamentary secretary was young and did not know enough about the past. When public holidays were reduced by nine days, the workers got an off day every Saturday, annual leave rose to 25 days, the working week was fixed at 40 hours and workers were granted leave for injury at work. And a PN government only reinstated four of the nine days which the Labour government removed.

In 1971, Labour inherited from the previous Nationalist government Lm43 million in debt. But it ended its term in 1987 with a balance of Lm500 million in the consolidated fund, Lm40 million in the posterity fund and Lm50 million in a fund to make good for any cost of living crisis.

And it was a Labour government that made hospitals and secondary schools free of charge.

The 1996 Labour government was accused of having borrowed Lm120 million, yet it had found that the Nationalist government had left unpaid debts of Lm92 million for medicines, Lm43 million for road works, Lm29 million for school maintenance and Lm24 million for Gozo Channel vessels. Many government bonds had matured and Labour had to resort to loans to pay them.

Mr Bartolo asked by how much productivity would rise through the reduction of four days of leave this year. Was it true that government economists disagreed on the impact of this measure and a fresh study would be made?

Some had claimed production would rise by 1.8 per cent but others said the gain would only be 1.1 per cent.

With the government's decision to reduce public holidays, Malta would have fewer holidays than Singapore which had 11, India (12), China (12), the US (13), Malaysia (14), Japan (15), South Korea (16) and another 18 EU countries.

If the public holidays were taken into consideration together with the minimum annual leave, one would see that Malta was moving towards the bottom end of the scale with only the UK and Ireland having fewer holidays than Malta.

According to a study by the British human resource company Manpower, reducing holidays did not improve economic competitive production in any sector. Indeed, countries which had long hours and the least number of holidays had the lowest GDP. This could be said for the UK. Austria, on the other hand, had the highest number of holidays and an above average GDP.

Mr Bartolo said that an IMF study comparing the GDP per hour level of France, Germany, the UK and the US where workers did not have a right for leave, showed that the highest GDP per hour level was registered in France at 103, followed by Germany at 101, the US at 100 and the UK at 79.

The report said that because French workers put in less hours overall they performed better.

He pointed out that the competitiveness yearbook used 300 indicators to calculate competitiveness. Public holidays and leave were only mentioned in one indicator.

Other factors which affected competitiveness included the level of transparency of public tenders, taxation, efficiency and bureaucracy.

Mr Bartolo said the figures for capital investment given by Mr Fenech totalled Lm932 million. But with a debt of Lm2,000 million, where was the difference?

Noel Farrugia (MLP) said this measure was impinging on working conditions, the standard of living and family values. Decreasing annual leave was no solution to the problems which the government had so far opted to sweep under the carpet.

The Euro and Sterling had appreciated against the Malta lira. Was this going to happen year in and year out?

The government had not told the people that the Maltese were paying the most for their imported products.

Karmenu Vella (MLP) said it was not true that the most competitive nations were those where wages were low; competitiviness depended on the value of the product. The government said it invested Lm150m on roads but where was the value for this money spent?

Mr Vella said that the government had eroded the workers' spending power through taxes and VAT.

Malta was the most taxed nation worldwide. Was this not impinging on competitiveness? If no incentives were ever given to research and development, was this not affecting competitiveness?

Incentives should be related to the type of product produced and not tied to the number of workers in employment. Government-induced costs and energy costs were also a burden.

Replying to further Opposition comments, Mr Fenech said that Malta and Austria, with 38 days in annual leave and public holidays, were at the top of the list of the EU member states with the most holidays.

The 10 countries which joined the EU last May had, on average, 32 holidays, far less than Malta. The UK had 25.

In reality, the government measure only impinged on those feasts that fell on a Saturday and Sunday. This was also the practice in Germany and other countries.

According to a Financial Times report, Germany had managed to record a 1.5 per cent growth in its economy because five public holidays which had fallen on a Saturday or a Sunday were not added to the workers' anual leave entitlement.

Reacting to Mr Bartolo's remarks on economists having different views on the benefits of this measure, Mr Fenech said he had no difficulty in putting the workings on the Table of the House.

Edward Scicluna had labelled the workings given to the government as "a childish attempt at economic estimation". However, Prof. Scicluna himself, at a business breakfast last December had estimated that "the l.8 per cent potential lowering of labour cost of this measure would be 1.5 per cent for the private sector".

And Prof. Scicluna had also recomended to the GWU what to propose to the government in its negotiations, such as that wage increases should be linked to the rise in the cost of living only and this should also apply to all collective agreements in force. There were also to be cash bonuses which were performance related, the first 50c of which should not to be taxable.

Prof. Scicluna also proposed that there should be a decrease of two days of vacation leave in 2005, another two days in 2006 and yet another two days for 2007. Apart from these, public holidays should be reduced by up to two days.

Mr Fenech said that if anything, the opposition should criticise the government for not doing more than it was proposing.

The opposition had claimed that Malta was the most taxed country. Where did this come from? Latest Eurostat figures for 2003 indicated that when compared with the average direct and indirect tax burden of the 25 EU countries, Malta's was 34 per cent. The average was 42.5 per cent while the average of the 'old' 15 EU members was 41.8 per cent.

The opposition claimed that free time was important for the workers to spend with their families. Had the opposition forgotten how it had warned the workers during the referendum campaign that once in the EU they would lose out on overtime? Was not overtime impinging on the workers' free time?

The opposition, he said, was not consistent and had not come up with any concrete proposal to spur the economy other than devaluing the lira and doing away with workers' bonuses.