Opposition calls for 'Valletta strategy' for economic and social reform

Opposition EU spokesman George Vella said yesterday that Malta needed a "Valletta strategy" which mapped out targets for economic development in line with its priorities.

Dr Vella was speaking at the opening of a three-day debate in Parliament on the EU's Lisbon Agenda to make the European economy the most competitive and dynamic in the world.

Dr Vella observed that a commission headed by former Dutch Prime Minister Wim Kok in making recommendations after reviewing the Lisbon Agenda last November had also urged EU member states to draw up national programmes for economic growth.

The Labour MP said no one disagreed with the targets laid out by the Lisbon Agenda, but in seeking to achieve them, Malta should focus on its priorities and not get lost on other programmes which effectively led it to miss the wood for the trees.

The debate was opened by Competitiveness Minister Censu Galea who explained that the main target of the agenda, agreed by the EU in the year 2000, was to make the EU the most dynamic and competitive knowledge-based economy by 2010 while giving due consideration to social solidarity. These were targets originally set for the then 15 EU member states, but they had also been adopted by the 10 accession states.

Obviously, the new member states had not started working towards the attainment of the Lisbon targets from the year 2000, although preparation for EU membership also meant preparing their country for the same goals.

Five years after the Lisbon targets were set, the Wim Kok review last November agreed that some of the targets were too optimistic, not least because circumstances had changed and the targets had to be adjusted accordingly. Indeed, recommendations made over the past weeks set fresh targets with new emphasis on the importance of social cohesion.

Among the original targets, the most important was for the European economy to catch up with that of the US, especially in areas such as innovation, technology and employment. But, clearly, the EU was still far from this target.

Much also remained to be done for the EU to achieve its aim of further opening up its internal market, particularly in the services and financial sectors, energy and posts. Several countries were holding back on the opening of markets for services and financial services.

The Competitiveness Ministry had held a national conference on the internal market and was evaluating recommendations.

Referring to Malta's actions, Mr Galea said that in the employment sector, the agenda laid down that 70 per cent of the population should be in employment and 60 per cent of women should be in the labour force. These were benchmarks which Malta still had some way to go before they could be attained.

Malta was, however, among the leading countries in the area of information technology, particularly after the liberalisation of communications.

One had to admit that Malta was far from meeting the Lisbon target of having research, innovation and development accounting for three per cent of GDP. Indeed, very few countries had reached this target. Malta had its own problems because it was a small country with limited resources. The government wanted to ensure that research projects were eligible for assistance. It also wanted to ensure that research and development which was actually taking place would become better known and recorded.

Malta also had difficult market conditions for the implementation of competition policy but it was working to ensure that all the rules and tools of fair competition were in place.

In the area of network industries, progress had been made in telecommunications where, following liberalisation, this sector had grown enormously in the past few years and now employed more workers than most people would have imagined.

In entrepreneurship, the government was working to facilitate business start-ups by removing excess bureaucracy while modernising the regulatory framework.

Central to the target of greater social inclusion was the National Action Plan for Employment announced last year. Substantial investment was also being made by the government in worker training.

Over the past few years Malta had also improved its infrastructure, with better facilities at the airport, telecommunications and the roads, among others. This, too, was an important yardstick for the attainment of the Lisbon targets.

Indeed, in line with the Lisbon agenda, the three pillars of the government's activity were the economy, education and the environment.

The government wanted everyone to be involved in making Malta more competitive. It expected everyone to do his duty, to do it on time, and in the most efficient way possible. Achieving the Lisbon agenda targets required not only a national commitment, but a commitment from everyone.

Dr Vella said the government was acting like it had not known about the Lisbon agenda before Malta joined the EU. Malta had been an EU candidate country for three years after the Lisbon agenda was adopted, and it had now been a member of a year.

Before accession, the government had given the impression that once Malta joined the EU, it would hit the ground running and the economy would progress rapidly. The government had promoted a feel good factor which turned out to be hollow.

As requested by the EU, the government had produced a convergence programme which not only showed the seriousness of the financial situation, but was also totally lacking in ideas of how the economy would grow. The government only held out the sale of the family silver in order to raise revenue, along with more efficient tax collection. And of all sectors ripe for reform, the government had only focused on pensions and the health service.

The government was continuing to insist that the economy was on track, but the people were feeling otherwise as they were seeing fewer jobs and deteriorating working conditions.

It was said recently that the Lisbon agenda targets were also the targets of the government. Yet a scoreboard of how member states shaped up to the Lisbon targets so far shamed Malta and should prod the government into real action.

For example, Malta's economy was the worst performer and GDP per capita had actually declined further below the EU average. And the outlook was that GDP per capita would continue to decline to 70.7 per cent of the EU average next year.

Per capita productivity had also declined, from 95.2 per cent of the EU average in 1999 to 84 per cent last year and would decline to 83.3 per cent next year. What was the government doing about this?

The rate of growth of Malta's debt was the steepest of the EU countries.

In employment, the Lisbon agenda target was to have an overall employment rate of 70 per cent by 2010 and a female employment rate of 60 per cent.

Malta's workforce had slumped to 54 per cent last year and the participation rate of women was 33.6 per cent in 2003 and last year it only increased to 33.63.

Malta was doing relatively well in the comparisons of when workers retired but how was it that the rate of early retirement was higher on average in Gozo than Malta?

Lifelong education in Malta had declined from 4.5 per cent to 4.2 per cent in three years and risen to five per cent last year, still far too low.

Although Malta's spending on education as a percentage of GDP was similar to that of most other European countries, only 47.9 per cent of Maltese youths were furthering their education beyond secondary school, compared to the EU average of 76.4 per cent.

Despite all the hype about IT in Malta, the number of graduates in science and technology had actually declined: from 3.9 per 1000 in 1999 to 3.1 per 1,000 in 2003. This was a situation which was scaring away investors with worry that they would not find the skilled and trained workers they needed. Indeed, the government had also closed trade schools, reducing the options for training.

Malta had also performed badly in the figures for foreign direct investment, but even as the economy wallowed, prices had gone up, further eroding competitiveness.

Malta had done well in the scoreboard on greenhouse emissions, but it was worth noting that while emissions throughout the EU had declined by 10 per cent on average, in Malta they went up 11.5 per cent over the past decade.

Dr Vella said the Opposition did not want the Maltese to be discouraged by these findings. The situation could be turned around if the people were told the truth and then directed and encouraged to work. It was for this reason that the MLP was drawing up its plan for social and economic regeneration.

Rather than threatening to further erode the workers' rights, the government should continue to seek a social pact. But that would not happen if the social partners were incited against each other.

The MLP did not agree with development to the detriment of the workers' social rights. A balance had to be found.

More than the Lisbon Agenda, what was needed was a Malta agenda, a Valletta strategy which set out Malta's targets and identified the sectors which the country needed to focus on and develop. Wim Kok himself in his Lisbon agenda review report had urged member states to draw up such national programmes.

All the country's forces needed to work together. Manna would not fall from the heavens and even to access EU funds, Malta had to show it had the capacity to use them.

He was confident that with the right leadership and with confidence the people would rise to the occasion.

Other speakers will be reported tomorrow.