Sharing the burdens

Two weeks ago the secretary general of the General Workers' Union made a comment in a speech he was giving that the union he is leading shall continue to insist that the economic burdens that the country as a whole has to face should be shared fairly among the population. As such, what Mr Zarb is claiming is that individuals should not be expected to carry burdens beyond their means and no segment of the population should be expected to carry burdens to an extent that is greater than other segments of the population. He was referring to one specific issue, that is the electricity bills surcharge.

No one can fault the General Workers' Union for standing up for its members. Looking at the wider perspective, no one can fault the General Workers' Union for asking that economic burdens should be shared fairly among the population to minimise the social impact.

However, I would like to look at an even wider perspective than this. The issue of who is going to pay for the higher fuel bill is important and possibly there may be ideas different to government's as to how such a burden may be distributed. The much wider issue that is raised by the General Workers' Union (definitely indirectly and possibly unconsciously) is who is going to pay the highest price for the transformation that our economy has to go through.

Over the past decade and a half, the economy has already gone through a change process. It was achieved with little industrial unrest, but a price was still paid, mainly through the budget deficit. Eventually each taxpayer is having to make up for the shortfall in government revenue through an increased tax burden.

This was required such that we maintain in employment a large number of people in the public sector, instead of them being put out of a job, while having a social security net that provided coverage to several categories of persons who required it.

Some have called this appeasement at all costs; I would like to call it a good policy that has safeguarded social peace and has helped Malta to remain attractive for foreign investment.

Some may call it a short-sighted policy. I call it a policy that has helped Malta's long-term economic growth.

In effect, it has been a policy where the economic burdens have been shared. This has been Malta's economic and social model of the last 15 years or so, and it has worked.

Some may ask that, since it has proved to be a good model, why cannot it remain so. The obvious answer is that times do change. The government no longer has the manoeuvrability in fiscal policy that it had in the past. The level of the budget deficit had reached proportions that made it no longer sustainable.

This meant that we had to seek a new balance in the sharing of burdens. Even if the price of fuel had not reached the levels that it has reached in the last 18 months, we would still have been forced to find a new balance.

Moreover, we are being faced with new challenges. The longer life expectancy and the aging of the population has meant that the whole welfare system (including health services and social services) can no longer be sustained the way we know it today. In a typical English expression, it has become evident that something has to give. The question is what has to give. Going back to the statement by the head of the GWU, the message is that it cannot be the "workers" and "pensioners" that have to give. It is claimed that there has to be more equity in seeking to find this new balance in the way economic burdens are shared.

I believe that it would be futile to keep on arguing (or discussing if one wants to put it euphemistically) about the burdens related to the electricity bill surcharge, unless we discuss the wider issues involved. Now we also have the pensions issue going to add to the intensity of the debate.

If the GWU wishes that the government spreads the economic burdens differently, it has to state who is not carrying enough today. It certainly cannot be yet again the taxpayer. Any uncollected revenues from the surcharge will have to be collected from the taxpayer. Presumably, there is agreement that it cannot be the employers if it is going to mean loss of competitiveness. After all, having a job and paying the surcharge is better than having no job at all.

There is an answer to the dilemma. However, all trade unions and employer organisations have to support it. The answer is the tax evaders. There can longer be any shelter for those who are avoiding tax.

Unfortunately, not all trade unions have shown themselves to be willing to make public their position against tax evasion and the organisations representing the business sector have at best been elusive on the issue. If we want a different way of sharing the burdens, it is only those who should and can pay more that need to shoulder more of such burdens.

However, there has to be unison among the social partners in the message that has to be delivered. So far this has not happened and the government cannot be blamed for it.