Labour spokesman queries basis of economic expansion

The Labour Party spokesman for economic affairs, Charles Mangion, said yesterday that while Malta's accession to the eurozone was being seen by the government as a boon for the people, facts speak otherwise.

Putting a number of questions, querying the validity of the government's statement on the state of the economy, Dr Mangion asked whether the economic expansion was being reflected in a better quality of life.

He asked whether this latest development means more income for the workers, income that will, in turn, lead to a stroger purchasing power. Dr Mangion wondered whether economic activity was restricted solely to a number of sectors. While economic activity for 2005-2006 recorded progress, this happened in the financial intermediary sector, primarily in banks and financial services, in the construction industry and in online gambling. Tourism, transport and industry were still facing big challenges, Dr Mangion said.

Official statistics, Dr Mangion added, confirm that the value added leading to economic expansion in 2005 and last year was characterised by the fact that it was the profit posted by certain sectors that led to such expansion rather than the contribution by wages and salaries. In fact, the contribution of wages and salaries in the economy dipped from 1.55 per cent to 1.1 per cent between 2005 and 2006.

One has also to take into consideration the fact that the cost of living in this period was an average three per cent or higher.

Referring to public finances, Dr Mangion said the European Central Bank report underlined the fact that the deficit target was reached due to extraordinary one-off income.

The commitment for the shoring of public finances ought to be economic expansion and better income for families rather than one offs or an increase in taxation, Dr Mangion said.