The Malta Employers' Association has urged the new government to stick to the target of a balanced budget by 2010.

"Political parties can too easily succumb to deliver pre-electoral promises at the expense of sustainability, and it is the association's belief that the target for a balanced budget by 2010 should be adopted irrespective of who is in power," president Pierre Fava said.

"This is not just to satisfy the parameters that have to be respected as part of the eurozone but because it is healthy for the economy. This entails designing sustainable welfare systems, together with a more efficient and lean public sector.

"Fiscal policy should ensure that expansionary measures do not have an adverse effect on the deficit. The experience of the past couple of years has shown that prudent reductions in the tax burden have not increased the budget deficit. However, this was because of the increased revenue generated through economic growth.

"Although one can argue that the tax cuts themselves contributed to the positive growth through an increase in aggregate demand during 2006 and 2007, one must not lose sight of the fact that any tax reductions can only be feasible if supported by increased economic activity. This is why MEA advocates measures that increase labour participation as a means of ensuring sustainability."

Mr Fava was speaking at the recent 43rd annual general meeting of the Malta Employers' Association (held before the election).

He stressed that the MEA was in favour of measures that increased the supply of labour, the three key target segments being females, the older segment and foreign workers.

"The introduction of family-friendly measures is a step towards encouraging a higher female participation in the labour market. Incentives that address child care, tax incentives and related other legislation can yield results. MEA has been on record in supporting such measures as long as they do not increase the costs of employment. However, employers must weigh the costs of wage-induced inflation that arises from a shortage of labour against the possible cost of introducing family-friendly measures to increase the labour supply," he said.

Mr Fava said it was also important to encourage employees to stay longer in the labour force.

"The incentive given to pensioners to get their full wage and their pension after retirement age is definitely a step in the right direction. MEA has also been insisting on controlling early opt-outs from the labour force since these reduce the labour supply and increase the welfare gap," he said.

There are currently around 7,000 foreign persons with a work permit in Malta and there is growing demand for foreigners by employers in many areas. It is expected that this demand will increase to satisfy the needs of the many investment projects in the pipeline.

"This will become a necessary feature of our economy. However, MEA stands for safeguarding the rights of foreign workers and condemns any exploitation that may occur when foreigners are employed in the informal economy," he warned.

Mr Fava also reported that the MEA increased its membership and now represents the employers of 45,000 people in all sectors of the economy.

In the coming weeks, it will be running a media campaign about health and safety with the Union Ħaddiema Magħqudin.

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