No urgent need for social pact, Finance Minister argues

While agreeing with Central Bank Governor Michael Bonello on the need for consultations between the social partners in view of the prevailing economic situation, Finance Minister Tonio Fenech does not believe this should be extended to a formal social pact.

Mr Bonello, on Thursday, urged the social partners to restart talks on a social pact in view of the need to raise competitiveness given the current international economic scenario.

Mr Fenech said, when contacted, the government was always open to discussion but he did not feel any urgent need for a social pact. "Not because it is not desirable for one to be reached but an intensive attempt at doing so has already been made and, unfortunately, because of the country's political environment, it failed".

He was referring to the breakdown of talks in November 2004 after several months of discussion between the social partners.

Mr Fenech said the government has now set up a regular consultation mechanism entailing a pre-budget document, which was then discussed with the social partners, civil society and the public, who together drew up a programme of work for the following year. This was one way in which consultation could lead to important decisions and the government was now working on the next pre-budget document.

The minister acknowledged, however, that the discussions over a social pact had helped the government make certain decisions that had helped the economy to grow, even though not everyone had agreed with such decisions.

Asked whether the situation was now different since the country has just come out of a general election, Mr Fenech said he did not think so.

"I do not think we should once again take the country down this route at this stage unless there is really the will from all sides to agree on some form of social pact."

He said that one had to put what the Governor was saying in context - he had been speaking about the need to continue increasing the country's competitiveness in view of the unpleasant global economic realities.

Although Mr Fenech agreed that consultations with the social partners should carry on, so that they would agree on certain measures to be taken, he voiced the fear that discussions on a social pact might stop the economy from progressing. If no agreement was reached it would be very detrimental to the economy.

"Somebody has to bite the bullet and the government is there to do this. When we tried to bite the bullet together someone did not want to do so because of political considerations. The situation is not too different now."

The Governor's appeal was, however, music to the Union Ħaddiema Magħqudin's ears.

"The UĦM first floated the idea that the country should learn to work together - the government, unions and employers - in a general conference in March 2004. This is because, ultimately, there are no winners or losers in the light of globalisation," general secretary Gejtu Vella said.

He said that that, in view of new challenges, such as an increase in the price of oil and cereals, unless the country learned to identify such problems together and work to find solutions, there would be more casualties. "Ultimately, we're talking about people here."

Mr Vella acknowledged that the talks had failed in the past and said that before the country learned to make a distinction between partisan politics and economic and social realities, it would not make the great leaps forward that it was capable of.

FOI President Martin Galea agreed that restarting talks on a social pact was a "very good idea". He said he believed this helped the parties register progress on issues and try to come to some sort of agreement.

"It has failed in the past but I don't think that because of that we shouldn't get it moving again."

Tony Zarb, the general secretary of the General Workers' Union, said that the GWU would be discussing the issue internally in the coming days but, in the past, the union has always said that when measures were taken, everyone, and not just workers, should shoulder part of the burden. Workers, he said, were the only ones to suffer after a number of public holidays were removed.

The director general of the Malta Employers Association, Joe Farrugia said the MEA did not have an official stand on the matter as yet but it would be discussing it and issuing a position in the coming days.

Tancred Tabone, President of the Malta Chamber of Commerce and Enterprise, said the chamber will be writing to the Parliamentary Secretary for Public Dialogue and Information, Chris Said, and to the chairman of the Malta Council for Economic and Social Development, Sonny Portelli, to see to it that talks on the social pact would kick off without delay.

"It is important for all stakeholders to heed Mr Bonello's warning. The Governor gave concrete proof of the deterioration in our national competitiveness levels, which is coupled by the dangers of less resilient economic conditions across the globe. No country and nobody owe us a living and, unless we are in a strong position to compete, there is no way for us to prosper in the modern globalised world," Mr Tabone said.

He added that all must understand that the country cannot sustain wage increases that are not in tune with higher productivity as that would mean the country driving itself out of the market.