STM and the Budget (2) - Blue skies and miracles
The Minister of Finance is in charge of the guidance of the economy. To call that "management" would be wrong. No government can truly manage an economy, not even under the remaining state-centred regimes. But the minister in charge of the economy has...
The Minister of Finance is in charge of the guidance of the economy. To call that "management" would be wrong. No government can truly manage an economy, not even under the remaining state-centred regimes. But the minister in charge of the economy has his work cut out to try to bring about conditions best suited for exploitation by the private sector.
He attempts to try to do that directly, through the fiscal policy he draws up and implements. Directness also involves applying a deft hand to project policies. He plays a major role in the Malta Council for Social and Economic Development (MCSED), mistakenly so, I believe, since the social partners address him far too much, rather than seeking a pro-active balance with each other.
The minister in charge of the economy also tries to jolly up society, by drumming as much as he can a feel good factor. He is not alone in doing this. The band of cheerleaders is led by the Prime Minister, and all the other Cabinet ministers and the parliamentary secretaries pitch in.
Finance Minister Tonio Fenech has been very active in this latter role in the past week or so. The official data coming out has been in the main good for the hand he seeks to play. Unemployment is down, both absolutely and in relative terms. Growth is estimated to have continued at a brisk pace in the first quarter, after a good performance overall last year.
On the negative side the price indices are rising. Mr Fenech went to great pains to demonstrate to the public, through a detailed presentation to the MCSED, that price rises are very largely due to imported inflation. At a time when the prices of crude oil, grains and their by-products are soaring on the world markets, Malta cannot be expected to remain insulated from their inevitable effect.
The Finance Minister stressed that the authorities are monitoring prices to winkle out unjustified increases. He did so in the context of strong criticism initiated by the Labour opposition before the general election and sustained since then that certain prices are rising faster in Malta than they are doing in the rest of the European Union.
He did not quite placate suspicions that there are in fact prices which are quite higher here than they are elsewhere. One such obvious phenomenon concerns medicines, some of which can be obtained up to a third more cheaply elsewhere. I personally found that to be the case with an intake I have to take in countries as geographically and economically far flung from each other as Tunisia and Abu Dhabi.
Importers say, and the authorities reiterate, that such price differences are due to the manner in which drug companies categorise the countries they supply. That may be the case, though not always necessarily so. The Finance Minister has a long way to go before he can satisfy consumers that they are not at times paying over the odds, though many consumers have also to learn to appreciate that Canute could not keep the tide from coming in - Malta is not about to succeed where that shrewd man failed.
The minister is on safer ground when it comes to the employment situation. Several thousands still remain on the jobless register, and their composition in terms of age range and skills or lack of them remain of concern to policy makers and the Employment and Training Corporation. Nevertheless, it is very obvious that there is a tight job situation.
Employers report that they are finding it very difficult to recruit certain types of workers, including cleaners and maintenance personnel in the tourism sector. Recourse to immigrant workers, done both legally as well as illegally, is widespread. In the building sector contractors not infrequently call out to be allowed to employ expatriate labour, not least from outside the European Union. Another factor in evidence is that one comes across many more expatriate employees in various sectors of the economy.
The positives available to the Finance Minister are quite numerous and he delivers them very carefully to the public. He also has to give out unpleasant news, like that of the removal of subsidies on domestic bread and the imminent increase in the surcharge of water and electricity. In doing so he strives to balance the good with the bad, and to play the inevitability card for all its worth.
Careful though he is it may well be that Minister Fenech looks unduly to good data which deal with the past, and also extrapolates the positives too far out into the future. The brutal fact is that we are living in a world which is tough and getting more so. The minister puts on a very brave face when he forecasts that growth will bump around three per cent in real terms. And that the cost of living will be contained.
Should prices begin to surge, it will be very hard to persuade a suffering public, particularly the lower income groups, that the government could not do more to cushion some of the impact. On the employment front the threat that is STM will not go away easily. No doubt the government will bend itself double, within the limits allowed by the EU, to assist STM to meet its challenges without resorting to discharges. But there can be no assurance it will be as successful as it wants to be.
There are dark clouds hovering above us and more on the horizon. Emphasise good news though one may, it would be wise to introduce more sobriety in comment about the state and future of the economy. Blue skies are never inevitable, not even in the height of economic summers. Let alone economic miracles.
He attempts to try to do that directly, through the fiscal policy he draws up and implements. Directness also involves applying a deft hand to project policies. He plays a major role in the Malta Council for Social and Economic Development (MCSED), mistakenly so, I believe, since the social partners address him far too much, rather than seeking a pro-active balance with each other.
The minister in charge of the economy also tries to jolly up society, by drumming as much as he can a feel good factor. He is not alone in doing this. The band of cheerleaders is led by the Prime Minister, and all the other Cabinet ministers and the parliamentary secretaries pitch in.
Finance Minister Tonio Fenech has been very active in this latter role in the past week or so. The official data coming out has been in the main good for the hand he seeks to play. Unemployment is down, both absolutely and in relative terms. Growth is estimated to have continued at a brisk pace in the first quarter, after a good performance overall last year.
On the negative side the price indices are rising. Mr Fenech went to great pains to demonstrate to the public, through a detailed presentation to the MCSED, that price rises are very largely due to imported inflation. At a time when the prices of crude oil, grains and their by-products are soaring on the world markets, Malta cannot be expected to remain insulated from their inevitable effect.
The Finance Minister stressed that the authorities are monitoring prices to winkle out unjustified increases. He did so in the context of strong criticism initiated by the Labour opposition before the general election and sustained since then that certain prices are rising faster in Malta than they are doing in the rest of the European Union.
He did not quite placate suspicions that there are in fact prices which are quite higher here than they are elsewhere. One such obvious phenomenon concerns medicines, some of which can be obtained up to a third more cheaply elsewhere. I personally found that to be the case with an intake I have to take in countries as geographically and economically far flung from each other as Tunisia and Abu Dhabi.
Importers say, and the authorities reiterate, that such price differences are due to the manner in which drug companies categorise the countries they supply. That may be the case, though not always necessarily so. The Finance Minister has a long way to go before he can satisfy consumers that they are not at times paying over the odds, though many consumers have also to learn to appreciate that Canute could not keep the tide from coming in - Malta is not about to succeed where that shrewd man failed.
The minister is on safer ground when it comes to the employment situation. Several thousands still remain on the jobless register, and their composition in terms of age range and skills or lack of them remain of concern to policy makers and the Employment and Training Corporation. Nevertheless, it is very obvious that there is a tight job situation.
Employers report that they are finding it very difficult to recruit certain types of workers, including cleaners and maintenance personnel in the tourism sector. Recourse to immigrant workers, done both legally as well as illegally, is widespread. In the building sector contractors not infrequently call out to be allowed to employ expatriate labour, not least from outside the European Union. Another factor in evidence is that one comes across many more expatriate employees in various sectors of the economy.
The positives available to the Finance Minister are quite numerous and he delivers them very carefully to the public. He also has to give out unpleasant news, like that of the removal of subsidies on domestic bread and the imminent increase in the surcharge of water and electricity. In doing so he strives to balance the good with the bad, and to play the inevitability card for all its worth.
Careful though he is it may well be that Minister Fenech looks unduly to good data which deal with the past, and also extrapolates the positives too far out into the future. The brutal fact is that we are living in a world which is tough and getting more so. The minister puts on a very brave face when he forecasts that growth will bump around three per cent in real terms. And that the cost of living will be contained.
Should prices begin to surge, it will be very hard to persuade a suffering public, particularly the lower income groups, that the government could not do more to cushion some of the impact. On the employment front the threat that is STM will not go away easily. No doubt the government will bend itself double, within the limits allowed by the EU, to assist STM to meet its challenges without resorting to discharges. But there can be no assurance it will be as successful as it wants to be.
There are dark clouds hovering above us and more on the horizon. Emphasise good news though one may, it would be wise to introduce more sobriety in comment about the state and future of the economy. Blue skies are never inevitable, not even in the height of economic summers. Let alone economic miracles.