GWU, chamber clash over need for price stability agreements

The General Workers' Union yesterday called on the government to seek price stability agreements with the business sector aimed at keeping prices down, in the wake of the steep increase in the price of food over the past year.

Later in the day, however, the Malta Chamber of Commerce and Enterprise insisted that such requests were "simplistic in their outlook and futile in their aim".

Price stability agreements were reached with a number of major import companies to cover the euro changeover period but they expired in March. The GWU also urged the government to consider other measures such as lowering taxation levels, which would spur economic growth and help all those finding it difficult to live decently as a result of rising prices.

The food price hikes are affecting the standard of living of more and more families especially workers and pensioners, the GWU said. Workers' wages were coming under great pressure and their purchasing power was being eroded.

The price of food in Malta has gone up by 9.7 per cent in the 12 months leading up to April, according to EU figures released earlier this week. The union had already voiced its concern some months ago when the annual rise was already above seven per cent, saying yesterday that people in the medium and low-income brackets were bearing the brunt of this food inflation.

It said their situation was set to deteriorate further with the removal of subsidies on bread and the imminent increase in the surcharge on utility bills. The chamber said the price stability agreements which came to an end in March were voluntarily entered into by a number of companies with the sole aim of ensuring a smooth currency transition. The measure was never intended to control inflation.

It insisted that though other measures, such as tax cuts, could help in the short-term, sustainable export-led growth is crucial for the country's long-term economic prosperity and this can only be achieved through increased competitiveness and productivity.

It reiterated its belief in free market forces. "The local market is mature and competitive. Such is the level of competition that if a company adopts a pricing policy which is not in tune with the realities of the market, it would be immediately out-priced from the market," it said, insisting that the free market is the best form of price control to the benefit of the consumer and the authorities.

Surely no one could ignore the international situation which is the major contributor in rising inflationary pressures on the local economy, it said.

The chamber also referred to the European Commission's quarterly report on the eurozone, which was quoted in some media reports regarding the situation of food prices in Malta. On page 27 this report acknowledges that "Malta, for instance, imports almost all of its food supplies. Consequently, fluctuations in global food prices have a significant impact on inflation developments".