Enter the second NRP
A public consultation programme was launched recently by Finance and Economic Affairs Minister Tonio Fenech, on the National Reform Programme (NRP) covering the years 2008/2010. This follows the previous NRP based on three years to 2008, previously...
A public consultation programme was launched recently by Finance and Economic Affairs Minister Tonio Fenech, on the National Reform Programme (NRP) covering the years 2008/2010. This follows the previous NRP based on three years to 2008, previously introduced by ?ensu Galea, Minister for Competitiveness and Communications.
The first NRP was groomed to serve as a roadmap for plotting Malta's economic progress, particularly its employment prospects while investment would be made in knowledge and innovation, energy and a cleaner environment. Then in 2005, the main concern was to marshal the national debt which exceeded 70 per cent of GDP. The reform document listed five targets namely sustainability of public finances, competitiveness, employment, education and training, and the environment.
So what is new this time around? The new emphasis is now on attaining fiscal consolidation. In simple terms this means that the tax revenues and all other rich pickings will make up for the ever increasing government expenditure. The holy grail seems to be the balancing of the budget by 2010. This is an ambitious goal in itself. However, is it enough considering that although we witnessed a reduced rate, cumulatively the debt levels are raucous for redemption? Being complacent one can reason that Malta cannot but be thankful for little mercies considering that for past decades successive governments did not manage a surplus in the annual budget and the prevalent deficit was somewhat part of our yoke. Moving on, it is positive that another attempt will be made in the coming three years to solve the pension time bomb linked to a spiralling cost of ever more advanced health care development amid an aging population.
The cherry on the cake of the new NRP is the statement made by the finance minister who declared a war on bureaucracy. It seems our home-grown "Sarko" wants to bite the bullet and wrestle the mantle of state-harnessed red tape. We all wish him well. But how feasible is this plan? Can Malta benefit once it responds to this call for action to regenerate the jobs market?
One expects the NRP to revisit priority areas such as the sustainability of public finances, employment, education and environment and to foster a unilateral front between government, the social partners and civil society. But will this again lead to a whole hearted attempt for a social pact? Yet in spite of this noble cause there was no agreement reached by the social partners to sign a social pact. In their opinion employers lament that it is indeed unfortunate that after lengthy discussions with all stakeholders to reach a social pact, the unions backed out of the agreement. This failed attempt cannot act as an albatross round our necks yet every effort must be applied to try to reach consensus again. Such a small business community cannot afford the luxury of fragmented labour factions each fighting for their own patch.
Success calls for an antidote. This depends on a number of external factors such as the rate of expansion of neighbouring European countries that are our main export clients and the mitigation of the US recession. Will the oil price continue in its downward drop? Back to basics, and we face a further problem concerning the low participation rate of the female workforce. In this respect the NRP proposed in its first version various measures intended to boost the female employment rate by 7 per cent, and reduce the early school leavers' rate by 13 per cent within 2010. This has improved but not significantly. Opening up the jobs market for more female participation is quite an ambitious task and it all looks very hunky-dory on paper. Naturally the labour market has to afford better paid jobs for married females, coupled with flexi-hours and improved childcare centres. Only then will paper targets become achievable. Of course, the popular jest is to emulate the champion in the field - the much hyped French President Sarkozy who can be credited with having managed to trim the wings of militant unions and slowly paved the path for more liberalisation in the jobs market. He dropped tax on overtime. Much like the vaunted alchemist stone in the middle ages members are seeking the elixir to stabilise their job markets. The Barroso administration showed a brave front by urging members to prime their economic pumps with the aim for Europe to become, by 2010, the most dynamic and competitive knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion, and respect for the environment. This is certainly a tall order.
As can be expected, in spite of a number of drawbacks on the local front, party apologists lax lyrical about the government's success in solving the unemployment challenge, now dropped to under 6 per cent. But are politicians being too ambitious when we plan to reach the objective of raising the overall employment rate by 3 per cent by 2010? For this and other reasons sceptics retort that the objective to raise the gainfully employed by three percentage points by 2010 is a pipe dream conjured by backroom bureaucrats. This unless one resorts to the perceptible scheme of absorbing more unemployed in the burgeoning bureaucracy. Some state that this target may prove to be highly illusive to put into action. For this reason, it is crucial for us to emulate the strategy on achieving a higher jobs growth formulated at the Lisbon Summit.
Our resolution in the NRP should wholly encompass the enrichment of workers' education by investing in "knowledge" workers thereby boosting our potential for sustainable employment opportunities. Achieving jobs growth depends on the ability to maintain and develop the competitiveness of the manufacturing industry, particularly the services sector. Industry's interdependence with services cannot be ignored and the progressive outsourcing of business services has reduced the apparent scale of the manufacturing industry. Continuing on a local aspect, it is encouraging to note that the request for submission of comments on Malta's second NRP was given the green light by the finance minister.
To conclude one may wish to quote the Prime Minister who constantly reminds us that one had to keep in mind that the economy was susceptible to external factors, such as the skyrocketing oil prices, cost-push inflation and the credit crunch which could as a result derail the NRP.
Even though subsequent to the implementation of 2005/2008 NRP we fared badly in the Eurobarometer survey we can still perk ourselves up. Other than this we must take courage in our abilities to attract more foreign direct investment. This is invariably linked to our success in achieving gold in the Lisbon Olympics!
Mr Mangion is a partner in PKFMalta
gmm@pkfmalta.com
The first NRP was groomed to serve as a roadmap for plotting Malta's economic progress, particularly its employment prospects while investment would be made in knowledge and innovation, energy and a cleaner environment. Then in 2005, the main concern was to marshal the national debt which exceeded 70 per cent of GDP. The reform document listed five targets namely sustainability of public finances, competitiveness, employment, education and training, and the environment.
So what is new this time around? The new emphasis is now on attaining fiscal consolidation. In simple terms this means that the tax revenues and all other rich pickings will make up for the ever increasing government expenditure. The holy grail seems to be the balancing of the budget by 2010. This is an ambitious goal in itself. However, is it enough considering that although we witnessed a reduced rate, cumulatively the debt levels are raucous for redemption? Being complacent one can reason that Malta cannot but be thankful for little mercies considering that for past decades successive governments did not manage a surplus in the annual budget and the prevalent deficit was somewhat part of our yoke. Moving on, it is positive that another attempt will be made in the coming three years to solve the pension time bomb linked to a spiralling cost of ever more advanced health care development amid an aging population.
The cherry on the cake of the new NRP is the statement made by the finance minister who declared a war on bureaucracy. It seems our home-grown "Sarko" wants to bite the bullet and wrestle the mantle of state-harnessed red tape. We all wish him well. But how feasible is this plan? Can Malta benefit once it responds to this call for action to regenerate the jobs market?
One expects the NRP to revisit priority areas such as the sustainability of public finances, employment, education and environment and to foster a unilateral front between government, the social partners and civil society. But will this again lead to a whole hearted attempt for a social pact? Yet in spite of this noble cause there was no agreement reached by the social partners to sign a social pact. In their opinion employers lament that it is indeed unfortunate that after lengthy discussions with all stakeholders to reach a social pact, the unions backed out of the agreement. This failed attempt cannot act as an albatross round our necks yet every effort must be applied to try to reach consensus again. Such a small business community cannot afford the luxury of fragmented labour factions each fighting for their own patch.
Success calls for an antidote. This depends on a number of external factors such as the rate of expansion of neighbouring European countries that are our main export clients and the mitigation of the US recession. Will the oil price continue in its downward drop? Back to basics, and we face a further problem concerning the low participation rate of the female workforce. In this respect the NRP proposed in its first version various measures intended to boost the female employment rate by 7 per cent, and reduce the early school leavers' rate by 13 per cent within 2010. This has improved but not significantly. Opening up the jobs market for more female participation is quite an ambitious task and it all looks very hunky-dory on paper. Naturally the labour market has to afford better paid jobs for married females, coupled with flexi-hours and improved childcare centres. Only then will paper targets become achievable. Of course, the popular jest is to emulate the champion in the field - the much hyped French President Sarkozy who can be credited with having managed to trim the wings of militant unions and slowly paved the path for more liberalisation in the jobs market. He dropped tax on overtime. Much like the vaunted alchemist stone in the middle ages members are seeking the elixir to stabilise their job markets. The Barroso administration showed a brave front by urging members to prime their economic pumps with the aim for Europe to become, by 2010, the most dynamic and competitive knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion, and respect for the environment. This is certainly a tall order.
As can be expected, in spite of a number of drawbacks on the local front, party apologists lax lyrical about the government's success in solving the unemployment challenge, now dropped to under 6 per cent. But are politicians being too ambitious when we plan to reach the objective of raising the overall employment rate by 3 per cent by 2010? For this and other reasons sceptics retort that the objective to raise the gainfully employed by three percentage points by 2010 is a pipe dream conjured by backroom bureaucrats. This unless one resorts to the perceptible scheme of absorbing more unemployed in the burgeoning bureaucracy. Some state that this target may prove to be highly illusive to put into action. For this reason, it is crucial for us to emulate the strategy on achieving a higher jobs growth formulated at the Lisbon Summit.
Our resolution in the NRP should wholly encompass the enrichment of workers' education by investing in "knowledge" workers thereby boosting our potential for sustainable employment opportunities. Achieving jobs growth depends on the ability to maintain and develop the competitiveness of the manufacturing industry, particularly the services sector. Industry's interdependence with services cannot be ignored and the progressive outsourcing of business services has reduced the apparent scale of the manufacturing industry. Continuing on a local aspect, it is encouraging to note that the request for submission of comments on Malta's second NRP was given the green light by the finance minister.
To conclude one may wish to quote the Prime Minister who constantly reminds us that one had to keep in mind that the economy was susceptible to external factors, such as the skyrocketing oil prices, cost-push inflation and the credit crunch which could as a result derail the NRP.
Even though subsequent to the implementation of 2005/2008 NRP we fared badly in the Eurobarometer survey we can still perk ourselves up. Other than this we must take courage in our abilities to attract more foreign direct investment. This is invariably linked to our success in achieving gold in the Lisbon Olympics!
Mr Mangion is a partner in PKFMalta
gmm@pkfmalta.com