Facing challenges may hurt a little, Gonzi warns

Just weeks ahead of Budget Day, Prime Minister Lawrence Gonzi said yesterday the country should not fear challenges but change what needs to be changed even though that might "hurt a little".

"Let us bite the bullet," he said before adding that caution needs to be exercised as the changes would "affect people".

He was speaking during a business breakfast organised by the Nationalist Party in the run-up to Independence Day and probably short of a month away from the budget.

Although ambiguous, throughout his closing speech Dr Gonzi said the boat may need some rocking, while referring to oil prices and the credit crunch as threats to the economy. "It would be irresponsible to think in terms of not rocking the boat," he said.

At a similar business breakfast on the environment on Tuesday he also insisted that a strategic decision on sustainable development is needed but that it would come "at a price".

The emphasis on the financial challenges, which jars with the pre-electoral promises of substantial income tax cuts by this budget, effectively comes in the wake of troubling statistics that signal a ballooning budget deficit.

Dr Gonzi yesterday reiterated his electoral pledge of retaining stipends, saying this was not a political gimmick because stipends were reaping results.

He underlined the importance of going for family-friendly measures to increase employment participation, especially among women who want to work while taking care of their family. But there was no direct mention of the income tax cuts.

The director general of the Malta Employers' Association, Joe Farrugia said employers support family-friendly measures so long as they do not disrupt production, adding that customised solutions are preferable to across-the-board measures.

He referred to inflation, which he described as a threat to employment, stressing that salary increases should reflect productivity rather than inflation.

He referred to what he termed as a series of challenges facing employers and listed the lack of certain skills, including in the tourism, IT and health sectors, and the poor knowledge of English even among University graduates who sometimes struggle to compile reports.

On the other side of the fence, the General Workers' Union's general secretary, Tony Zarb said unions were facing great difficulties to get pay increases for their members.

Mr Zarb mentioned the exploitation of immigrants, both legal and illegal, something that was also detrimental to Maltese workers. He added that the union would be launching its position on the issue in the coming days.

On this point, Mr Farrugia pointed out that the small gap between social benefits and the minimum wage could be keeping people away from legal employment and also encouraging the black market. He stressed the importance of education and ongoing training in order to increase the number of skilled workers and help job mobility.

Malta Enterprise chairman Alan Camilleri said a road map, plotting the skills that industry will be needing in the coming years, was a must. He said Malta was facing tough competition from Baltic and Eastern European countries that were trying to attract industries which had set up shop in Malta.