Utility tariffs biggest cause of inflation - GRTU

Reforms were needed to curb inflation but price controls did not make sense, the Chamber of Small and Medium Enterprise, GRTU said.

It said that wage increases which did not reflect an increase in production and government induced costs on the economy were increasing the country’s inflation rate.

While a few people worked very hard and were poorly paid, others were very well paid for very little work. Others had low wages because they worked in over-manned sectors. This led to unnecessary bureaucracy and a burden which the private sector had to make good for.

To cover these expenses, the private sector had to rely on prices. But as soon as these were increased, inflation went up and enterprise became uncompetitive to the detriment of jobs.

The GRTU said that the privatisation of ports had failed with Malta still being uncompetitive and expensive. In certain instances the situation was even worse than it was prior to privatisation.

The same could be said for the airport which had among the highest charges in the world for airlines. Banks and financial institutions, such as insurances, were dominant and did what they wanted. Shipping was also uncontrolled with the country having a lot of shipping agents but very little services.

Inefficiencies in the private sectors were also aiding inflation. The biggest inefficiencies were in distribution, there being enormous expenses to take products from one place to another.

But the tariffs imposed by Enemalta and the Water Services Corporation were the main cause of this year’s high inflation rate, the GRTU said.

It said that subsidies could not continue to be given and incompetency had to be tackled. The antiquated equipment also had to be changed. But after years of doing nothing it was as if the authorities woke up and what they could have increased little by little on a number of years they increased all at once to the detriment of inflation and competitiveness.

Reforms were needed in all sectors but price controls did not make sense. The problem was much deeper and needed serious solutions were required.