Tourism wobbles pushing up unemployment

Finance Minister Tonio Fenech yesterday identified uncertainty in the tourism sector as one of the reasons for the increase in unemployment.

About 1,300 more people are unemployed than at the same time last year, during a period when tourism peaks and the number of job openings usually increases.

Speaking during a radio interview, Mr Fenech said that although tourist numbers were at the same level as 2007, which was considered a good year, hotels had reduced their rates, making them less comfortable about employing additional workers.

"This has reduced their flexibility and they are trying to do with two people what they might have done with three, so as not to put their company at risk," he said.

Speaking to Karl Gouder on Radio 101, Mr Fenech defended the policy of investing in major projects, including the €80 million City Gate project, saying that it was imperative to have a good product to attract quality tourists who would leave more money behind in the country.

In an hour dedicated to the pre-budget document launched last Wednesday, Mr Fenech stressed the importance of investing in the economy to generate the needed wealth.

He said it was imperative to make sure that no jobs were lost, although he admitted that it was not possible to save each and every one. He insisted that the government's intervention to help six companies earlier this year saved some 2,500 jobs.

Mr Fenech said the country needed to continue investing in quality education which gave young people better skills. "We do not want Malta to compete on the basis of cheap labour, but want people to have skills which help them earn good money," he said, adding that those already working should also have the opportunity of continuing with their studies.

He argued that families who were dependent on social services were likely to have children who also grew up to be dependent.

On the other hand there were women who worked as maids and did not declare their income, which meant that they would never be entitled to a pension and were dependent on their husbands'. Ironically, these women were likely to fall under the tax thresholds and would not have to pay tax, highlighting the importance of education campaigns and incentives.

Mr Fenech stressed the need that the budget be planned realistically, taking into consideration the international scenario that was fraught with economic problems and job cutting.

"We cannot have a budget which is outside of the reality," he said.

He added that while the government was trying to bring the deficit down to 3.8 per cent from last year's 4.6 per cent, the country was not there yet, and balancing the books might be difficult, making a deficit inevitable.

"This is not the moment to introduce new burdens, either on the economy and much less on individuals," he said. Although abuse had to be curbed, social services should not be slashed to cut government spending, he added.