Growth, jobs and social cohesion

Government has once more published the Pre-Budget Document which is expected to serve as a stimulus to the discussion that leads us to the presentation of the actual budget in Parliament.

I have often commented about the fact that for the last two decades the debate on the Budget has gradually and steadily veered towards the real economic issues, even though there are still some who seek to interpret the Budget with a narrow minded approach that smacks more of colonial times, than with an approach that is a clear signal that Malta is an independent nation and a full member of the EU.

The Minister of Finance has titled this year's document, Growth, Jobs and Social Cohesion, giving a clear signal that Malta's economic priority is employment. Employment delivers economic growth and strengthens social cohesion and as such the link between the three is more than evident.

The document also focuses on education since a critical issue related to employment and growth is the country's ability to increase the level of value added in the economy. And the level of value added in the economy can only increase if the workforce and those aspiring to join it have a higher levelof skills. Moreover there are enough examples that prove that one of the pre-requisites of social cohesion is a good educational system.

The balance that needs to be achieved between growth, jobs and social cohesion is a critical factor that must be considered in the discussion as to whether employers should be made to pay for the whole of the cost of living adjustment in the forthcoming Budget. The trade unions have made their position very clear - employees are entitled to their full cost of living adjustment. On the other hand employers' representative organisations have stated that certain employers may not be able to afford all of this year's Cola and that in any case, wage increases should be tied to productivity increases and that collective agreement increases should be inclusive of cost of living adjustments.

I have always believed that since the mechanism regulating the cost of living increases had been agreed upon with the involvement of a number of parties, there must be unanimity between those parties to change that mechanism.

However, one also needs to make sure that this mechanism that has worked so well for the past eighteen years or so does not cause us, as a country to lose jobs. To my mind this qualification is critical as we cannot afford to have a rigid system that causes mayhem in the jobs market. The reality is that more damage will be caused to social cohesion as a result of a loss of jobs than as a result of the cost of living adjustment not being passed on fully to employees.

Therefore, we need to have flexibility in the system that takes account of the special challenges that our economy is facing as a consequence of the unprecedented international economic situation. We are not alone in facing such a situation and other countries are seeking to sort matters out through effective dialogue.

In Italy, for example, the head of the Italian federation of industry met with the head of Italy's largest trade union with the objective of exploring solutions that would safeguard employment while safeguarding employees' incomes. Such open and sincere dialogue between employers and employees' representative is required also in this country.

I do not believe that we can escape economic realities. We cannot take decisions that put into perils existing jobs and job creation. If we have economic growth, other issues can be addressed through a mature and realistic approach. This is why employment must remain our top economic priority as employment creates wealth and generate social cohesion.