Employers propose welfare supplement for low-income households

The Malta Employers' Association has urged the government to award a one-off welfare supplement of €78 (based on €1.5 per week) to families with a household income of less than €12,000 per annum to counter an expected increase in inflation next year.

"This will be a focused and temporary intervention which will reflect current economic conditions, and preferable to nationwide measures that often are more expensive to implement and are wasteful," the association said in its proposals for next week's Budget.

It said that employers were conscious of the fact that the lower paid section of the labour force was finding it difficult to make ends meet. As the economy shifted to higher value added activities, wage disparities would increase and the relative purchasing power of some segments of society would decline.

Furthermore, it was likely that next year would see an acceleration of inflation caused by the global recovery, which may result in an increase in energy prices.

"In spite of encouraging signs of recovery and growth of the Maltese economy, these have not, as yet filtered down to consumer confidence. " the MEA said.

In its proposals, the MEA said the budget should aim at stimulating growth in those sectors of the economy which were still struggling to achieve pre-recession levels, and to increase the labour activity rate. The latter, combined with continued investment in education was the best means of generating income and wealth, and a way out of poverty to many.

The association called for an increase in family-friendly measures including increased investment in child care services and tax incentives/subsidies for affordable child care services at community level or at strategic locations (e.g. near park and ride in Blata l-Bajda; Industrial estates).

Schools, it said, could be kept open to provide the option - possibly at a charge - for parents to leave their children to be looked after at school. This could be achieved by offering extra payment to teaching and school administrative staff to man these hours.

On maternity leave, the MEA reiterated its view that, starting from next year, payment for maternity leave by employers should be phased out over a period of three years, and that any additional maternity or paid parental leave that may be introduced or imposed on the labour market would be paid for by government.

"This proposal will reduce the relative cost of employing female employees, which can act as an unfair barrier to them to participate in the labour market," it said.

With regard to the projected cost of living wage increase of €1.16, the MEA said that although this would be one of the lowest registered, due to the low inflation rate during the period September 2009 - 2010, it did not follow that labour costs would not increase during the coming year.

"The COLA increase of €1.16 will follow a year when employers had to award a COLA of €5.82, at a time when many were experiencing a drop in revenue and profitability due to the recessionary impact," it said.

"Employers will also face an increase in Social Security contributions in the coming year, as the ceiling for such contributions will increase to reflect the changes in the pension ceilings.

The pro rata entitlements to part-timers in their secondary employment would also raise the costs of employment, particularly in sectors which traditionally employ a considerable number of part timers, like tourism."

The trend in the past six months of falling unemployment would also trigger an increase in labour costs.

Therefore, it said, the government was being urged not to add any further costs to employment beyond the COLA for 2011.