The need for growth must be pursued – Chamber

The Malta Chamber of Commerce Enterprise and Industry yesterday stressed that while the IMF’s opinion on Malta took note of Malta’s recent economic progress, it warned about the possibility that recent economic momentum might not be sustainable. It further stated that “uncertainty remains high and the risks tilted to the downside”.

Malta Chamber president, Helga Ellul stated that “the only way to steer our country effectively out of the economic and financial storm is through economic growth – and to grow, our country must implement the necessary decisions in favour of competitiveness”.

In many ways, the Chamber said, the IMF’s recent report echoes the opinions put on record by the Malta Chamber. “Immediately after the last budget, for instance, the Malta Chamber voiced concern about whether the economic growth assumed in the budget would materialise and whether this would in fact bring about the forecasted receipts from direct taxation, VAT and National Insurance contributions,” it said.

The Chamber said it has echoed very similar opinions to the IMF on export-led growth, wages and productivity and public finances. It has similarly advocated consolidation, albeit with utmost caution. Mrs Ellul stated that “systems of taxation and social benefits must encourage people to work and increase people’s employability. Malta has a successful social welfare model; it must be sustained and protected through work”.

The IMF’s call for higher productivity, skills and employment rates and the recommendation that wages should follow productivity developments is also well justified, the chamber added.

“This is exactly what prompted the Malta Chamber‘s stand on the need to fine-tune the COLA mechanism with a focus on ascertaining Malta’s competitiveness but retaining it as a means to safeguard workers’ purchasing power.”

The IMF has also recommended the implementation of “flexible working practices” to stimulate participation and growth. “It is widely known that for two consecutive budgets, the Malta Chamber has called for the introduction of labour-flexibility measures such as Banking of Hours to support further growth in the economy. This measure is widely accepted and adopted in other EU member states. It allows businesses to retain highly skilled workers and helps employees strike a better work/life balance. It contributes to securing jobs and does not necessarily lead to loss of overtime. We are a small country and flexibility must be our main driver,” it said.

The Malta Chamber reiterated that this is not the time to be complacent. Recommendations made in the national interest by the Malta Chamber and which are confirmed by the IMF and the Central Bank Governor must be heeded to, it said, even though they may require unpopular decisions.