While trade unions are lauding the national employment policy unveiled on Friday, employers are warning that top-ups for lowincome earners may trigger calls for wage increases and consequently increase labour costs. The policy includes measures to support low-income earners through a series of incentives meant to “make work pay”.

These include keeping part of the social benefits in those cases where people find a job after a minimum of two years on the unemployment register.

Another measure is to introduce a permanent top-up for low income earners to encourage them to remain in employment, thus reducing those living on social benefits. On the other hand the government is pledging to crack down on jobless people seeking “inexistent” vacancies opportunities or outrightly refusing employment opportunities.

When contacted, Union Ħaddiema Maqgħudin president Josef Vella told The Sunday Times of Malta that these proposals were very similar to the ones put forward by the union prior to this year’s Budget.

“One of our proposals was to give an annual €900 allowance for every child in low income families,” Mr Vella said.

He added that this would have to be limited only for those cases where people are at risk of poverty.

Mr Vella said that after agreeing on this measure in principle the next challenge would be the social partners to find the right mechanism and iron out the details.

However, the UĦM president cautioned that the Jobs Plus Programme, which was central to this employment policy, needed a €30 million investment to yield the desired results.

“It would be futile agreeing on the measures without having any resources available,” he said. Mr Vella argued that this investment was based on the experience of a similar programme carried out in Austria. The policy was also hailed by General Workers’ Union general secretary Tony Zarb who said that these proposals came just days after its May Day appeal to raise the minimum wage.

He added that this would also serve to address poverty and played down fears it would trigger calls for wage increases, arguing that this would not be part of the salary.

However, employers said that while the policy proposed concrete action to address labour market deficiencies, some of the measures needed further study.

Malta Employers Association director general Joe Farrugia said that any top-ups for low-income earners would affect the relativity of wages. He also questioned whether such measures would automatically apply to all minimum wage earners, even if in cases where take-home pay was higher due to overtime and allowances.

Employers also questioned the cut-off point of such measure, arguing that workers who would not qualify would then ask for a pay rise to keep the same salary scales.

“In principle, the aim of supporting low-income earners is commendable but it would be a mistake to mix up the concept of a wage with that of a social measure,” Mr Farrugia remarked.

He added that employers were “surprised” when they learned about this measure on Friday, saying that it had never been discussed between social partners.

Economist Lino Briguglio said that this was a step in the right direction.

“Its overall effect is likely to be positive as it should increase the number of gainfully employed, reduce the occurrence of persons registering for non-existent jobs, and reduce abusive use of the social services,” Prof. Briguglio said.

However, he acknowledged that introducing top-ups could disturb wage relativities and possibly lead to calls for wage increases by other workers.

“This would then affect the cost of production,” Prof Briguglio said.