Whistling in the wind

Are we on the verge of a brisk drive which will lead to a tri-partite social pact being concluded, as the Prime Minister hopes? I think not. I doubt that there will ever be agreement on such a pact. That does not mean that a different way of doing things in the socio-economic sector is not urgently required.

Talks about a formal social pact – as had been reached in Ireland in an unrecognisable yesteryear for that country – run aground five years ago. From time to time one voice or another lamented that fact and urged reconsideration by the parties involved. None came about.

This year, however, there was a breakthrough within the Malta Council for Economic and Social Development, the forum in which the social partners meet. Under the patient and able guidance of Gordon Cordina, Malta’s leading economist, representatives of the unions and the employers managed to reach agreement on a common position paper.

I confess I found that amazing. There is embedded division not only between the representatives of the workers and of the employers but, to a considerable extent, in the union side and, to a lesser extent, in the employers’ side as well. That Dr Cordina managed to lead them towards a limited common stance was nothing short of miraculous.

I understand that he did that by talking to each entity separately, and also by using the tactic – salami tactic would be a misnomer – of concentrating on what could unite and leaving what would divide to a future date. The latter approach was not total or in any way week-kneed. It led to considerable inching towards common ground on issues which are of fundament implication to the vested interests of the two sides, like the statutory annual cost of living adjustment, or COLA.

Having explored and found out that mutual cooperation for mutual interest, after all, was possible the two sides began working on proposals for a few manageable specific actions. The approach remained to talk to MCESD members individually to clear the ground for discussions at plenary meetings.

I rather suspect that, speaking to the unions individually, Dr Cordina found them not to be the ogres they are so often painted to resemble. Reasonableness was not such a scarce factor, after all. The unions exist to protect their members, above all, by protecting their jobs. The quality of work, pay and working conditions are key elements for trade unions to tackle. But the first priority is job protection.

For that to be possible, economic operators have to be able to sail through very rough economic waters without capsizing. They have to be able to compete in the domestic and international markets. Otherwise, with all the goodwill in the world between employers’ and employees’ representatives, the enterprise will fail. Jobs will be lost. The continued existence of collective mechanisms like COLA has to be seen in that context. Anyone who suggests that the trade unions do not recognise that simple fact of life misreads the situation and starts off on the wrong foot.

I should think that Gordon Cordina definitely did not make that mistake which is why he could bring the two sides together. The unions must have seen that the minimal increase in wages provided by COLA should be affordable by our economy: if not there would be a serious competitiveness problem. The unions, I know from experience in my professional life, are ready to help tackle this situation through other initiatives, especially if the competitiveness thus brought about also leads to better job security.

On their part, employers would be happy to pay COLA and obtain the industrial peace that comes with it, if they are in a sufficiently competitive business situation so as to be able to afford it. For employers to argue that they want COLA gone at all costs would simply stop the possibility of limited consensus dead in its tracks. As it is, the fact that inflation has been high and COLA has produced a high wage increase from January 1 has almost brought about that result. The employers’ side have been careful not to say that they do not want to pay COLA. They want the government to assist them to do it in various ways. There is not agreement in all the ways proposed between the larger and smaller employers. And the government has not shown willingness to bear part of the burden itself.

All eyes are now on the forthcoming budget. But the background is such that the Prime Minister’s call for a fresh effort at a social pact only muddies the waters. Ironically it should be possible for the workers’ and the employers’ representatives to reach broad agreement, even to work out a pact. But one which includes the government, which is held responsible for a large part of the ongoing inflationary trend, has a weaker chance than whistling in the wind.