The 2015 Budget is expected to contain a set of measures intended to coax young people on benefits into training or employment, The Sunday Times of Malta has learnt.
Under 23s will stop receiving unemployment benefit unless they join a Youth Guarantee programme, through which young people go through a tailored training programme aimed at improving job prospects.
The measure will also apply to single parents whose children are one year and older. They will lose their entitlement of some €100 a week, known colloquially as ‘relief’, unless they join the training initiative.
The measures are intended to underpin the theme for this Budget which is meant to employ a carrot and stick approach to encourage work.
However, there will be the usual fiscal measures aimed at increasing revenue.
Wine drinkers are in for an excise tax of 20 cents per litre, a move resisted in previous years to protect the local industry which took a hit from increased competition after Malta joined the EU. Spirits, however, are not expected to be affected.
There will also be a one-time top-up for those who are at the lower end of the income scale to compensate for this year’s low cost of living adjustment, which works out at just 58 cents a week, but the details of how this would work could not be obtained.
There will also be some incentives to encourage young single parents to join the labour market.
Currently, single parents on benefits who chose to join the labour market, have their entitlement reduced progressively if they earn more than €57 a week – a low threshold which is seen to discourage people entering the marketplace.
The government now intends scrapping this threshold and will instead introduce what is known as benefit tapering over a three-year period.
They will keep 65% of benefits in first year of work
They will keep 65 per cent of their benefits in the first year of employment, 45 per cent in the second year, and 25 per cent in the third year.
Moreover, employers who hire single parents or switch them to full-time employment will be given a cash refund equivalent to the salary of their workers, up to a maximum of €10,000 over two years.
The measures are part of a raft of recommendations which had been made by the Union Ħaddiema Magħqudin in 2012 as part of its JobsPlus programme which both main parties endorsed before the last election.
Finance Minister Edward Scicluna is expected to announce investment in new IT infrastructure at the Employment Training Corporation.
The move will help tighten the system to weed out benefit frauds.
As expected, the maximum income tax rate will now be capped at 25 per cent.