The government, in close collaboration with the social partners and the local community is to invest in incentivising work in order to attract and retain employees in the labour market, according to its Pre-Budget Document 2012 which was launched by Finance Minister Tonio Fenech on Monday.

As part of Malta’s National Reform Programme under the EU’s 2020 Strategy – which has an employment rate target of 62.9 per cent, an increase of 4.5 per cent – the government is considering a number of proposals namely:

The introduction of a pilot project involving a number of job creating and sheltered work ventures for persons with a disability; the introduction of a scheme for unemployed 21 to 29 year olds which focuses on their respective skills and the labour market opportunities; the revision of the present Community Work Scheme with the aim of including more people and to ensure that the needs and difficulties experienced during the first phase of the project are met;

The continued training of low-skilled employees in various sectors, so that they improve their chances of upward job mobility; the introduction of more initiatives to encourage more individuals of retirement age to remain active in the labour market; the continuation of apprenticeships and training programmes which are seen as a direct investment in human capital and the economy; and further investing in equal opportunities in the workplace between men and women.

The government is also planning to increase the number of childcare centres in Malta and Gozo. There are currently 14 such centres operated by the government and it envisaged that at least another five centres will be built between 2011 and 2013.

The report says that employers are to be encouraged to develop more family friendly measures at their place of work. The Employment and Training Corporation will be guiding and counselling companies on the measures which can be adopted in their workplace. Companies which implement good family-friendly practices will be accredited with a quality label and will be given awards for the introduction of such arrangements.

The Pre-Budget Document also highlights that as part of the government’s commitment to the green economy a number of proposals are being considered including a fiscal incentive scheme to promote the restoration and maintenance of scheduled properties aimed at promoting ownership and the restoration of scheduled buildings.

The government is also considering the provision of incentives for young people, associations and small scale creative industries (and which do not cause disturbance to residents) to move to urban cores, utilising existing buildings and investing in retrofitting for energy and water efficiency and reduced resource utilisation.

In order to assist with the transition to zero-carbon buildings, the government will also modify in the coming years the transaction tax on buildings depending on their energy performance class.

The report says the government wants to encourage all sectors to take advantage of environmental innovation as a business opportunity. To this end it will promote a positive climate for eco-efficient innovations through various means.

“In order for new technologies to become viable, as well as to be adapted to the Maltese environment, a high level of research and development and innovation is required. To further support eco-innovation and green technologies, financial assistance for eco-innovative start-ups, businesses implementing eco-innovative solutions and companies bringing innovations to the market will be formulated,” the report says.

The government will also explore the possibility of easing certain regulatory burdens on eco-innovative or green firms while also facilitating start-ups and promoting best practices.

The document makes it clear that fiscal consolidation and deficit reduction will be given top priority in the forthcoming Budget.

“Unfortunately, the experience of most of our European partners teaches us a very tough lesson on why financial consolidation is essential. Financial responsibility has allowed us to take decisions cautiously. We must not lose track of such targets as one day someone would have to pay the price,” Finance Minister Tonio Fenech says in his introduction to the document.

The report says that the government’s fiscal consolidation strategy for 2012 is largely expenditure-based.

“Expenditure cuts are more effective in a medium-term perspective than revenue increases, particularly in view of the government’s macroeconomic objectives of improving national competitiveness levels,” it says.

The government will sustain its policy of expenditure restraint as regards intermediate consumption and the general government wage bill, which in total are expected to account for 0.6 per cent of the decline in the expenditure-to-GDP ratio.

The government’s debt strategy remains that of ensuring that the financing needs of the public sector are met at the lowest possible cost while minimising medium and long-term interest rate risk. After reaching 68.2 per cent of GDP in 2010, gross government debt is expected to follow a downward path, declining by 0.2 per cent of GDP in 2011 mainly on account of a positive primary surplus, and by 0.8 per cent to 66.9 per cent of GDP in 2012.

The government deficit is projected to decline by 0.6 per cent of GDP from 2.8 per cent in 2011 to 2.2 per cent in 2012.