The Malta Employers Association this morning backed calls made to Malta by the European Commission for further reform to the pensions system and the COLA (cost of living adjustment).

The MEA said the recommendations reflected a number of concerns which it had been voicing for years with regard to competitiveness and sustainability of public finances.

The MEA said it agrees with the recommended measure to index (link) retirement age to mortality age.

"This is being adopted by other countries and is a realistic way to ensure that the retirement age reflects changing demographics," it said.

COLA ADJUSTMENT

As for reform to COLA, the MEA said it has, for years, been arguing that  the COLA mechanism is outdated and could result in a loss in competitiveness.

"This is also being discussed at MCESD but it is evident that government and unions will resist – for political reasons – the removal of automatic cost of living increases, in spite of advice to the opposite by the IMF, the Governor of the Central Bank, and now the Commission."

EARLY SCHOOL LEAVERS

The MEA said EU calls for Malta to further reduce the number of early school leavers  were 'very sobering'.

"It should be a national priority that, with so much investment in education taking place, the number of school leavers has to be cut down even further than the 33% projected for 2014 from the current 36.8%. However one needs to compare the measuring instruments to ensure that the comparative figures are based on the same basis."

With regard to fiscal consolidation targets, the MEA said the although Malta does not have an alarming situation, it is imperative to reach the fiscal targets by keeping the deficit below the 3% threshold and reducing the size of the public debt.

"The government should not give in to pressures to increase expenditure unless it is matched by revenues generated through economic growth. Another tough nut to crack is our dependence on fossil fuels, as moving from an over reliance on fossil fuels entails substantial investment."