As Malta finds itself immersed in arguments over an ever growing string of allegations, or claims, over contracts, tenders, fraud, irregularities, transparency and accountability, workers in quite a number of countries in Europe are furious over austerity measures being taken by their governments to cut soaring deficits.
It all seems so ironic that, while many thousands of workers across Europe are protesting over bread-and-butter issues, Malta somehow gives the impression, outwardly at least, to be blissfully isolated from the ill-winds hitting allies in the European Union, though the General Workers’ Union was represented in the protests in Brussels. Not all the issues currently stealing the limelight are trivial. They are not, but it does seem odd that the country sometimes appears somewhat indifferent to what happens abroad.
It goes without saying that the austerity measures being taken in Europe are of direct interest to Malta for if they slow down economic activity, the island will, sooner or later, feel the impact, as it did in the recession that followed the credit crunch. The situation is expected to be brought into sharp focus by the government when it presents the Budget for next year but, as happened in so many Budget debates before, most of the talk is likely to centre on the wage rise the government decrees to make up for the rise in the cost of living.
It will not come as a surprise therefore to expect the usual protests if the allowance decreed by the government falls below the trade unions’ expectations. The problem for Malta is that, against the justified claims for adequate compensation, the government would have to ensure that the island does not lose its competiveness. On its part, it would also need to keep to its plan to reduce the deficit and the national debt to the levels required by the European Union. It is in the country’s interest to do so, for a higher deficit means having to fork out larger interest payments on the national debt.
On the same day, Wednesday, that thousands of workers in Europe were protesting against the austerity measures, the European Commission came out with proposals aimed at strengthening its sanctions against member states with out-of-control public finances. If they are accepted, EU states failing to keep public expenditure growth below the “trend growth of their economy” would be forced to set aside 0.2 per cent of their gross domestic product for an interest-bearing deposit. They would get the money back once their fiscal policies have been adjusted in line with the EU’s requests.
According to the new proposals, the Commission would no longer insist solely on states bringing public deficits below three per cent of GDP but also enforce a previously ignored rule that set the maximum level of public debt at 60 per cent. Countries over the limit will be asked to reduce the amount by which they overshoot the 60 per cent target by five per cent a year, over a three-year period. Malta’s deficit is nowhere near that of some other members but it is still over the required limit, and the national debt level is over the 60 per cent limit too.
The long and short of it is that, in the face of all these circumstances, it would be wise on the government’s part to stick to its programme of putting its finances in order. It is also important for the government to do all it can to remove bottlenecks that stand in the way of making the economy more competitive.