The Labour Party and the General Workers' Union should put the country's interests before partisan politics and help work towards a social pact, Prime Minister Lawrence Gonzi said yesterday.

Although Malta was weathering the global recession, a social pact was important in the current economic climate, making it necessary for all the social partners to work on an agreed programme, he said.

"The problems are not over and we need more reforms. We need to work together and need a social pact," he said during a political activity in Tarxien.

The social pact needed to ensure that the country remained competitive and continued to attract investment.

Dr Gonzi said a pact was also needed for Malta to retain its competitive edge. Although he failed to reveal prospective new investments which he mentioned for the first time a month ago during a mass meeting to mark Independence Day, Dr Gonzi said Malta was still competitive and attractive.

He said that when Joseph Muscat was elected as Labour leader, he had referred to a new political season. However, this could only be achieved if all the stakeholders worked together. His party had won the general election with the slogan that everything was possible and he invited the social partners to work together towards agreeing a social pact since the recession was not over yet.

The Prime Minister said that five years ago the country was close to reaching a social pact but the GWU then organised a street protest to cries of "We Will Rock You" while the Queen was on a state visit.

Referring to the Labour demonstration held yesterday, Dr Gonzi said he had still not understood the reason behind it, although he insisted that everyone was free to demonstrate.

On the upcoming budget, Dr Gonzi said employment would be a priority - the protection of jobs and creation of new ones. He expressed the hope that there would be positive talks within the Malta Council for Economic and Social Development in the coming days.

Although he had not forgotten the need to eliminate the deficit, at the moment the priority would be to retain jobs and create new ones for newly graduated students, in whom the country had invested heavily.

Dr Gonzi promised to retain the student stipends since they were an investment in the future and an incentive for more young people to take up further studies.

He said that, while it was imperative to attack abuses in social benefits, it was also important that genuine cases did not suffer. Single mothers were first and foremost mothers of a child, and it was important that children did not suffer.

"These are our values," he said, adding that, while abuse would be fought, the innocent should never suffer.

He again referred to the rising oil prices, now at the same levels as last year. Last week Dr Gonzi strongly hinted that the country should expect an increase in the price of electricity as a result of higher oil prices.