An uncertain future looms for the country's largest private employer after workers rejected an agreement which the government has now disclosed was a "condition" linked to ST Microelectronics' recently announced investment.

Two weeks ago, Prime Minister Lawrence Gonzi spoke about the state-of-the-art investment, saying ST recognised Malta's potential, its competitiveness and workers' skills.

But when asked for his reaction on the vote taken on Friday by ST workers where they wholly rejected austerity measures proposed by the company to secure competitiveness, a "very concerned" Finance Minister Tonio Fenech yesterday said: "The investment was conditional on ST regaining competitiveness in terms of labour costs... I hope workers are aware of the consequences of their decision," he said.

"Possibly the workers are thinking that now that the company has committed the investment things cannot change. If they truly think that, they are taking the situation very lightly."

He stressed that if ST now decided to "change its mind", workers could not accuse the government of not doing anything. Mr Fenech also questioned the term "austerity measures" used by employees, saying workers had a "very generous" collective agreement before but this meant the country was losing its competitiveness, tempting ST to downsize and leave Malta.

The new measures, which would save around €600,000 in the short term, would also mean a freeze of wage increases for two years while new employees would start work on minimum wage.

"They are not asking for wage cuts but for a moratorium in which the country can win back its competitiveness."

Mr Fenech said he was surprised by the outcome of the vote because the General Workers' Union was "on board" and knew the implications of rejecting this package.

Mr Fenech said he spoke to the union and to the company and would now wait and see what happens during a meeting this week.

"My advice to the union is to explain the seriousness of the situation to the workers and encourage them to accept the proposal," he said, questioning the legitimacy of 504 workers taking a decision on behalf of 1,500 employees.

The union has 925 registered employees, of whom 542 cast their vote and only 29 voted in favour.

"When a union agrees to a certain package, workers need to appreciate that the unions did not act lightly, but responsibly."

Mr Fenech admitted that by announcing the investment before the vote, the government may have confused workers into thinking the austerity measures were not needed. In fact, no mention was made of the package being negotiated.

"But we couldn't divulge a lot of information. We couldn't have done otherwise in the circumstances."

Meanwhile, GWU section secretary Andrew Mizzi said the workers "took a gamble", probably because they thought that if the investment was coming in, the austerity measures were not needed.

"The outcome of the vote was expected because before we met the workers the government announced the investment. It was never publicly said that the investment was dependent on the changing of conditions. We told the workers, but they took a gamble. And we respect their decision."

Mr Mizzi acknowledged that if ST decided to invest elsewhere the consequences would be far more serious for the workers than the austerity measures. However, he said 50 per cent of the workers voted so their vote was legitimate.