20 - 26 June , 2001
ECONOMIC SERVICES MINISTER, JOSEF BONNICI, TALKS TO KURT SANSONE ABOUT THE UNEMPLOYMENT CONTROVERSY AND THE CHALLENGES MALTESE INDUSTRY FACES IN VIEW OF EU MEMBERSHIP.
What is your reaction to the unemployment results of the Labour
Force Survey, which were different from those published by the Employment
and Training Corporation?
What do you think of the Labour Partys criticism of the results?
Most local businesses are built on a minimum capital base, which makes them susceptible to bank loans and subsequently bank interest. This makes them very fragile.
Nonetheless, increased competition has resulted in having too many outlets chasing too few pockets, therefore the business scenario for operators has changed, resulting in lower profit margins. For a number of years now, business has been hit by longer credit terms, and this is causing a problem.
However, one must not neglect shifting consumer expenditure. Just look at the mobile phone sector. Over the last two years it has boomed. Consumers shift their expenditure, so businesses in some sectors may feel that they are losing customers, while others may be gaining them. It is a question of identifying consumption patterns and planning for them.What about the reduction of disposable income because of increased taxation?
The fiscal measures we are adopting are raising revenue through increased efficiency. The rise in National Insurance contributions, the change in Income Tax brackets and the tax on fringe benefits may have had a negative effect on disposable income.
However, we must not forget that a lot of state services, such as health and education, are free. The government must make sure that these services are run efficiently and in a sustainable way.
People are feeling the pinch, but they are not seeing government doing its part to reduce its expenditure. What are your comments?
I tend to disagree, because if you look at the number of workers in various public corporations there has been a constant natural decline in the workforce. Malta Shipbuilding, the Drydocks, the Water Services Corporation, have all seen a decrease in their workforce over the last 10 years. The government is seeking to better utilise its human resources and we will shortly embark on public-private partnerships.Is Malta facing a recession?
We might be facing a slowdown but certainly not a recession. Jobs are still being created, unemployment is going down, as the Labour Force Survey showed and growth is on the increase.
This year a number of industries such as Baxter, Methode, Carlo Gavazzi and others are expanding. They will not only be upgrading their current production lines, but, more importantly, they will be diversifying, thereby increasing value added to the economy. Furthermore, we expect to witness an additional 200 to 300 jobs being created in the jeans sector.
The opening of new firms in the high technology sector such as FAL in Mosta and Lasercom are positive developments. The scenario is not all doom and gloom as some would have us believe.What about the local manufacturing firms?
The removal of levies in some sectors has increased competition, but there are positive developments. Take a look at the detergent manufacturers; they have been diversifying their products and we have also seen a drop in prices.
But will they be able to compete with other European manufacturers if Malta
joins the EU?
What is the government doing to soften the impact of membership
on the manufacturing industry?
We recently had the furniture manufacturers getting together to form a Trade Group with the help of IPSE. They will co-operate among themselves to penetrate foreign markets, improve design and possibly import raw materials.
During the press conference to launch the furniture Trade Group,
I noticed that the involved parties were quite upbeat in the face of
foreign competition. What is your reaction to this?
When will the last levies be removed?
What are the major stumbling blocks that industry might face with
What about the Labour Partys option of a free trade agreement
with the EU instead of membership?