17 OCTOBER 2001

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The pensions debate – an eye opener

We have always looked at others to inspire us and to guide us. And it is therefore surprising, to say the least, that the union leaders who attend international conferences and seminars abroad and spend so many valuable hours away from home have ignored the writing on the wall.

We refer here to pension reform.

In Germany - one of the European countries where unions play a very important role in management and political strategies - a quiet revolution is taking place that can only be described as innovative and essential.

Germany as we will all agree is an affluent country. Its citizens live a comfortable life and there is a social welfare system that works.

It is also a driving economy that leaves Germany as one of the richer nations of Europe and the world.

Yet, with their efficient collection of taxes and their buzzing economy, the German government led by a social democrat is taking steps to introduce new measures that will reform the state pension system.

Germans will, from 2002, be able to siphon 1% of their gross wage into insurance products, bonds and stock. This will increase 1% every two years to reach 4%. Simultaneously, the government will reduce its ratio of state pensions to wages from 70.7% to about 68% until 2010.

This is not a very daring reform but it is a start. When the social democrats go there will surely have to be more changes.

The crux to all these changes is the budget. There is hardly any way that the budget can continue to sustain such large amounts for an ever-increasing pension contribution.

Here in Malta we are still basking in the wake of a debate on pension reform that has not taken off.

The so-called second Galdes report.

The first Galdes report was a farce, for its non-debate of the financing of political parties. As we can all guess, nothing ever changed after that report.

The second Galdes report is now waiting for a baker to bake it. Perhaps we are blind, but there is no baker in sight.

The unions have taken a very negative approach to the whole business of pension reform, taking advantage of a report which was leaked to the press.

We have said this before and we will say this again, there is no time to waste. We must act now before the pension time bomb catches up with us.

The Privatisation process

The privatisation drive at MIA is underway. And all eyes are on the future.

We are for privatisation, for it is one sure way of divesting pressure off the bloated state sector. If there is to be a lucrative scheme to privatise then surely it must be the MIA.

We are not for scaremongering here, but let this process be proper.

And let all the cards be shown.

We are concerned that some individuals or companies may or may not be involved in a conflict of interest situation. This is no laughing matter and this one definitely requires clarification.

If this is the case then let us settle the matter once and for all.


The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt