17 March 2004

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UHM sets the social pact ball rolling

By Kurt Sansone

The idea of a social pact to get the economy back on its feet is less of an airy fairy concept now with the Union Haddiema Maghqudin being the first organisation to list a series of proposals in black and white aimed at enhancing competitiveness, increasing efficiency of the labour market and reducing bureaucracy.
The 52-page document contains a comprehensive list of proposals that bind unions, employers and government. Some may argue the proposals do not go far enough to address some of the more burning issues that hound the economy such as exorbitant port charges, monopolies in the transport sector, overstaffed public entities and a bloated public sector. The report also makes no mention of the summer half days for government employees and whether these should be curtailed.
Nonetheless, the bold exercise undertaken by the UHM has produced a blueprint on which the social partners may start discussing the best way forward.
Among the more controversial proposals the UHM is suggesting a limit on the percentage of wage increases for the period 2005-2006. The wage increase for 2007 would then be tied to sectoral productivity rates, calculated according to a pre-determined mechanism. The UHM is also suggesting the cost of living increase announced by government in every budget to be incorporated in any wage increase thus employees would get one increase rather than two separate increases further reducing costs for industry.
Tied to these proposals is a suggestion for employers to annually reinvest a percentage of their profits in their business for employee training and the purchase of modern technology.
As for government, the UHM is proposing a moratorium on direct and indirect taxation for the next three years and any increases in the prices of services offered by government controlled entities should be introduced in a phased approach after consultation with the social partners.
The UHM leap frogs what is possibly another controversial subject – the number of public and national holidays – by suggesting any holidays falling mid week be shifted to either Monday or Friday to reduce the cost of having to reset and restart machinery.
An important element in the UHM document is the insistence on the efficient use of human resources particularly by encouraging greater participation of women in the work force.
In this respect the social pact should include measures to assist working parents to meet costs of childcare services such as tax relief, allowances and social welfare payments targeted at low income families.
Other family-friendly measures in the report speak of innovative working concepts such as flexi-hours and tele/e-working. The UHM also proposes the removal or reduction of fiscal disincentives associated with part time work that may discourage women from re-entering the work force on a part time basis.
Targeting the unemployed, the UHM suggests introducing a ‘loans of honour’ scheme whereby government acts as guarantee for unemployed who want to take out a commercial loan to set up as self employed.
The report also stresses the importance of a multi-skilled workforce and the need to have better links between the education system and industry. These issues are reflected in a chapter dealing with innovation.
Proposals linked to these issues include fiscal incentives for employers to take on apprentices thus ensuring new entrants in the labour market will also have practical work experience, an education system that emphasises linguistic capabilities and a tertiary education stipends system linked to performance and utilised to support students in those areas of studies where additional manpower is required by industry.
The UHM is also proposing the setting up of a research and development fund to facilitate access to finance for innovative SMEs. The fund could be financed from a percentage of income tax government collects from corporate entities.
Bureaucracy also finds its place in the report with two particular proposals aimed at trimming expenses for business. UHM proposes the setting up of an independent regulatory impact assessment unit whose job would be to evaluate the impact of new legislation on business. It also proposes that ministries must undertake annual ‘anti bureaucracy’ exercises and creating action plans to reduce unnecessary bureaucracy.
Identifying tourism as a priority area for the economy the report proposes the introduction of environmental wardens to safeguard natural environment. The report says that a culture of service has to be built and cleanliness must become a top priority. However, apart from the usual rhetoric there are few concrete proposals on how the tourism product could be improved over all.

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Editor: Saviour Balzan
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