16 February 2005

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Tonio Fenech hits back at Prof. Scicluna
By Karl Schembri

Parliamentary Secretary Tonio Fenech said government’s calculations behind the measure to reduce public holidays were done by economists “lectured by Professor Edward Scicluna”.
Reacting to the economics professor’s harsh criticism at government’s economic calculations reported in The Malta Financial and Business Times last week, Fenech said they tallied with Prof. Sicluna’s own estimates and therefore he could not understand his criticism.
Contacted yesterday Prof. Scicluna stood by what he told this newspaper last week saying that he was upset with the poor standard of the document presented to the MCESD by Government. “The final result of the calculation of increased productivity is not what I contested,” Prof. Scicluna insisted.
Former MCESD chairman Edward Scicluna last week criticised the government’s calculation that a reduction of public holidays which fall on a weekend will increase productivity by 1.5 per cent, saying it was “flawed” and its workings “a childish attempt at economic estimation”.
“Whoever worked out the calculation simply assumed the numbers for labour and capital services,” Prof. Scicluna said. “Not even a first year university economics undergraduate would have ‘assumed’ such data let alone somebody who is giving the country’s prime minister such important advice.”
Asked for his reactions during a press conference last Monday, Fenech said: “The government’s calculations were made by the government’s Economic Policy Division, who, it’s good to note, were lectured by Professor Edward Scicluna.”
Referring to a business breakfast organised by The Malta Financial and Business Times last December, Fenech said Professor Scicluna had calculated that the government’s measure would raise productivity in the private sector by 1.5 per cent.
“That’s the same as the government’s estimate,” Fenech said. “So I can’t understand why we should have fooled the prime minister if Prof. Scicluna arrived to the same conclusion. I ask him how he arrived at his original figure because it tallies with our’s. Maybe he didn’t like the economic model we used, maybe he used a different one, but we have the same result.”
As to the assumptions, Fenech said: “I’m not an economist but economists teach us, Professor Scicluna foremost among them, that economic models are always based on assumptions, because you’re looking at the future. You can only assume future data because we don’t have a magical formula … He criticised the fact that we made assumptions, but Prof. Scicluna knows that the data based on assumptions is the type of data that is not compiled, and therefore we couldn’t work in any other way.
“The reality is that it’s not Prof. Scicluna who can really say whether our measure will have a good effect on productivity; it’s those who are in the productive sector who can say it; factories, hotels and other sectors. The comments they made, the Federation of Industry, the Chamber of Commerce, Malta Hotels and Restaurants Association, were that this will make a difference in the way they operate, and that the changes to employees leave will give them more opportunity to raise productivity. On MCESD they always called for increasing working hours, because to become competitive we have to increase working hours.”

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