The latest rise in fuel prices by Enemalta last Tuesday week, one of the steepest since the monthly fuel revision mechanism was introduced in 2004, came at a time when Malta’s annual inflation rate stood at 4.34 per cent in May, one of the highest rates in the euro zone. This, together with the economic recession that has already hit the economy during the past year, could be the straw that breaks the camel’s back for industry as well as for consumers. CHARLOT ZAHRA spoke to a majority of the social partners, both Trade Unions and employers’ organisations, for their reaction to the announcement and its impact on the sectors they represent and the economy at large.
George Schembri (MHRA Chief Executive Officer): “The increases in fuel will reduce the spending power of families”
What is the reaction of the Malta Hotels and Restaurants’ Association (MHRA) to the increases announced by Enemalta last Tuesday week? MHRA was surprised that once again Enemalta increased prices of fuel due to the fact that the purchase of such fuels was made at a higher price than anticipated.
A 15 cents increase is a substantial increase by any standards and the MHRA feels that Enemalta is exploiting its monopolistic position. If Enemalta had another competitor in the market would it have behaved in the same way?
How do you think that these increases will affect Maltese and Gozitan hotels and restaurants? Do you think that these establishments could withstand more burdens in view of the recession that has hit the country and the high inflation that is already affecting the country negatively? The increases in fuel will reduce the spending power of families and these will have less disposable income to spend in hotels and restaurants.
Internal tourism is an important factor in view of the slow-down in foreign visitors and therefore a drop in local custom in hotels and restaurants will furthermore affect adversely the sector.
Apart from this, these increases will continue to put upward pressure on wage demands in a time when hoteliers are seriously considering this major cost area of their operations.
Did you expect to be consulted? Why? As normally has happened in the past with regard to increases in fuel prices, MHRA was not consulted beforehand. If it was, it would have recommended strongly against any increases in the present scenario without hesitation.
Will the MHRA make any kind of representations with the Government of this increase in fuel prices? A call for cost of living increase is not based on the price movement of one item but a basket of items under the Retail Price Index.
MHRA is concerned that with the state of the tourism industry at the moment, its members cannot afford any increases in their cost base.
Tony Zarb (GWU Secretary-General): “These increases will affect negatively Maltese industry and create more unnecessary pressure on workers”
What is the reaction of the General Workers’ Union (GWU) to the increases announced by Enemalta last Tuesday week? This is not a matter of huge increases or small ones because every increase in the price of fuels is a burden each time is affected. The GWU insists that increases such as those announced last Tuesday week in the price of fuels will continue saddling the people with more burdens.
Moreover, these increases will affect negatively Maltese industry as well as continuing to create more unnecessary pressure on workers. These increases also run against the consensus in other countries, especially those in the EU, where fuel prices have remained stable and there were cases where fuel prices even went down.
How do you think that these increases will affect Maltese and Gozitan families as well as low and medium-wage-earners? Do you think that these categories could withstand more burdens in view of the recession that has hit the country and the high inflation that is already affecting the country negatively? Undoubtedly, these hikes will affect negatively the basic needs of a lot of Maltese families, and more people will continue moving towards the poverty lines, especially low-wage earners.
These categories are the most vulnerable ones in society and if the Government really is sensitive to their needs, it should immediately strive how to alleviate this burden which the Government itself shouldered on them.
Moreover, this will definitely lead to a further surge in inflation when Malta already has the highest inflation rate in the Euro zone. The more the Government takes similar decisions, the more it confirms how insensitive it is to the pain of the people. Then the Government should not expect the GWU to remain silent on the matter.
Were you consulted by the Government before the increase was announced? No, at no stage was the GWU consulted about these increases in fuel prices. Genuine social dialogue is missing, and we more hear about it rather than see it implemented.
This clearly shows that the Government uses the social dialogue process only when and how it suits it.
The irony is that these increases were announced on the same day that a special meeting with the social partners on the country’s economic situation for which the Prime Minister attended was held.
Did you expect to be consulted? Why? Yes, especially since Government itself has admitted that what the manner in which it had introduced the water and electricity tariffs had been wrong, thus proving the eleven Trade Unions, including the GWU, right.
The fact that the social partners were not consulted on the decision is a fault for the Government.
Will the GWU make any kind of representations with the Government of this increase in fuel prices? Currently there is the budget consultation process going on and in the next few weeks, the GWU will be presenting its proposals based on the Government’s proposals on the matter.
What kind of compensation will the GWU will be requesting for the increase in cost of living that this fuel price hike will bring around? Despite the fact that the people have started paying with the increased prices from now, the GWU expects the increase in fuel prices to be reflected in the Retail Price Index (RPI), from which the cost of living adjustment will be calculated.
Gejtu Vella (UHM Secretary-General): “Somebody has to pay for fuel – either the consumer or the Government through taxes”
What is the reaction of the Union Haddiema Maghqudin (UHM) to the increases announced by Enemalta last Tuesday week? Each price increase, both of products as well as of services, leads to a reduction in the standard of living of workers and pensioners well as to a dent to their quality of life.
It also impinges on the competitiveness, both of Maltese industry on its own as well as when compared with other countries that are competing with us for the creating of new jobs.
When consumer prices, including those for fuels, as happened last Tuesday week, increase, nobody enjoys having to pay more for the same product or service.
However, the choices in front of us on this matter are few and far between. Since Malta does not have this resource, then the country needs to buy this resource.
Obviously, somebody has to pay for this resource – either the consumer who makes use of that resource, or the Government through taxes. This resource costs a lot of money to be purchased.
When faced with this situation when the consumer is faced with high prices, everybody is faced with tough choices.
Every cost of living increase that is given might be jeopardising the jobs of other workers in places of work that cannot shoulder the burden of international competition anymore.
The solution is not easy, but every attempt at a solution should not be thought out superficially.
Vince Farrugia (GRTU Director-General): “With the current inflation rate, the Cost Of Living Adjustment (COLA) mechanism is already forecasting a wage increase of €7.00 per week”
What is the reaction of the Malta Chamber for Small and Medium Enterprises (GRTU) to the increases announced by Enemalta last Tuesday week? The crux of matter is not whether the increases are small or huge but primarily what their impact on the inflation rate is. Malta already has a very high inflation rate and this is a huge obstacle for the economy to recover from the recession n a short period of time.
Those countries that have a very low inflation rate recover more quickly from a recession than those that have a high inflation rate.
In Malta’s case, inflation is not caused by retailers who are increasing their prices, but from the bottleneck that the economy has because of monopolies like the Grand Harbour, the airport, the Fish Market, which contribute to the inflation spiral.
To add insult to injury, the excessive increases in the charges and prices paid for diesel and electricity have also contributed to the high inflation rate.
The GRTU has made a lot of pressure on MRA and Enemalta to avoid another massive hike in the price of diesel.
We are satisfied that the price of diesel has not increased heavily, however we are still worried on the negative impact that these prices will have on the inflation rate, when Malta’s inflation rate should have started contracting as had been forecast in the last European Commission report.
How do you think that these increases will affect owners of Maltese and Gozitan small and medium-sized enterprises? Do you think that these businessmen could withstand more burdens in view of the recession that has hit the country and the high inflation that is already affecting the country negatively? With the current inflation rate, the Cost Of Living Adjustment (COLA) mechanism is already forecasting a wage increase of €7.00 per week. If the inflation rate continues to rise, COLA increase will continue to spiral upwards.
In the current circumstances, this would bring about huge problems for the manufacturing industry and the tourism industry, as well as bring about a huge additional burden on the budget deficit.
Were you consulted by the Government before the increase was announced? Did you expect to be consulted? Why? No. There is already a formula that the Government adopts when Enemalta feels the need to increase fuel prices. More than consultations, which would be futile at this stage, it should be the competition regulator and the Malta Resources Authority (MRA) that should protect our common interests.
If the MRA is not fulfilling its task, then it is up to the Minister politically responsible for Enemalta to insist with the MRA to do so.
Will the GRTU make any kind of representations with the Government of this increase in fuel prices? We have made them at the MCESD.
What kind of compensation will the GRTU will be requesting for the increase in cost of living that this fuel price hike will bring around? The GRTU will only be requesting compensation only when it has an agreement on behalf contractors who are bound with a fixed contract that does not include an escalation clause as a result of fuel prices. These normally are collective contracts that bind distributors and transporters.
In other cases, it will be up to the entrepreneurs and the service providers to adjust their prices to reduce the increases in expenses.
This can only take place where the market could still sustain an additional increase. In most of the cases, however, the market cannot sustain more increases and the burdens are shouldered by the entrepreneurs.
William Portelli (CMTU President): “Government should be sensitive if burden on families turns out to be huge”
What is the reaction of the Confederation of Maltese Trade Unions (CMTU) to the increases announced by Enemalta last Tuesday week? In the CMTU’s view, every price increase is a burden for Maltese families, especially during this period. Malta does not have any natural resources and the Maltese economy is currently under the water.
There will therefore be some burdens, although the CMTU has already made it clear that if this increase is a hefty one, this does not preclude any of the social partners from discussing the negative impact that there could be and a joint effort should be made to see how this burden could be alleviate.
I also expect the Government of the day to be sensitive enough when this happens.
As we have always said, the CMTU considers every similar increase as and additional burden, especially for those who earn low wages.
In the current circumstances, this obliges the Government to apply fiscal measures while at the same time agreeing that consumers should pay for what they consume.
However, the CMTU always insists that with a true and effective dialogue between employers, the social partners and the Government, one can strengthen further the collective responsibility so that we could face all the challenges that the country and Maltese families are facing.
In this context and at a time of a global recession which are undoubtedly affecting everybody, the CMTU will insist with the social partners and the Government that every effort should made so that the forthcoming Budget is one that address the problems facing Maltese families, while at the same time, it gives an impetus to the Maltese economy with confidence to consumers if and when it is possible.
The CMTU declares this with responsibility and commitment, especially when the size of the deficit is what it is.
Helga Ellul (Chamber of Commerce Enterprise and Industry President): “Manufacturing, tourism, distribution will be hit very badly”
What is the reaction of the Malta Chamber for Commerce, Enterprise and Industry to the increases announced by Enemalta last Tuesday week? These increases were the result of movements in the international price of oil, which are being reflected in the Maltese market.
How do you think that these increases will affect Maltese and Gozitan enterprises? Do you think that these enterprises can withstand more burdens in view of the recession that has hit the country and the high inflation that is already affecting the country negatively?
The Chamber believes that this increase is going to affect the competitiveness of its members, but the impact depends on how much fuel individual companies use in their operations, as well as on the extent of the company’s efficiency regarding fuel use.
The sectors that will be mostly hit are manufacturing, tourist establishments, as well as those who operate vehicles to distribute their products or services.
In the majority of cases, the increase will not be passed to the consumer, but will have to be absorbed by the companies themselves, which could affect the rate of growth and new investment.
Did you expect to be consulted? Why? As we have already said above, this price change was the result of the international prices of oil. The Chamber was consulted a few years ago when the policy of fluctuating fuel prices which reflect the international movements in fuel prices was adopted in Malta.
Will the Chamber make any kind of representations with the Government of this increase in fuel prices? At this moment, the Chamber does not feel that it has to do any representations with the Government over this increase in fuel prices.
