Bite the bullet: Chamber boss calls for immediate downsizing of civil service

Government must bite the political bullet and urgently implement a rationalisation process within the public sector to cut down the government’s payroll, the president of the Chamber of Commerce told BusinessToday.

Marisa Xuereb said that the government must trim the public sector if it is to be in a position to continue to offer essential services, subsidies and carry out major projects in the future.

“During the COVID-19 pandemic, government toted the war chest it had available to offer subsidies and introduce measures, such as the wage supplement, to mitigate the effects of the pandemic,” she said.

“Now we are facing an energy crisi triggered by the war in Ukraine, and government is already started to feel the pinch, having to announce budget cuts in different sectors and to suspend projects.”

On Tuesday, Finance Minister Clyde Caruana said that the aim was to keep the deficit at between 5.5% and 5.8% of GDP. He confirmed that subsidies on energy prices would stay in place bt insisted the deficit of the country had to be kept under control.

At a meeting with social partners he also confirmed that the cost of living adjustment (COLA) would be between €9 and €10. Caruana said that if the government had not subsidised energy prices, the COLA next year would have been around €25.

“No enterprise would have been ready for that. We did not subsidise energy for political convenience but because it makes sense,” he said.

Xuereb said that if the public sector were to be downsized, it would free up funds to help it reach its targets.

She said that a vast majority of companies in the private sector were struggling to find staff to fill vacancies, because people were still lured to work in the public sector by the job security offered and the understanding that the output required would not be as high as in the private sector.

“Seeing examples such as Air Malta workers offered alternative jobs in the public sector or very favourable early-retirement conditions, makes it simpler for people to decide to join the public sector, even if at a lower pay than they would earn in the private sector.”

Xuereb said that, unfortunately, terms like upskilling and re-skilling had become mere clichés because whereas workers in some departments or entities were over-burdened, the vast majority did superfluous work and could be better utilised.

Xuereb said that if government were to initiate a rationalisation process to realign its workforce as really needed, it would cut its payroll considerably while freeing up more workers for the private sector.

She said she was not naive as to not realise this was a political decision that could have repercussions for the party in government.

But if the government were to implement such an exercise early during the legislature, it would have enough time before the next election to deal with the political fallout.

National interest

As to the €10 COLA for 2023, Xuereb said the Malta Chamber was looking out for the national interest when it out out a number of proposals to ensure such an increase would not lead to high inflation.

The Chamber has proposed, amongst others, that employees would already have been compensated during the year, do not receive the full COLA.

“Many businesses have already had to renegotiate collective agreements or revise wages and bonuses in a bid to not only attract new hires bt also to keep current staff,” she said. “We never questioned the need for workers to be compensated for the rising cost of living, all we said was that many companies had already done so.”

She said that the Chamber’s proposals were intended to serve as provocation for thought and it was already evident that other social partners were starting to see the need to discuss the matter within the MCESD.

She welcomed the suggestion floated on Tuesday by Malta Employers Association president Joseph Farrugia who said that, from 2024, COLA should be capped at €6 for the ensuing five years.

“Details of the proposal aside, we welcome the acknowledgement that the matter needs to be discussed, since we had originally been alone in suggesting that this was far more than a simple question of workers versus employers,” Xuereb said.