Workers who got salary raise should not get full COLA – Malta Chamber

“Summer half-days should be abolished. Public sector departments operating on a half day schedule are detrimental for business, particularly departments such as Customs.”

Workers who had a salary raise this year should not receive the full cost of living adjustment expected to be announced in the budget later this year, the Malta Chamber of Commerce, Enterprise and Industry is suggesting.

They should only get the difference between the increase to be announced by the government and the COLA for 2022, the chamber said in its pre-budget document, published on Saturday.

The argument for this is that these workers had already received a wage boost. Low-income workers should get the whole COLA, it said.

With inflation going through the roof in the last months, the yearly COLA is expected to be the highest ever, with some reports placing it at €8 per week.

Among other proposals, the chamber is suggesting the introduction of parking meters in urban centres, and the cutting down of VAT charged by restaurants and takeaways to seven per cent.

The chamber also suggested that the road licence paid should depend on how much the vehicle is used, by factoring in mileage covered since the previous renewal in addition to the existing criteria of engine type, size and age of vehicle.

Malta urgently needs a longterm energy plan to make the country more resilient, given that energy costs are not expected to return to their pre-crisis levels within the foreseeable future, the chamber said.

Malta is an exception amongst EU countries regarding industrial energy tariffs, since these are higher than domestic rates. Regardless of the current subsidisation of energy by the government for both households and businesses, this remains anomalous and needs to be rectified, it said. Additionally, businesses should be incentivised to become more self-sufficient in terms of energy generation, the chamber added.

At current levels of energy subsidization, it is likely that excessive consumption is also being subsidized. Those units that are over and above the eco-reduction entitlement should not be subsidized, the chamber said.

It added that consumers should be incentivized to replace appliances that are inefficient with energy-efficient alternatives through reduced VAT on such products.

Significant investment is required in the distribution network to reliably provide for the energy needs of the country, particularly as it shifts to electrification of vehicles to meet the targets.

The energy market distribution must be liberalised to allow competitive market forces to bring down prices and increase efficiency, the chamber suggested.

Petrol and diesel subsidies should be gradually phased out and replaced with incentives for alternate modes of transport by promoting a behavioural change through an e-mobility wallet concept, with funds made available for use on various sustainable transport modes other than private cars, it added.

“Investment in Commercial Electric Vehicles needs to be further facilitated.”

It also said that a skills survey needs to be carried out to provide real-time structured skills availability data and enable the identification of skills gaps, which can be addressed through upskilling and reskilling of the workforce and targeted recruitment of adequately skilled imported labour.

Tax breaks for the first 5 years should be introduced to encourage highly qualified Maltese nationals working and living abroad to return to Malta, it suggested.

“There should also be a scheme whereby households can claim a tax deduction on fiscal receipts related to services rendered for home renovations, repairs, cleaning and maintenance work.”

The government should rectify the Work-Life Balance Legal Notice by introducing a centralized system for keeping a record of parental leave utilization, ensuring that no portion of parental leave entitlement would be transferable and addressing the current fluid business situation with greater sensitivity, thus undertaking a reassessment of the situation after the first year of implementation, it said.

As for pensions, the Chamber said that workers who qualify for a pension before retirement age and choose to take it should be given the option to work on a part-time basis.

“It is high time to revise the capping on pensionable income, as salaries have been increasing for many years and the cap on pensionable income has remained stagnant.”

The Chamber also had recommendations for the public sector.

Government should commission an independent audit exercise to take stock of the skills and output of the human resources currently employed by the government, directly and indirectly, and an analysis of their efficiency and effectiveness in government, it said. Surplus staff should be seconded to the private sector through incentive schemes, the chamber added.

“Summer half-days should be abolished. Public sector departments operating on a half-day schedule are detrimental for business, particularly departments such as Customs,” it added.

The chamber suggested that public spending on R&I should reach 2% of GDP by 2024 and 3% of GDP by 2026.

The chamber also addressed the difficulties faced by employers to recruit third country nationals.

While bureaucracy and inefficient sequences of procedures can cause substantial impediments for employers, this is further exacerbated by administrative issues experienced when dealing with Identity Malta, the chamber said.

The Malta Chamber said it is aware of several cases in which businesses have experienced issues related to conflicting information provided by different contact persons at Identity Malta. This conflicting information can lead to a degree of uncertainty amongst employers, and potentially a lack of trust in the fairness and universal application of the agency’s processes. A key component when it comes to attracting and retaining the right talent from third countries is an efficient system that processes requests for family reunification in an expeditious and fair manner, it said. “Unfortunately, the length of time required for administrative approvals for these family members is exorbitant and can have a real impact on the attractiveness of the Maltese labour market. This bureaucracy should be tackled,” the chamber said.