The official position of the Maltese Government is that Malta did not have to resort to austerity measures to counterbalance the effects of the international financial crisis and the recession that ensued. However, several important cuts and reforms have been adopted.
General information and figures
The official position of the Maltese Government is that Malta did not have to resort to austerity measures to counterbalance the effects of the international financial crisis and the recession that ensued. However, several important cuts and reforms have been adopted.
Unemployment rate (June 2010): 6.5%
GDP (bn euro – 2010): 5.91
General Government debt (2009 - % GDP): 68.6
Public deficit (2009 - % GDP) : 3.8
Source: Eurostat
Public Employees
The 2011 Budget states that public service employment will gradually be downsized by 50%. The adoption of this policy would mean that one employee would be engaged for two employees that leave.
One of the anomalies in the current collective agreement is that employees in the lowest 3 grades of the public service wage structure are denied the cost of living wage adjustment as such increases, according to the government, are absorbed in the collective agreement increments.
Pension reforms
A reform was put in place from 1 January 2007 which will gradually increase the retirement age from 60 years for women and from 61 years for men to 65 years for both. Lately, there have been proposals to increase the retirement age to 67 years to bring the pension fund to a more sustainable and adequate level.
Collective bargaining and labour reform
With regards to public sector collective bargaining, no significant reforms were applied except the increment to 6 years of the duration period of the collective agreement for civil servants in 2005, whereas in the private sector collective agreements normally expire after three years. As negotiations are underway for the renewal of the collective agreement for public service employees, all trade unions involved are opposed to such duration as they are also opposed to the government’s proposal to invoke a wage freeze during the first 3 years of the collective agreement starting 1 January 2011.
It is worth mentioning that employees were awarded a €1.16 weekly wage increase as a cost of living adjustment with effect from 1st January 2011, whereas Government Cabinet Ministers saw a rise of €27,000 in their salary to an annual maximum of €80,000 inclusive of allowances and other benefits.
Tax changes
Prior to 2008 General Elections, the Nationalist Party (in government) in its electoral manifesto promised that if re-elected it would decrease the maximum income tax ceiling from 35% to 25%. This promise was made notwithstanding the fact that the international recession was looming on the horizon. However this is one of the many broken promises on the pretext that it is not wise for the government to introduce such measure when Malta is not yet fully out of the recession.