Budget 2024: Social partners react to Caruana’s Budget speech

The Chamber of Commerce

The Chamber of Commerce noted an increasing portion of recurrent spending, which it said, included energy subsidies, social assistance for pensioners, vulnerable persons and low-income households. But it said such spending had its flipside.

“This is commendable as it helps the most vulnerable strata of society to keep up in the current inflationary environment. The flipside of heavy social expenditure is that the spend on infrastructure is inadequate, especially when one considers population increases in recent years and the resultant pressures on energy distribution, waste management, and our traffic congested road network.”

The Chamber said this budget was another missed opportunity at introducing concrete measures to disincentivise private car use in congested areas and during rush hours.

It also said there was little clarity in the budget on how the government is going to improve the productive capacity of the economy, beyond mention of a number of schemes to incentivise businesses to make digital and sustainable investments.

“The Malta Chamber is concerned that the emphasis on subsidies is creating a culture of dependence, and subsidies now constitute such a substantial portion of our GDP that our economic growth is being fuelled largely by subsidies.

“Government is relying on increases in tax revenue resulting from wage increases, most notably due to COLA, that are fully taxable since there has been no revision in the lower income tax bands, ignoring the recommendations of all social partners including The Malta Chamber.”

The Chamber said many events could have a significant impact on public finances in 2024: the ongoing war in Ukraine, a new threat to the stability of international energy prices arising from the war in Gaza with its potential for destabilisation in the oil-rich Middle East,  and the €100 million claim on the failed hospitals’ deal being contested by Steward.

The Chamber said it was pleased that the government was not considering introducing automatic enrolment in private pensions and the launch of a specialised commercial court, both of which were proposals of the Chamber.

Other positive developments which draw on the recommendations made by the Chamber include the regulation of temping agencies, venture capital for start-ups, incentives for family businesses, schemes related to ESG for SMEs, and the use of technology for law enforcement.

It also said that the government was finally bold enough to withdraw an incentive related to the purchase of property in Gozo to protect what is left of the greenbelts of Gozo and increase incentives for the renovation of properties in urban conservation areas.

“This budget mentions a number of ideas that need to be explored further and developed in detail to become more tangible. As always, The Malta Chamber is eager to see more tangible proposals that will provide the required impetus for a leap in quality, higher productivity, sustainable growth and improved competitiveness of our economy.”

General Workers Union

The General Workers’ Union said it was satisfied with the measures announced for Budget 2024, dubbing it as the budget with the greatest expenditure ever on social measures, which supported the most vulnerable even within the context of the ongoing international crisis.

“The GWU is pleased that this is another budget that continues to the quality of life, gives stability, strengthens the standard of living of workers and pensioners, while ensuring economic growth,” said GWU Secretary-General Josef Bugeja.

The GWU said the most important measures were those strengthening the national minimum wage over four years, the increase in social services and pensions, the subsidy on the price of energy, fuel and cereals – totalling €350 million – and all without the introduction of new taxes.

The GWU welcomed the increase in service pensioners and widows’ pensioners, cash grants for small and medium-sized enterprises, the increase in student stipends, the strengthening of the additional COLA mechanism, the increase in Children’s Allowance, the increase in Carers’ Grant as well as addressing the anomaly of those pensioners born before 1962 amongst others.

The GWU also said that even with an unprecedented level of new and additional social measures, Malta’s national debt will remain below EU limits.

The GWU said its proposal for continued subsidising of energy and fuels, regulating so-called outsourcing and temping agencies, and the principle of equal pay for work of equal value, had all been taken on board by the government.

But it said that the compensation for the cost of living should not have been taxed and that employees of the public administration, the public sector and the contractor’s workers serving the public administration should have been more support other than compensation for the cost of living.

Chamber of SMEs

The Chamber of SMEs said that while energy subsidies were an important reassurance for the economy, SMEs should have played a more prominent role in this Budget.

“The greatest reassurance of this Budget is that the energy subsidy will remain for as long as necessary. This offers basic but very important assurance.”

But the SME Chamber said there was no emphasis or new incentives on how SMEs can be strengthened.

It said a plan to renew the economy by attracting economic growth from high-end sectors was important. “At the same time however we are forgetting the absolute majority of the businesses that contribute towards the Maltese economy. It is therefore more important to see that our country’s small and medium-sized businesses are incentivised to renew and modernise to be future proof. The SME Chamber will therefore continue to work to address this gap and give priority to Maltese SMEs.”

Goo Business Chamber

The Gozo Business Chamber noted the Budget’s principally social aspect in the face of international pressures, and also praised various measures addressing Gozo.

The included the prospective start of the rural airfield project, the completion of important projects in the upcoming year such as the Gozo Aquatic and Sports Centre, the completion of Dar San Ġużepp, the Victoria Primary and Middle Schools, and the new health centre in Victoria, the acquisition of an MRI machine for Gozo, the provision of accommodation for Gozitan students studying in Malta, and those for relatives who have their family members currently undertaking care in Maltese hospitals.

But the GBC said that even with the recent publication of the Gozo Regional Development Strategy, the Chamber believes that the Budget failed in transforming the Gozitan economy into a more sustainable economy, and to sustain a long-term vision for the island.

The GBC had already noted that while the blanket 2% tax on the purchase of property in Gozo was beneficial at a point when the market was stagnant, such a blanket measure as currently formulated was incentivising the development of small apartments concentrated into massive projects, within communities that cannot currently absorb such type of development. Nonetheless the Chamber had also advocated that the savings from the removal of the reduced stamp duty should be directed to incentives which are aligned to Gozo’s socio-economic priorities.

It said that except from the increase from €30,000 to €40,000 for first-time buyers in Gozo who buy property in Urban Conservation Areas, such incentives have not materialised in any way.

In 2022 the GRDA had also highlighted that the present scheme be transformed into: targeted incentives that are aligned with the achievement of policy objectives, namely: (i) encourage more upmarket property development in Gozo; (ii) limit eligibility of the scheme to low-end, dilapidated and vacant property which is repurposed into medium- to higher-end real estate in selected development zones; (iii) at the same time, subject small units to either higher stamp duty and/or additional fees to disincentivise the construction of small, low-end units; and (iv) promote green and efficient buildings.

“Unfortunately no such type of incentives have materialised. Such a situation may simply lead to an increase in prices, without actually directing the current construction industry to more sustainable practices and upmarket property development,” the GBC said.

The Chamber had also proposed schemes for the finishings of existing property, as the risk of the current property stock of small apartments remaining vacant is now very high. “Unfortunately none of its proposals in this direction were taken into consideration.”

The Chamber reiterated the need for a new hospital for Gozo and for new law courts, as well as for a new incentive framework to attract companies to the Gozo Innovation Hub.

The Chamber was dissatisfied that sectors which need support such as importers and artisans established in Gozo, which require assistance in the transport between the two islands, were not addressed.

ADPD, the Green Party

The Green Party, ADPD, said increases to the minimum wage announced right before the Budget, were a step in the right direction but far from those needed for a decent living.

ADPD chairperson Sandra Gauci said the announced increases in the minimum wage budget were far from what several studies had been carried out. “While it is positive that the government has finally acknowledged that the minimum wage should increase, it is unclear how this increase has been established... Caritas in Malta carried out various studies and finally found that a family of two adults and two children needs an income of just under €14,000 in 2020, about €4,000 per year above the minimum wage. This means that the minimum wage in 2020 was 40% below that decent minimum income level.”

Gauci said that people on minimum wage were indeed poor workers who, even at current proposed levels of the increased minimum, did not have a decent living. “ADPD has been insisting on the need to change the basket of products and services upon which a minimum wage is being calculated. It is not known how the minimum wage agreed between the so-called social partners was worked out. The increase, on the basis of the Caritas study, should have been €78 per week and not €15 over three years as agreed. What is needed is a permanent increase in the ‘temporary COLA’ for those at risk of poverty.”

ADPD also said that the energy subsidy should have provided a unique opportunity to encourage a more sustainable lifestyle change. “We are not convinced that the cost of €70,000 per hour in subsidies is the best way to allocate our country’s limited resources. It is time to focus on whether there are better ways of using subsidies in particular those applied to petrol, diesel and electricity.”

Gauci said while basic and essential household electricity consumption should continue to be subsidised, a review of other non-residential energy and fuel subsidies should take place.

“Those economic sectors which are highly dependent on the use of petrol or diesel can be helped directly with specific assistance taking into account those needs. A reduction in subsidies could also lead to further necessary investments in areas that really lead to improved life for future generations – investments in education, and the urgent transition to renewable energy sources among others.”

Union of Professional Educators

The Union of Professional Educators (UPE) dubbed the Budget 2024 as “irrelevant to education” saying none of its measures had given any comfort to educators.

The UPE complained that there was inadequate investment in education, that working conditions had not been improved, and claimed that teachers’ freedom of association with the union of their choice was being systematically violated.

“This budget gives no hope to educators,” said UPE secretary-general Graham Sansone. “Educators are getting nothing but hollow words and unkept promises. They are working in conditions from 30 years ago, with poor salaries negotiated with the blessing of the Malta Union of Teachers. Educators have increased workloads, while conditions and pay remain miserable, because of a monopoly that violates freeomf of association.”

The UPE said the government was resting on the acquiescence of other trade unions with the bulk of teachers as members – a reference to the MUT – to not improve working conditions for teachers. “This monopoly is simply resulting in the blood acceptance of greater workloads for poorly remuneration.”

The UPE complained that union members could not get the support of their preferred union if it was not majority-recognised by the employer. “We appeal to the government to respect teachers’ rights, as workers. It is their fundamental human right to choose the trade union of their choice for the protection of their interests. Up until then, this budget is irrelevant to educators.”

For.UM

The Malta unions forum For.UM, which groups various unions, issued an unequivocal thumbs-down to Budget 2024, with president Paul Pace – who also heads the nurses’ union MUMN – saying it was a “treasonous budget”.

Pace said For.UM was disappointed that despite a reassurance from the finance ministry that civil servants and public sector employees would be granted wage adjustments as in the 2023 budget, “it was clear that government had turned on its word and betrayed workers.”

“In the absence of this mechanism, thousands of workers will lose out because of this Budget. The result will be that these workers will be poorer, with much lower spending power than at present. This is a great blow for all workers against the background of the unbridled cost of living. The government has again failed to introduce concrete measures to curb the cost of living.”

Malta Union of Teachers

The Malta Union of Teachers (MUT) slammed government’s lack of vision in the education sector.

The union said it falls short in providing new initiatives for the education sector, “particularly the vision.”

“The budget document mentions just three main items which are directly related to the sector but which have already been announced in the past months: The National Education Strategy 2024-2030; the laptop for students in year 7 and the completion of infrastructural works on a number of schools,” the MUT said.

The budget fails also to mention whether the government shall be providing a relativity adjustment for COLA for 2024 for its employees in the public service and public sector, according to the MUT.  

“This was provided in 2023. Unless this adjustment is provided, government employees will be short-changed,” it said.