Employers concerned over disability quota

MEA praises cuts in energy rates for industries, eco-tax removal, third-pillar pensions, and 'Project Malta' to promote public-private partnerships. 

The Malta Employers’ Association said that the government should have consulted with employers before deciding to enforce a law that 2% of the workforce of companies employing over 20 people must be composed of people with a disability.

“We have always expressed ourselves in favour of integrating disabled persons in the labour, however there are questions that need to be answered,” the MEA said in a post-budget reaction. “How can companies employing 20 persons have 2% of its workforce classified as disabled persons? What about unregistered disabled persons? What about partially disabled persons- are they also to be considered for the quota purposes?”

By 2017, companies who don’t fulfil the disability quota will have to pay an annual €2,400 fee for every disabled person they should be employing, capped at €10,000. In 2015, such employers will have to pay a third of this fee and in 2016, they will have to pay half of it. Funds generated through this initiative will go to the National Fund for Integration of People with a Disability.  

The MEA also said it “doesn’t understand the rationale” behind the taxation of wine, given that it is a product in which local industry has invested heavily, and which faces strong competition and disadvantages due to diseconomies of scale.

While the MEA also welcomed the cuts in energy rates for industry, they said that it is important to position the energy rates at a level that makes local business competitive, given the global scenario of plummeting oil prices.

“Thus it is not the rates per se that are important but the rates relative to what competing companies are paying in other countries,” the MEA said. “We need to ask whether the new rates bring commercial energy tariffs close to the EU average.

“Another consideration with respect to energy rates is their fiscal sustainability, given that as yet, the reductions are not resulting from cheaper generation of energy, but through subsidies and, this far, in the absence of clear time-lines for the operation of the new power station.”

The MEA said that the impact of the budget on consumer expenditure will depend on the effect of the €0.58 Cost of Living Allowance increase on one hand and the substantial income tax reductions on the other.

“The rise in social housing rents, coupled with anticipated increases in prices of other services may negatively affect that segment of low income earners not covered by collective agreements or other wage adjustments,” the MEA added. “The decrease in income taxes will raise purchasing power of middle income earners who will end up with lower deductions for the upper marginal income, overtime and taxable allowances. “        

The MEA said that it agreed with the government’s decisions to remove eco-tax on electronic equipment by September 2015, to incentivise third-pillar pensions in preference to a mandatory second pillar, to issue a fresh call for Training Aid Framework funds, and to provide a one-time bonus of €35 to people in receipt of social security benefits, low income earners and income taxpayers working full-time who are not benefitting from the 2015 income tax reductions. They also described the idea of ‘Project Malta’ to promote public-private partnerships as “encouraging”

While the MEA believes that the announced in-work benefit will incentivise workforce participation, they are concerned that it could disincentivise some employees from working overtime so as not to lose the benefit.

“We appreciate incentives to employers to hire single parents, and other initiatives to make work pay, but we still maintain that the benefit tapering system can create issues at the workplace,” the MEA said. “We remain, in principle against the concept of treating social benefits as an opportunity cost to gainful employment.

They also said that the compulsory Youth Guarantee programme for young, unemployed and single mothers could renounce their dependency on social benefit, and praised the measure to link benefits with the youth guarantee as a “bold step” to channel recipients of social benefits into vocational training and productive employment.

They also said that they are disappointed that their proposal to establish a system of set-offs between government departments for amounts due by government to relieve companies of liquidity problems wasn’t taken up in the budget.

More in Budget 2015