‘Disappointing’ coronavirus budget will not stop job losses, Chamber warns

Half of €1.8 billion Malta COVID-19 budget is composed of bank guarantees, and not cash injection to pay salaries 

Robert Abela: his budget to cushion the COVID-19 impact falls short of what is desired
Robert Abela: his budget to cushion the COVID-19 impact falls short of what is desired

The Chamber of Commerce has called the measures announced by the Maltese government to inject a €1 billion cash relief into businesses affected by the COVID-19 and €900 in bank guarantees “very disappointing”. 

It said they fell short of its repeated calls over the past two weeks, saying employees were the biggest losers from the support package, despite claims that the measures were intended to protect jobs.  

“The Chamber is in a central position to make this claim because it is in touch with the needs and pains of business during these challenging times,” it said. 

The Chamber said the subsidies on salaries, a priority measure for the Chamber, were not substantial enough to avoid significant redundancies. The Chamber wants companies suffering in excess of 25% loss in turnover, to have half of their salaries paid up to a maximum of the average salary, with the employer covering a further 25%. 

“The announcement made today is equivalent to a mere subsidy of 20% of the employee’s salary at the level of the minimum wage,” the Chamber said. 

Almost half of the government’s €1.8 billion stimulus package is composed of loan guarantees for business which may be leveraged to €4.5 billion via the banking system. While government-guaranteed loans were an integral part of the Chamber’s proposals for business, their potential effectiveness was placed into serious doubt by the insufficiency of the wage subsidy measure. 

A long-awaited announcement to partially offset the employers’ cost for quarantine leave at a rate almost equivalent to the minimum wage (or €350 per employee), will not fully compensate employers for abuse by those employees who intentionally self-inflict quarantine, the Chamber claimed. 

“In a scenario of looming mass layoffs, even the deferment of payment of payroll taxes and VAT, which accounts for the bulk of the package, becomes a redundant measure. This amount will not be paid after recovery but lost forever if there are significant job losses and declines in local sales,” the Chamber said. 

It insisted that there were valid socio-economic justifications for the government to extend temporary support to ensure that affected companies maintain employees on their books whilst business is at a standstill. “Such support would serve to avoid large-scale redundancies which would inflict social hardship on affected families and increased recurrent expenditure for Government by way of unemployment benefits. At the same time, such assistance would ensure Maltese companies’ strong competitiveness position upon resumption of business.” 

The Chamber was also disappointed that no reference to a decrease in public sector spending.