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Karmenu Vella on recession effects – ‘real incomes down, inflation up’
Labour MP says quality of life claims by Tonio Fenech betrayed by rising inflation
Labour MP Karmenu Vella purchasing power had decreased because of greater rises in prices than in salaries.
Prices for goods and services have increased by 6.5% over the past four years, according to NSO data cited by the Labour party, more than double the average salary.
Labour MP Karmenu Vella said Eurostat data shows than per capita salaries between 2008 and 2011 grew by an average of 3.1%, or €500.
"In 2011, while salaries grew by a meagre 0.7%, prices went up by 2.7% or four times the increase. Is this a better quality of life?" Vella asked, referring to comments by finance minister Tonio Fenech who said more jobs had been created in the past four years.
Vella added that in the past three months, per capita income had increased by 1.4% over the same quarter in 2011, but goods and services had increased by 2.1% and in April inflation had climbed to 2.6%.
"This means that real incomes have decreased, and it's no surprise that consumption fell by 4.5% in the first three months of 2012. Where is the improvement in people's quality of life Tonio Fenech has been talking about?"
Malta experienced two consecutive drops in growth of its gross domestic product of -0.3% and -1% between September 2011 and March 2012, indicating the economy is now in recession.
Provisional estimates indicate that the gross domestic product (GDP) for the first quarter of 2012 amounted to €1,556 million, an increase of 1% compared to the corresponding quarter last year.
But in real terms, GDP decreased by one per cent - household consumption fell by 4.4% in the last quarter compared to the same quarter last year. but government spending had increased by 10% (q1:2012 compared with q1:2011). Additionally, the NSO data states that exports in the fourth quarter of 2011 increased by 3% (compared to the same quarter in 2010), and by 0.79% for the first quarter of 2012 (compared to the same quarter in 2011).
There was a major fall in wholesale and retail trade, a broad category that also includes motor vehicle repairs, transport and storage, accommodation and food services, which fell by 20% in the fourth quarter 2011, and again by 7% in the first quarter of 2012.
