Social partners up in arms over gas and fuel prices

The new range of prices, announced on Monday and welcomed by government as the “benefits of liberalisation”, represent yet another increase in the price of gas that social partners maintain will have a domino effect onto the rest of the industry – raising costs of prices and services.

As both Liquigas and Easygas went head to head by releasing price lists on Monday, just a day earlier Enemalta announced price increases for petrol, diesel, kerosene, and gasoil.

Both gas and fuel price hikes struck already-tense nerves, coming in the wake of industrial action by gas cylinder distributors during a ‘golden’ period for businesses – particularly those in the catering and entertainment sector.

Expressing “disgust” at the price hikes, the General Workers Union hit out at what it described as government’s “insensitivity” pointing out how it had no problem with increasing ministers’ salaries and increasing parliamentary honoraria - but was only able to provide a €1.16 cost of living increase (COLA) “which has already been eroded by the increases in fuel, gas, and national insurance."

“It is ironic that while last year was dedicated towards the eradication of poverty, our country is headed in the opposite direction in making decisions that are pushing many Maltese families, especially pensioners, to the brink of poverty,” the GWU said.

The GWU added that the increases in fuel would also mean greater burdens on the industrial sector, which would translate into similar burdens on the economic sector - “which is already suffering and struggling to get by because of the international economic crisis and the recession that is threatening the country.”

In its own statement, the Union Haddiema Maghqudin similarly maintained that the that the €1.16 cost of living increase will not adequately cover these price spikes as the COLA increase only covered up to 30 September 2010.

The public would now have to wait until January 2012 before the price revisions coming into force now are eventually reflected in the next cost of living increase, the UHM said. “This means that workers and pensions will need to shoulder this burden without any compensation for a whole year,” the union said, pointing out also that price hikes in gas and fuel inevitably mean price increases in other products and services as well.

Responding to pressure by both the UHM and the GWU, government yesterday called for an emergency meeting of the Maltese Council for Economic and Social Development (MCSED) to discuss the gas and fuel prices. The meeting is presently scheduled for Friday 7 January.

In its own statement , the General Retailers and Traders Union - Malta Chamber of SMEs (GRTU) lay the blame squarely at government’s feet, maintaining that it is acting like a “transmission belt” and simply passing onto the public whatever difficulties the market turned up.

 “It is clear that the government is only concerned about how overseas prices would affect Enemalta, without calculating the impact on other enterprises,” the GRTU said. “Government is incapable of finding other means through which limiting the impact on the economic without further deepening the budget deficit.”

GRTU also maintained that issue should be discussed on a national level and social partners should be assured that no other viable road exists before decisions are taken. “It is unacceptable that we come to know of decisions … without ever being given any explanation apart from ‘because this is what the pricing mechanism for energy-related products indicates’.”

The FORUM trade unions group similarly slammed the steep increase in fuel prices, pointing out that the price of unleaded petrol is now 40 per cent higher than what it was five years ago while diesel had gone up by as much as 24 per cent higher.

The unions maintained that only five countries in the EU announced price increases which were higher than Malta's, adding that other countries kept their prices stable, including countries where salaries are double those earned in Malta.

Joseph Farrugia, director general of the Malta Employer’s Association speculated that the price hikes do not bode well for the rest of the year. Contacted by Maltatoday, Farrugia said that increasing the costs of production for employers will have an “inflationary effect” throughout 2011 and well into 2012.

“Although the increases may be a reflection of an increase in global prices of gas, it is going to affect us domestically in a number of ways,” Farrugia said. “The inflationary effect, in some cases, will have a negative impact on demand of some products, putting employers under added pressure.”

The Malta Chamber of Commerce however warned against “creating a crisis where one does not exist.” While slamming the increases in the price of fuel, gas and energy “as a threat to price stability and export-led growth”, the Chamber emphasised the need to ‘concentrate on long-term sustainable solutions.’

“We should be focusing on the fact that all increases affect businesses, and businesses mean jobs. This is the focal point that we should never lose sight of,” the Chamber warned, urging social partners and government to tackle the issue “positively and rationally through dialogue.” 

Describing the price hikes as “the worst possible start” to the New Year, the Labour Party reacted by announcing a national demonstration on Friday 14 January. Just yesterday, the PL also presented a motion in parliament proposing a slew of measures revolving around the price hikes.

The motion is requesting that government provide an energy benefit to cover the recent rise in energy costs, while also calling on the Malta Resources Authority to publish its working, reports, and sources dealing with the price change approval of gas - both past and present.

Labour is also proposing a parliamentary committee that will investigate decisions taken on privatisation of national assets as well as calling for discussion between government and stakeholders on establishing a method that introduces gas greater price stability.