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Maintaining fiscal discipline under pressure. Sustainable Wage Bill Management Practices : Malta’s Experiences Paul Zahra Permanent Secretary Office of the Prime Minister - Malta. Malta ?. What is this?. Small Island State…. Island economy in the centre of Mediterranean

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Maintaining fiscal discipline under pressure l.jpg

Maintaining fiscal discipline under pressure

Sustainable Wage Bill Management Practices:

Malta’s Experiences

Paul Zahra

Permanent Secretary

Office of the Prime Minister - Malta

Malta l.jpg

Malta ?

What is this?

Small island state l.jpg
Small Island State…

  • Island economy in the centre of Mediterranean

  • No resources whatsoever…except its people!

  • Independence since 1964

  • Member of British Commonwealth

  • Member of the European Union since 2004

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Country’s Economy

  • Population: 415,000 people

  • GDP per capita: Euro 13,000

  • Main industries: manufacturing, tourism, financial services, trade, other services

  • Inflation : 3.5 %

  • Unemployment : 7 %

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A European Social Model

  • A vision of society that combines sustainable economic growth with ever-improving living and working conditions

  • This is what distinguishes Europe from the US model

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The Maltese Scenario – The Milestones

  • Stevedores and Port Workers Ordinance of 1939 and the Factories Ordinance of 1940

  • CERA (1952) – regulated the relationship between employers and employees including wage rules

  • 1974 – Introduction of National Minimum Wage

  • EIRA (2002) – Part III of the Employment Relations Section of EIRA deals specifically with the protection of wages

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Malta – Cost of Living Adjustment

  • Collective Bargaining at enterprise level possible and enhanced as agreed wage increases are “Net” of COLA.

  • Important for Employers (incl. Public Sector) as ensures predictability of costs and budgetary impact & limited impact of competitivness.

  • COLA opt-out clauses exists for firms that prove that COLA for year is not affordable.

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Methods explored in Malta

  • Wage Freeze (1983….no success and had to be abandoned)

  • Incomes Policy (1990….still in place with limited success save COLA adjustments)

  • No panacea for problems exist and pragmatic approach

  • Take stock …and communicate widely the options and impacts.

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Facing Realities in the Public Service…all on Board

  • Political commitment …critical.

  • No redundancies, but reductions through

    - strict recruitment policy

    - no recruitment at industrial level

    - natural attrition across wide rage of categories

    - simplification & re-emgineering

    - Use of ICT (incl. e-Government)

    - Labour flexibility

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Role of Government in Economy

  • Not a political ideology but pragmatic reality

  • Regulator not Operator

  • Privatisation

  • PPPs…with public service manpower attachments

  • Benchmarking Malta with other EU countries.

  • Long term planning necessary

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Public Service Collective Agreement 2005-2010

  • Agreement for 5 years…against tradition 3-year term

  • Employers and unions commenced discussions not having financial implications in March 2007

  • Wage levels determined for 5 years (net of COLA)

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What future?

  • External environment

  • Stance of trade unions

  • Government commitment