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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

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
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
country s economy
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 %
a european social model
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
the maltese scenario the milestones
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
malta cost of living adjustment
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.
methods explored in malta
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.
facing realities in the public service all on board
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

role of government in economy
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
public service collective agreement 2005 2010
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)
what future
What future?
  • External environment
  • Stance of trade unions
  • Government commitment