The social partners in Malta have asked the government to compensate their members for the significant increases in the price of fuel and gas, which came into force in January 2011. Year-on-year figures show the price of petrol has risen by 18%, diesel by 24% and gas by 52%. The government refused to guarantee help, because of the country’s fragile economy. However, a meeting was held at the Malta Council for Economic and Social Development to try to find an amicable solution.
Malta’s two largest trade unions, the General Workers’ Union (GWU) and the Malta Workers’ Union (UHM) asked the government to offset the energy price rises by revising the weightings in the Retail Price Index in order to reflect the changing consumption patterns of the Maltese people.
However, the Malta Employers’ Association (MEA) said their members would not approve any further increase in the cost of living wage adjustment which came into effect in January 2011. The association said this would create further inflationary pressures and give rise to a wage spiral that would negatively affect the economy. The Chamber of Commerce, Enterprise and Industry, while voicing its concern about these increases, advocated a long term solution advising the social partners to avoid ‘knee-jerk’ reactions that are bound to backfire and exacerbate the situation.
The Chamber for Medium and Small Enterprises (GRTU) accused the government of simply passing on international prices for fuels to consumers without considering the impact. It also asked for help for self-employed workers, its core membership. The Malta Hotels and Restaurants Association (MHRA) said employers in its sector have already been registering lower profit margins and these would be further reduced by these price rises.
The Malta Resources Authority (MRA) was heavily criticised by the social partners for failing to carry out its remit of effectively regulating energy prices.
Following these protests, a meeting was held by the Malta Council for Economic and Social Development (MCESD). The council decided to commission a report to evaluate the inflationary effect of these increases. The report, due to be ready by March, was expected to serve as a basis for a number of decisions. After the MCESD meeting, Finance Minister Tonio Fenech denied GWU claims that the government had committed itself to compensating for the price rises. He said that decisions have to be taken within the constraints of the government deficit target and the competitiveness of the economy. Although he hinted that government was disposed to compensate vulnerable groups, Mr Fenech insisted that compensation was not a foregone conclusion.
Increases in fuel and gas impact heavily on the purchasing power of workers and the business community. All the social partners have therefore used their bargaining powers to urge the government to ease the financial burdens that these price rises bring. Maltese economist Professor Edward Scicluna, a member of the European Parliament, says this surge in prices indicates the Maltese economy has not come out of the recession unscathed, and that public finances are precarious and need to be addressed. Given these financial constraints, the government may be more disposed to accede to the trade unions’ request for a revision of the Retail Price Index rather than make direct financial compensation.
Saviour Rizzo, Centre for Labour Studies