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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…
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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
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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
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A vision of society that combines sustainable
economic growth with ever-improving living and
working conditions
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This is what distinguishes Europe from the US model
The Maltese Scenario – The
Milestones
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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
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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
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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
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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
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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
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Agreement for 5 years…against tradition 3-year term
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Employers and unions commenced discussions not
having financial implications in March 2007
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Wage levels determined for 5 years (net of COLA)
Results thus far…
Gainfully Occupied Population*
Private and Public Sectors Percentage Shares
80
70
60
50
40
30
20
10
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
What about headcount?
Public Service Workforce
December 2003 - September 2009
Category and Sector
Dec '03
General Service (Management and Administrative )
Police Force
Armed Forces
Professional (Other than Medical or Educational)
Medical
Nursing/Paramedical
Educational
Other Departmental (Customs, etc.)
Technical & Supervisory
Industrial/Messangerial
Dec '08
Sept' 09
Change %
3,579
1,854
1,775
397
715
3,949
5,328
1,915
2,391
6,365
3,752
1,888
1,705
419
783
4,380
5,153
1,631
2,039
4,681
3,776
1,854
1,791
411
754
4,652
5,168
1,809
2,010
4,346
5.50
0.00
0.90
3.53
5.45
17.80
-3.00
-5.54
-15.93
-31.72
28,268
26,431
26,571
-6.00
Public Officers detailed/attached to Authorities/Public Entities
2,089
1,727
1,567
-24.99
Part-Time Employees
Temporary Employees
Contract employees
369
1,121
631
495
1,287
859
490
1,282
642
32.79
14.36
1.74
30,390
30,799
30,552
0.53
Total
Grand Total
What future?
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External environment
Stance of trade unions
Government commitment