News & Events

Malta News - 05/01/2014

2014: Simplification and reform of Public service

Author: George Mangion
Published on The Malta Independent, 5th January 2013

augursThis year will be one of challenges and opportunities according to the prime minister in his end of year speech which highlighted work done by the government so far and thanked the people for the solidarity and generosity shown in l-Istrina and in other events. Equally generous were the party faithful who filled the coffers of their respective party during a call for collections to support the administration.

Dr Muscat was optimistic for the coming year and was upbeat about the good prospects that lie ahead. In his opinion it is going to be a year punctured with glorious celebrations of major historical events which will leave us gasping with joy and mirth. These celebrations include the historical milestones of Independence, the Republic, Freedom Day and EU accession) as well as the appointment of a new President (non-partisan?). There will be citizens gasping for breath given that the calendar this year is peppered with jubilant celebrations and these should be unifying events which one hopes can mitigate the political division among the voters (Malta Taghna Illkol). So what can we expect for this year given that the budget has promised us a better quality of life and to taunt the PN it also stole their thunder by reducing tax on personal income of managers and the middle class. The immediate reform includes an uprooting of the on the blink transport system which has been an unfortunate experiment for the past three years run by a German owed company registering losses of €68 million.

Guess what colour will be the new buses once the expression of interest (hopefully followed with a public tender) is concluded – certainly it will not be the bi-polar orange colour of the past. No doubt fares will go up but once established the transport system will improve our air quality if it receives a positive reception by motorists they will leave their cars home and use the public transport thus easing congestion.

But many will ask where is the beef? What are the tangible new capital projects that will improve our GDP,swell employment and reduce annual deficits ?An ebullient prime minister roll calls the list of projects to include free childcare centres, the maritime hub in Marsa, the cruise liner terminal in Gozo, massive land reclamation plans , the new power station and new traffic junctions at Kappara and near the Addolorata cemetery.

That is quite a mouthful and it augurs well. The nagging feeling is such ambitions projects need a vigilant and efficient civil service to see it through not forgetting the taming of MEPA -a tough cookie which may be the fly in the ointment –ie unduly slow down the issue of permits.

Is it a paradox to hear PL apologists continue to remind the party faithful to rejoice as Malta has done well in 2013 having registered the fourth lowest unemployment rate in 28 EU countries. Other good news are the daily sights of a recovering economy with record tourist arrivals, starting a new investment in gas operated power station and a respectable 1.9per cent GDP growth  Such good tidings are broadcast daily on State owned TV showering us with news about the economy saying it is on the mend while sadly most of the eurozone countries are languishing in sick bay. Some may ask – is this a home grown miracle of the Borg in-Nadur type or partly the work of an imaginative PR machine on steroids churning out smoke, spin and mirrors?

The truth is that we are still borrowing too much. Should we not be concerned by a national debt approaching a ratio of 75 per cent of GDP, with all this profligacy requiring repayment with interest in the coming years to come? It is true that the economy has grown in recent years with GDP at constant prices growing at an average of over 4.3 percent per annum during the years 2007 – 2010 (based on estimates), except for 2009 when the economy contracted mindful of increased  unemployment which in 2011 stood at 4.5% but it inched upwards to 6.8% this year. It is still a thorn in our side that gainfully  employed persons include a relatively high percentage in the public sector (27.6 percent as at 2011-about 37,000 including state agencies) with a winter timetable starting from 7:45 am to 5:15 pm with a 45 minutes’ break followed by three and a half months of summer reduced hours starting 7:30 am to 1:30 pm with no break.

But many government departments still open in the afternoons in summer because the workload is too much for them to close shop at 1.30 pm. Unions fight tooth and nail to preserve the status quo saying that several departments adopt different time tables that include even longer hours in winter and even in summer. This is normally done by creating flexible hours for employees and even by adopting a voluntary scheme that an employee can choose to work longer hours after 1.30 pm and then have the hours worked extra compensated for as time off on a one-for-one basis.

The unions are very keen to remind industrialists that such systems do not incur any extra costs but the paradox remains  -at  times when governments all over Europe are seeking to curtail budget deficits through fiscal consolidation and a leaner labour force in the public sector, it is clear that locally the government and unions must face reality. It is a good time as any to stop supporting outdated labour practices that contribute to inefficiencies and inflate public expenditure. For its part, the Malta Chamber of Commerce, Enterprise and Industry believes that the half-day system certainly needs revisiting, and has been suggesting it for a number of years. The Employers association says that our country surely cannot afford such a luxury which is reminiscent of the balmy days in the past when as a British colony the officers in charge clad in white shirt and khaki shorts retire after lunch with a few gin & tonics while men sahib packs his bags at 1.00 pm and heads home to till the fields and attend to other chores. Now, 50 years after independence public officers not exactly sweating in air -conditioned offices yet can still enjoy relaxed sunny afternoons at the beach while the private sector toils all day to earn its keep during the summer -busiest season of the year.

Surely massive investment in computers and air-conditioning have rendered summer time schedule archaic or at the most possibly reserved for a limited section of workers who work in the searing heat on road maintenance or beach cleaning tasks.

In immediate response, the unions reply that half-days are part of the family-friendly measures that enable employees to spend more time with their family when children are on holiday. The stark fact is that the private sector is principally responsible for the generation of wealth and prosperity in the country, yet it requires the full and unfettered support of an efficient public service.

Observers who are accustomed to working conditions in other Mediterranean countries tell us that local business cannot copy public sector policies and practices such as the half-day system, which delay business, and undermine competitiveness-so why in Malta no political party has tried to reform the half-days routine? Can these comments  be pure envy of those who cannot enjoy half- days? This may be partly so but then we cannot ignore our partners in EU who are facing a chronic unemployment crisis and need to pull their socks up.

To start with Portugal’s parliament approved the government’s austerity package to speed up a reduction in Portugal’s budget deficit by raising income and value-added taxes and cut the wages of some top-paid civil servants. Germany follows hot on the heels as it aims to save around 80 billion Euros between 2011 and 2014 and get its budget deficit below 3% of GDP limits by 2014 slashing welfare spending by 30 billion Euros over the period, cut public sector payrolls by up to 15,000 by 2014, and raise new taxes on nuclear power plant operators and air travel.

Spain has been cutting civil service salaries by 5 percent since 2010 and frozen the rest after 2011, while more than 6 billion Euros will be cut from public investment. Italy has approved a 24 billion-euro deficit cut and introduced measures such as delaying retirement dates by between three and six months, a state salary freeze and cuts of high public sector earners. Italy aims to lower its budget annual deficit to 2.7 percent by 2015.

France is also aiming to cut state operating costs by 10 percent over the same period. Finally Greece, which is the hardest hit by recession, will impose a public sector pay freeze until 2014 and has abolished Christmas, Easter and summer holiday bonuses, also known as 13th and 14th month salaries, for civil servants earning above 3,000 Euros a month and has capped these at 1,000 Euros for those earning less. Public sector allowances are cut by an additional 8 percent and vat went up to 23% with an added 10 percent increase on excise taxes on fuel, cigarettes and alcohol.

To conclude, the Prime Minister’s forecast for this year is optimistic and one hopes that some tightening of the screws on the public sector (a speedy introduction of Simplification measures) can lead to a more efficient throughput. As they say the public service is the holy cow, an untouchable and while no tears have been shed on the redundancy of the massive workforce at shipyards the civil service is unashamedly cocooned in a cast iron shell. Can the prime minister succeed to break the shell?

Author: George Mangion
Published on The Malta Independent, 5th January 2013