All in a Day

The Malta Independent on Sunday 
 

It cannot be coincidental that we are getting such a concentration of bad economic news nearly every single day, especially since the new year festivities faded off. Take a typical day last week.

Two hundred and forty of our most productive employees engaged in producing jeans for export have been discharged by a foreign-owned company compelled to down-size and reduce its work-force in Malta by 33 per cent. This cannot be due to market contraction as the major economies of the world are registering growth rates beyond what was imaginable just six months back. It must be that, at least in the manufacturing sector, we are losing out on the globalisation challenges as manufacturing jobs are lost to more competitive producers in the Far East without our succeeding to attract new manufacturing investment geared to our new realities.

What irks me is that these same employers, just 12 months ago, at the height of the EU referendum campaign, welcomed the Prime Minister to tour their factory and denied all allegations that it was facing problems of competitiveness which would force it to down-size.

I would not suggest that the cause of down-sizing is directly related to our decision to become EU members. I do dare suggest, however, that it could have connections with the injudicious decision made by our Central Bank last August to cut by half the US dollar content in our rate of exchange basket formula just as the US dollar was about to start its collapse on the foreign exchange markets. Considering that many Far East operators have a US dollar based exchange regime, and considering that our rate of exchange against the dollar strengthened nearly 30 per cent in less than one year, such an extraordinary rate of exchange movements have an influence on accelerating the relocation of economic units which could have survived here longer under a more docile exchange rate regime.

I also cannot help noticing the very mild approach taken by the GWU when confronted with such private sector redundancies. Clearly, the unions have no tools to protect these private sector employees and can only accept such restructuring and redundancies in the interest of those who remain in their jobs, and cannot go beyond promising to do their best to find the redundant employees new employment. Compare this to public sector re-structuring where the unions demand and get job guarantees, together with redundancies on a voluntary basis accompanied by the award of cash bundles. Indeed our workers are operating in an apartheid regime where the least productive gets the most protection. How can true socialists accept such blatant social discrimination?

In the same day we had the admittance by Maltapost foreign operators that they were caught out over the Christmas mail and that the backlog was finally cleared in the first week of January. This declaration by Maltapost NZ part-owners and managers is an insult to our intelligence. The long list of excuses that mailing patterns have changed this Christmas and that Christmas mail arrived late from overseas are nothing but excuses. If anything Christmas mail is reducing given the electronic means which many are shifting over to express their greetings. How Maltapost could be caught out just shows the incompetence with which Maltapost is being managed by operators who were given the freedom to abuse their monopoly to cut the quality level of their service thus saving on cost and making space for charging their management fees.

Whoever operated the postal service in Malta had managed to come to terms with all changing client patterns over the years and ensured that Christmas mail was delivered by Christmas, earning the employees a deserved rest between Christmas and the new year. Blaming the leave given to employees in the week after Christmas for the delay in delivery of Christmas mail is really scraping the barrel of excuses. Maltapost’s two-year management agreement was signed in February 2002 and given the general outcry by the public for the deterioration of the postal service, the government would do well to unwind the pitiful deal it made with the NZ operators.

In the same week another hotel has closed down and discharged its employees taking to six the number of hotels which announced closure in recent months. Furthermore, it was announced that Corinthia are on the point of selling Mistra Village which will be converted by the new owners into a residential complex. Clearly, tourism has not grown and the inefficient operators are being forced out of business with projects having to be re-shaped for the only thing which seems to be going strong – residential property development. With bad news streamed in such quick succession, with unemployment reaching levels not seen since the 1980s recession, it is hardly surprising that people are getting frustrated at the evident inability of our leaders to come up with any solutions for our problems except for the pious hope that magic will somehow strike us on 1 May. The opposition seems intent on raising awareness of our economic state of deprivation by organising street protests. This is all well and good in a democracy but hardly contributes to getting a millimeter nearer to any solution.

I tried to get some consolation from public finance statistics hoping that at least the pain of the citizens is reflecting itself by some improvement in State finances. But no. November 2003 public finance statistics still indicate that failing figure fudging for the month of December 2003 the public deficit for 2003 will be significantly in excess of that predicted in the November budget speech.

But such figure fudging seems to be well on its way. For years since the FSS system was introduced in 1997 I made it a habit to charge all my income at the maximum rate and then await a tax refund in December of the following year, a sort of forced saving which would be released just before Christmas. This year the refund for basic 2002 which normally should have arrived last month has still not turned up.

My enquiring through CIR indicates that the refund due to me has not been issued although interest for the overdue payment has been added to my account. When I asked why it has not been issued I was given that sort of look which said I should not ask such embarrassing questions, leaving me only to conclude that refunds due in 2003 were delayed not to exacerbate the deteriorating budget deficit and will now be issued in 2004 forcing the Exchequer to pay interest for the poor management of public finance. Have you heard the rumour that in Hungary they are forcing the Budget Minister to resign, to take responsibility for losing control over the public deficit?