The Malta
If you sit quietly in
silence today you can hear the economy’s plea for liberation. It has been
strangled for many successive years through multiple burdens of huge public
finance deficit, dearth of productive investment, over-valued rate of exchange
and rigidity of
The result of this strangled economy
is showing in low or no growth, loss of international competitiveness, and
rising debts (public and private) and falling savings.
This is not to suggest that the economy is about to collapse. For as long as citizens continue to show faith in funding the public deficit by over-subscribing long term public debt issues at cheap interest rates, then the situation can be carried forward for quite some more time.
But doing so will not be solving our underlying economic problems. Financing them does not equate to solving them. It equates to postponing them, making the unavoidable eventual appointment with reality much harder and more painful to resolve.
On this first budget under the administration of Prime Minister Gonzi the economy’s crying plea for liberation sounds louder and more desperate.
Of course the government had to go through the motions of trying to put together a social pact where measures are taken by consensus. But if it had any dose of realism it should have known that a patient is unlikely to prescribe his own medicine. It is unrealistic to expect the unions to subscribe on a nation-wide basis rollback to conditions obtained or given in the past.
As is happening inGermany
When the government gained political premium by extending the annual leave from 20 to 25 days and restored public holidays that where removed when the minimum four weeks leave was legislated to all, it did not seek to share its glory with the social partners.
It cannot expect to get away with a policy of ‘glory for keeps, sacrifices to share’ by having the social partners voluntarily subscribe to the rollback of such economically ill-conceived but politically convenient policies.
Prime Minister Gonzi has repeatedly stated that with consensus or without it, he will have to take the decisions to get the economy out of its state of sclerosis and to prepare it for joining the Euro at the earliest possible date, probably in 2008.
He stated, and I quite agree, that we would be disadvantaged if competing member states join the Euro before we do.
Now that we are EU members we cannot negate ourselves the benefit of the external discipline that EU membership, and in particular Euro membership, place on our political leaders to stop shortchanging the long term health of our economy for egoistic political benefits.
Of course Prime Minister Gonzi realises that for some time, hard measures will translate themselves in political unpopularity. But this is not enough reason to avoid doing what the economy is crying out for. And there are also two political reasons for not doing so.
Firstly is that if we administer the medicine now with determination and correct dosage, an economic regeneration could be engineered to show benefits in time for the next general election challenge.
Losing some electoral bouts at local council level would be a relatively small price to pay.
Secondly, Prime Minister Gonzi is blessed by the comfort of wide opinion polls showing that whereas the electorate is prepared to continue giving him a chance to prove that he can deliver, the same cannot be said about the Leader of the Opposition who remains very unpopular even with the electoral segment wishing a change of government at the next time of asking.
Perhaps unconsciously, the Leader of the Opposition through his unpopularity, is serving the national interest by giving government the confidence to apply the sour medicine the economy needs without risking unduly its electoral fortunes.
Tonight is the real test for the Gonzi administration. Unless it hears the pleas of the economy for liberation from its stranglehold there will be no another opportunity.
At next budget the lead-time to the next election will be too short to engineer a timely economic turnaround.
The economy is pleading the government to cut the chains of legislated working conditions and restore these to micro-negotiations at industry level between employers and unions.
It is pleading for government to declare its strong intention, as a major employer of the least productive economic segment, to cap its labour costs and drive efficiency gains to do justice to the employees in private sector whose tax payments are sourced from earnings in jobs competing with the rest of the world.
It is pleading for the rate of exchange over-valuation to be addressed before crisis hits. Tonight we will see whether the economy’s pleas are heard or whether we will have just another medium term plan, promise of more studies and discussions which are nothing if not euphemism for more escapism on the road leading to economic wilderness.
This is not to suggest that the economy is about to collapse. For as long as citizens continue to show faith in funding the public deficit by over-subscribing long term public debt issues at cheap interest rates, then the situation can be carried forward for quite some more time.
But doing so will not be solving our underlying economic problems. Financing them does not equate to solving them. It equates to postponing them, making the unavoidable eventual appointment with reality much harder and more painful to resolve.
On this first budget under the administration of Prime Minister Gonzi the economy’s crying plea for liberation sounds louder and more desperate.
Of course the government had to go through the motions of trying to put together a social pact where measures are taken by consensus. But if it had any dose of realism it should have known that a patient is unlikely to prescribe his own medicine. It is unrealistic to expect the unions to subscribe on a nation-wide basis rollback to conditions obtained or given in the past.
As is happening in
When the government gained political premium by extending the annual leave from 20 to 25 days and restored public holidays that where removed when the minimum four weeks leave was legislated to all, it did not seek to share its glory with the social partners.
It cannot expect to get away with a policy of ‘glory for keeps, sacrifices to share’ by having the social partners voluntarily subscribe to the rollback of such economically ill-conceived but politically convenient policies.
Prime Minister Gonzi has repeatedly stated that with consensus or without it, he will have to take the decisions to get the economy out of its state of sclerosis and to prepare it for joining the Euro at the earliest possible date, probably in 2008.
He stated, and I quite agree, that we would be disadvantaged if competing member states join the Euro before we do.
Now that we are EU members we cannot negate ourselves the benefit of the external discipline that EU membership, and in particular Euro membership, place on our political leaders to stop shortchanging the long term health of our economy for egoistic political benefits.
Of course Prime Minister Gonzi realises that for some time, hard measures will translate themselves in political unpopularity. But this is not enough reason to avoid doing what the economy is crying out for. And there are also two political reasons for not doing so.
Firstly is that if we administer the medicine now with determination and correct dosage, an economic regeneration could be engineered to show benefits in time for the next general election challenge.
Losing some electoral bouts at local council level would be a relatively small price to pay.
Secondly, Prime Minister Gonzi is blessed by the comfort of wide opinion polls showing that whereas the electorate is prepared to continue giving him a chance to prove that he can deliver, the same cannot be said about the Leader of the Opposition who remains very unpopular even with the electoral segment wishing a change of government at the next time of asking.
Perhaps unconsciously, the Leader of the Opposition through his unpopularity, is serving the national interest by giving government the confidence to apply the sour medicine the economy needs without risking unduly its electoral fortunes.
Tonight is the real test for the Gonzi administration. Unless it hears the pleas of the economy for liberation from its stranglehold there will be no another opportunity.
At next budget the lead-time to the next election will be too short to engineer a timely economic turnaround.
The economy is pleading the government to cut the chains of legislated working conditions and restore these to micro-negotiations at industry level between employers and unions.
It is pleading for government to declare its strong intention, as a major employer of the least productive economic segment, to cap its labour costs and drive efficiency gains to do justice to the employees in private sector whose tax payments are sourced from earnings in jobs competing with the rest of the world.
It is pleading for the rate of exchange over-valuation to be addressed before crisis hits. Tonight we will see whether the economy’s pleas are heard or whether we will have just another medium term plan, promise of more studies and discussions which are nothing if not euphemism for more escapism on the road leading to economic wilderness.
No comments:
Post a Comment