A Better Quality of Life -2006-2010 (Date: 01/01/2005)
19 September 2005
National Council of Women – Comments and Proposals
A Better Quality of Life -2006-2010
Pre-Budget Document
Comments - National Council of Women
The Pre-Budget document is as ambitious as it is forward-looking. It incorporates and builds on the National strategies and National Action Plans for development at National and European level over a five-year period, with some reference to Malta’s direction for development within the Global Economy It calls for action based on adaptability, commitment and responsibility of all individuals and the much needed cultural change that challenges are opportunities and not problems
Most important of all, it is an invitation to all sectors of society to participate in this consultation process which will be followed by the publication of the 2006 budget, which will form part of the overall strategy of this document. It is hoped that this consultation process will offer proposals that will enhance the content of this document and that practical and valuable proposals submitted will be taken on board.
The National Council of Women is submitting the following comments and recommendations
Chapter 1
A vision in the making
01.2 The rationale of this document Page 9
The section refers to Government’s three key strategic documents
It is pertinent to point out that the National Strategic Programme outlining the strategic priorities for Objective 1 structural funds from the EU for the period 2007-13 depends on the decisions taken by the EU Commission on the Financial Perspectives that so far have not reached any conclusions
It is also suggested that the priorities to be identified for the Structural Funds will have a wider spectrum to include sectors of society, including civil society, whose initiatives ‘building blocks’ can initiate an ongoing contribution to the economy that so far has not been adequately tapped. There should be a wider consultation with all stakeholders in the decision making stage.
01.4 The Budgetary Planning Period Page 10
Population Ageing, Life Expectancy and an Intergenerational Policy
The chapter refers to intergenerational budgetary decisions.
Given the shift in the population age structure, further research is needed for a sound basis for policy planning and decision-making in work and employment to rely longer than at present on older people’s skills and knowledge.
The following considerations should be taken into account:
• In which fields older workers will be able to put their skills to particularly good use, even with increasing age
• With regard to the transition from full-time employment to retirement, pre-retirement flexible arrangements at the workplace can be introduced to ensure that they are of benefit to older workers, businesses and social security systems alike to delay the age of exit from the labour market.
• Devising schemes for knowledge transfer so that older workers’ skills and wide experience over many years can be passed on in such a way that younger people are happy to take ‘old’ knowledge on board and make it part of their ‘new’ body of knowledge, both for their own benefit and for the benefit of their company.
As regards lifelong learning the following considerations should be taken into account:
• Identifying what kind of further training is most effective for older workers in terms of content and approach
• Identifying basic skills that are particularly important in old age
Chapter 2
The Challenges Malta is facing
02.1 An overview of the international economic situation Page 12
Reference is made to international economic growth, with reference to Asian growth, in particular China. Asian economic growth has impacted negatively on the European economy. To be able to compete, European industries are transferring to China, which is resulting in the increase in unemployment among other problems in European countries (relocation of industries) – European Industry within global economy.
Measures such as quotas on importation from Asian countries are being considered in the EU member states. How is Malta going to deal with compliance to these measures and avoid a negative impact on local business? What studies are being carried out regarding the relocation of industries from Europe to Asia and the impact on the local business ?
At national level, measures need to be taken to minimize the negative effects of this scenario on the Maltese economy A national policy should be devised to ensure a high level of competitiveness parallel with the efforts of the local economic sectors referred to in the conclusion (page 34)
Monetary Policy Page 17
Given the importance of the monetary policy, adequate reference should be made to Malta’s euro changeover envisaged to take place in 2008
02.1.4 Labour Market Page 26
Student population in higher education
Participation rates of 19 year old students in higher education is still low, vocational 17% and tertiary 23%) by European standards. Measures need to be taken to address this issue
Measures should also be taken to deal with gender differences accordingly
Manufacturing, Tourism (pages 27 – 34)
In these sections, the document rightly points out to the declining GDP contribution from manufacturing and tourism sectors that are two pillars of the Maltese economic profile. Despite this, it is believed that the document fails to recognise or argue the need [and challenge] to diversify Malta’s economy towards the services sector. NCW believes that the services sector offers great potential for growth and employment (including females) in the medium to long-term. Moreover, based on 2004 figures and after excluding public services, services’ contribution to GDP stood at just over 45% which is –25% of EU average.
Chapter 3
Competitiveness: the basis of our strategy Page 36
The document sets a very positive vision but lacks in substance and therefore let us have a robust strategy and action plans and implement them with determination so that we can ensure Malta's economic viability and a welfare system that distributes as due and necessary by its citizens.
The introduction highlights the importance of the social dimension. The document speaks about the ‘dependence’ of the social dimension on economic growth but fails to promote a policy of economic growth through social development. Countries such as Denmark, Austria, Luxembourg, and the Netherlands which take the lead in competitiveness all make high investments in social policy and social security systems (European Centre (2004) Lisbon revised - Finding a new path to European growth. (quoted in the May 2004 report of the high-level group on the future of social policy in an enlarged European Union (pg. 53)
03.1 Mobilising investment Page 36
Investment has a crucial role to play in improving our competitiveness and competitiveness has a crucial role in attracting investment. It is maintained that apart from stable macro-economic climate and physical infrastructure, there needs to be an attractive, stable and investor friendly economic infrastructure. One of the main features of the economic infrastructure today is regulation; considered to be the most available tool in the hands of Government, after macro-economic factors [fiscal policy, taxes, etc]. Regulation in this context goes beyond, bureaucracy as referred to in later section of this document (04.1.3) and to include quality and outcome driven regulatory policy and implementing instruments.
03.3 Reinforcing an entrepreneurial culture Page 38
The creation of the Venture Capital Fund is crucial to developing entrepreneurship Developing an entrepreneurial culture through education at all levels is also very important to ensure a culture of continuity between school and workplace
However we need to find ways of sustaining start-ups that are in difficulty, studying what the obstacles encountered were and addressing them rather than simply consider them as failures
Government should encourage the introduction of micro-financing institutions (MFI)
This must be accompanied with necessary changes in the legal infrastructure in order to make micro finance transactions possible. The aim of the micro finance institution would be to provide very small unsecured loans, ranging from LM25 to LM2000, in order to lend vital liquidity through legal channels. Local banks do not provide such loans
One of the priorities of the Structural funds should also provide for entrepreneurial initiatives, especially to encourage female entrepreneurship. Malta still has a culture of business men and not business women. We need to encourage women doing undeclared work such as for example dressmaking to declare their work and open up their own small business.
Chapter 4
Budgetary Thrusts for 2006 Page 42
The introduction lists a number of areas to be addressed.
Point 7 refers to social inclusion. Measures should also include a strategy whereby individuals at the risk of poverty are incentivised to retrain and enter the labour market thus encouraging a mentality of active participation rather than passive receivers of benefits
04.1 The Economy Page 42
04.1.1 Fiscal Measures Page 42-44
NCW fully supports measures proposed in the document to address fiscal policies that discourage work and undermine productivity. However NCW believes that the various factors influencing the state of growth of our economy require a reduction in the current corporate tax amounting to 35% to serve as a much needed impetus to business. This could be devised over a determined time frame.
04.1.2 The Public Service and the Public Sector Page 44
The establishment of a Recruitment and re-Deployment Advisory Group within the Office of the Prime Minister to manage surplus labour situations must work with deadlines in providing the necessary personnel in order to function effectively Moreover there is the need for flexibility to allow room for recruitment of specialized personnel from outside the public sector when these are lacking
The Public Service and the Public sector Page 44-47
On a generic note, it is recommended that the public sector operate on a business model. This model has been successfully adopted by the Public service in other countries such as the UK. Apart from the obvious benefits of accountability, objective and outcome driven management style, such a model creates a dynamic and responsive culture to the dynamics of the economic environment that businesses operate in.
It is believed that this section and relative measures would benefit from a distinction between economic operations and Government and Authorities (regulatory bodies). This is deemed useful, as despite the number of personnel in most cases, a number of regulatory authorities and departments lack empowering resources/information/professional knowledge to serve both the citizen and business community as due. For the business community this means stifling delays. A number of regulatory authorities/departments are considered to be lacking adequate resources to deal with complex issues in a timely fashion.
Page 46, 3rd paragraph: consolidation of public administration should also seek to address overlaps and fragmentation of regulatory functions, e.g. Malta Resources Authority is responsible for ensuring quality (overlapping with MEPA) and ensuring fair competition (lack of demarcation with Office of Fair Trading). Since some regulatory functions are relatively new, it is believed that consolidation of the regulatory institutional structures should necessarily include regulatory processes and should address weaknesses, delays and costs to businesses and Government alike. The opportunity of sharing necessary regulatory expertise and methodologies across utilities for example should not be overlooked.
04.1.3 The Role of Government in the Economy Page 47-49
The document rightly points out that when privatising certain assets and their operation, public services are to be guaranteed in the general economic interest. Within the European context and national competition rules, this is understood as the services that the market operator, for commercial reasons or envisaged commercial losses (or lack of attractiveness), would fail to provide to the detriment of the economy and citizens. Therefore, it seems pertinent that before privatisation, such services are identified as such; i.e. of general economic interest and therefore, whether there is the need to avoid or rectify market failures. The best approach to guarantee their provision at the least cost and ensure their quality should then be adopted, including the award of contracts through competitive bidding in order to ensure the benefits of competition are reaped.
Moreover, privatisation and liberalisation require an adequate regulatory structure and performance of the sector in question in order to attract confidence and investment. By way of example, the energy sector is being mentioned here which is not deemed to be sufficiently and adequately regulated. Its early privatisation, similar to what happened in eastern European countries, is therefore questionable.
04.1.2 Measures to encourage growth Page 49 – 55
04.1.3
Protecting the consumer against market failures
Further to comments made earlier relating to public service obligations, it is deemed necessary that such initiatives should take into account the economic reality of particular markets. Dominant positions per se are not anti-competitive, although they would require closer regulatory supervision in order to avoid such abuses, e.g. when firms seek monopolistic profits which should be avoided as indicated in the document.
However, in such a small market like Malta’s, fragmentation of dominant positions resulting from liberalisation may not always bring the desired results (downward pressure on prices, etc), due to economies of scale and scope. Sectors like the electricity market in Malta exhibit such attributes, wherein the minimum efficiency scale of a plant or service is such that fragmentation would run counter to the real objectives of competition. Vertical separation would also add the cost of transactions to real prices which would have to be borne by the consumer, and therefore, it is highly likely that results would also run counter to the scope and objectives of liberalisation. It is therefore suggested that the benefits of liberalisation and competition should be assessed through the efficiency test, rather then embarking on liberalisation policies on the basis of assumptions and results in bigger markets.
With regard to consumer protection, it is believed that since the consumer is a parallel economic regulator, consumers are empowered with more information, in order to make better-informed choices. Within this context, one has to consider the increased importance of consumer associations in Malta and should therefore be fostered and encouraged. The UK for example, recognises their importance and uses consumer associations, which are established by statute, as part of its regulatory policy and institutional structure. This policy, together with greater awareness and morality towards social responsibility by industry, has contributed towards the reduction of ex-ante regulation and hence administrative burden on both authorities and industry.
04.1.4 Regulatory reform and reduction of Government induced costs Page 50
The measures identified in the document are highly commendable, but regulatory reform is understood and required to go beyond reducing red-tape and bureaucratic burdens. It is suggested that a regulatory policy is established for/ by the Better Regulation Unit. Despite the infancy of the Maltese regulatory state, some tensions are already apparent leading to uncertainty, vulnerability to capture, high transaction costs on businesses, overlapping responsibilities between institutions, regulators with a multitude of non-prioritised objectives and functions, an apparent lack of horizontal coherence and enforcement and sanctioning powers that may tarnish credibility of the regulatory state amongst others. The objective of regulatory reform is to increase welfare both to industry and consumers.
Certain sectors may also be considered for reduced regulatory intervention. The need or otherwise could be assessed through various methodologies, such as the risk-based approach. A choice of implementation tools should also feature in any regulatory process in an attempt to move away from a dated command and control regime that is cumbersome to operate and comply with. As corporate social responsibility advances and consumer choice empowered through relevant information, co-regulation and self-regulation may become more feasible and credible to attain desired results.
O4.1.3 Energy
The emphasis on energy efficiency within this context is very welcome and as referred to earlier in this document. Malta’s efforts to mitigate the effects of higher and volatile oil prices should be guided by efforts to reduce the dependence of our economy on energy. The measures mentioned are also very commendable although they beg the question as to why such initiatives were not taken on before by the Authorities. It is also perplexing to note why Malta have not used the EU energy specific framework programme – Intelligent Energy for Europe which includes SAVE action areas relating to energy efficiency.
It would also be commendable if such strategy and implementing measures address the whole chain of supply, i.e. from production/ transformation processes- electricity which is reported to be highly inefficient due to aging plant at Marsa and technology used - and to include efficient transportation (reducing losses) and demand management. Due to the capital outlay that is still necessary to exploit renewable energy sources, energy efficiency programmes are deemed to be cheaper and yield earlier results and therefore should take priority.
Attracting new investment and supporting current manufacturing operations Page 51-55
Supporting micro and small business
Supporting clusters
Supporting entrepreneurship
Government should encourage the introduction of micro-financing institutions (MFI)
This must be accompanied with necessary changes in the legal infrastructure in order to make micro finance transactions possible. The aim of the micro finance institution would be to provide very small unsecured loans, ranging from LM25 to LM2000, in order to lend vital liquidity through legal channels. Local banks do not provide such loans
One of the priorities of the Structural funds should also provide for entrepreneurial initiatives. (As already stated earlier on)
04.1.8 Page 60
Addressing labour distortions
Invalidity benefits and early retirement
NCW agrees with audits being carried out with regards to the above and tightening the eligibility criteria , however they should be done with a positive approach and case by case.
Apart from those employees who are genuinely incapacitated, among those who took up early retirement only 4 out of 10 would have preferred to continue working. Only 35% of the 55-64 age group exited the labour market at the legal retirement age during 1995-
2005, while 17% were invalidated out.
(European Foundation for the Improvement of Living and Working Conditions :Combating age barriers in employment)
Recommendations
Research needs in work and employment should be carried out and positive measures adopted to retain older workers in the labour market
(see above Budgetary Planning Period Page 10)
Reducing undeclared work
• There is the need for a comprehensive strategy to address the issue of undeclared work Undeclared work occurs throughout society, involving both employers and employees. Till now undeclared part time work is very much part of our culture and it needs a culture change.
Some measures that need to be considered are:
• the creation of a legal and administrative environment which is favourable to the declaration of economic activity and employment, through simplifying procedures and by reducing the costs and constraints which limit the creation and development of businesses, in particular start-ups and small undertakings;
• strengthening incentives and removing disincentives to declare work on both the demand and the supply sides;
• reviewing and, where appropriate, reforming tax and benefit systems and their interaction to reduce high marginal effective tax rates and, where appropriate, the tax burden on low-paid workers;
• setting up suitable employment policies vis-à-vis beneficiaries of social-protection measures which will help them to participate in the regular labour market; and
• reducing the risk of unemployment and poverty traps by eliminating undesirable interactions between tax and benefits systems.
• Women are often in a vulnerable position when it comes to low-paid, undeclared work. Therefore their situation needs to be studied in greater depth so that appropriate measures can be taken.
• There is a need for an extensive public information campaign to make people aware of the negative impact of undeclared work on government revenue and social security and protection schemes and its negative consequences for solidarity and justice.
• Illegal work should not be seen as a minor offence. Effective sanctions must therefore be applied, in particular to act as a disincentive for businesses to indulge in the practice.
• Surveillance of legislative implementation must be stepped up, where appropriate with the active support of the social partners, as should sanctions in the event of violations, in particular in respect of those who organise or benefit from clandestine labour. Social awareness of the negative implications of undeclared work for social security and the consequences of undeclared work for solidarity and justice must be raised. It is also necessary to improve knowledge of the negative consequences of undeclared work.
04.1.8
Employment Page 60
Modernising the public employment services
NCW believes that a sub-section should have been inserted in the document to deal specifically with gender issues. We are all aware of the social and economical value of measures aimed at raising the participation rate of women in the labour market.
Reference should also be made to the National Commission for the Promotion of Equality, (NCPE). NCW believes that adequate funding is necessary for the Commission to be able to deliver.
Recommendations
Increasing the participation of women in the labour market
Under the new Employment Guidelines (2003) gender equality is a horizontal issue spanning all the objectives. Some progress has been made in relation to employment and training policies. However measures to improve the quality of work, career prospects, encourage women entrepreneurs, narrow the pay gap and promote women in the new technology sector are only in patches.
The following measures should be taken into account to provide the necessary incentives to increase and retain the participation of women in the labour market.
• Maximizing the number of women with individual entitlement to pensions.
• All pensions to be individualized and gender neutral
• Introduction of a ‘credit’ system for full-time parental leave for parents, mother or father of children up to four years, who have had prior paid contributions.
This should be equivalent to the parent’s social security contribution had he/she remained in paid work.
This should be added to a person’s contribution record before the average contribution for old-age pension entitlement is calculated (Criteria for registration are to be established).
• Introduction of part-time parental leave ‘credits’ for parents, mother or father of children up to the age of four years This should be equivalent to the parent’s contribution had he/she remained in paid work
• ‘Credits’ for men and women who take career breaks for the care of dependent adults and dependent relatives with disabilities
• Part-time employees are to be given prior access to either longer hours or full-time employment should their employer require additional labour.
• Introduction of a scheme of unemployment benefits for single parents registering for work to act as an incentive for single parents to enter the labour market rather than remain inactive.
• Flexible working hours are of central importance if women and men are able to combine jobs with parenthood.
• The setting up of temping agencies. (This has been proposed in the above document and NCW supports it as it has been lobbying for it)
04.2 Education 63
NCW believes that the section on Education is one of the strongest areas in the document. Whilst agreeing that the foundations of a highly skilled workforce lie in the strength of a system of quality education, as stated in the document, aims and objectives as well as measures proposed focus on strategies and structures, but fail to address the student is at the centre of the education system. Addressing emotional, social and economical issues that hinder the academic development of students at all levels should also be seriously planned. Measures addressing high rates of absenteeism must also be stepped up. Competitiveness depends on the wellbeing of each student throughout their school life and after.
The document should also highlight a strategy to address the digital divide, which is fast becoming a gender-discrimination factor (in line with the National Reform Programme)
Pensions
NCW has already submitted its proposals and comments on the Pensions White Paper.
NCW believes that the following areas should be given priority:
First Pillar
While acknowledging the need to increase the retirement age to 65 years of age for both men and women, the contribution period increased to 40 years will impact negatively on women making it harder for women to build up adequate entitlement due to gaps in their contribution record for a number of reasons:
Contribution period increased to 40 years will impact negatively on women because of:
• The wage gap of 18-20%
• The complete lack of mechanisms to ensure the principle of Equal Pay for Work of Equal Value as established in the EIRA
• Given the persistent inequality in women’s and men’s domestic responsibilities, women cannot work the full 40 years proposed in the White Paper as the contribution period for the accumulation of the Two-Thirds First Pillar.
• Women returners require time for re-training and re-skilling for an adequate re-entering the labour market
• Age discrimination, although against the law may also be an obstacle to women’s re-entry to the labour market.
Policy instrument for ‘credits’ for the undertaking of training, re-skilling etc
• We need to ensure that policies and their implementation reflect the current unequal balance in the use of time and employment of men and women. Since time use is greatly influenced by family benefits any ‘credit’ system or other forms of family benefits must reflect the current situation. The necessary mechanisms need to be in place to ensure a fair distribution of benefits for men and women
• Measures and incentives for both men and women for a more balanced use of time and employment should be considered as instruments of gender mainstreaming in social policy and social security policy regarding 15. 17.
Parental Responsibilities: This policy should be extended to men and women in relation to dependent members of the family including children and others in need of care such as the sick and elderly dependents and dependents with special needs
Second Pillar Pensions Scheme
The annual contributions into a Second Pillar Pensions Scheme should be non-taxable up to a capped limit as in the Third Pillar Pensions Scheme. This measure will serve as an incentive for both men and women.
Social Policy
04.4.3 Social Security
The above section describes current measures to control abuse of social security benefits. The document also speaks about the need to streamline the provision of social assistance structures. There tends to be a paternalistic strategy in dealing with Social Policy. This document fails to propose strategies and policies that are forward-looking and that encourage, wherever possible, beneficiaries to be active participants and thus also contribute to the economy of the country.
Gender aspect of Social Security and Pensions
Social Security Schemes and Pensions Systems need to be designed in a way not to penalize those who do unpaid care work and home care.
Conclusions
NCW acknowledges the intensive work put in this document. NCW however insists, that Gender mainstreaming should form part throughout the document and not only when talking about female participation in the labour market. This will not improve, unless gender mainstreaming is part of every policy. NCW agrees that planning for a five-year time frame is important. NCW hopes that the proposals in this document will be enhanced through this consultation process and that finally all stake holders will do their best to realistically put into practice the