The importance of Social Dialogue, Economic Performance and Governance stressed by Malta Employers’ Association Director General during the 107th session of the International Labour Conference

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Malta is a good example of how strong tripartite social dialogue structures have contributed to economic growth. The social partners were key players in the debate to join the European Union in 2004. Their role was essential in identifying and recommending policies to mitigate the negative impact of the international recession a few years later, and these policies were successful in keeping the country out of recession and minimising unemployment and yield further positive results.

Mr Joe Farrugia, the Malta Employers’ Association Director General said this during the 107th session of the International Labour Conference.

“Since joining the EU, average GDP per capita has increased from less than 75% of the EU average to 95%. Malta has one of the lowest unemployment rates in the EU. There has been a healthy increase in female participation rate – driven both by positive incentives and economic necessities – and yet the increase in domestic labour supply could not keep up with the rate of job generation.”

Farrugia said that “In spite of these positive indicators, the country still faces serious challenges, some which are a consequence of its economic successes, others which are self created. Farrugia said that the Malta Employers’ Association believes that an essential imperative is that the current level and types of activity should not come at a cost of placing at risk the country’s economic sustainability.”

Malta is undergoing a period of rapid demographic change, mostly brought about through the influx of foreign workers, and, given Malta’s geographical limitations, this is resulting in an overheating of the property market, which, in turn is becoming a major cause of wage inflation which is not backed by productivity. Employers are calling for a long-term strategic approach to such a radical social and economic transformation, to have a managed transition that will address the pressure that this expansion in population has on the social and physical infrastructure, our education and health services and natural environment.

Mr Farrugia said that the country’s main growth sectors – gaming and financial services – are inherently volatile and heavily dependent on our international reputation and rigorous corporate governance.

“Unfortunately, recent events involving financial institutions of ill repute and high ranking politicians are placing our reputation, and economic future, at risk. The brutal assassination of Daphne Caruana Galizia, Malta’s foremost investigative journalist, has left an indelible mark on the country’s social fabric.  Our governance is also being undermined by having members of parliament occupying executive positions in public entities, thus creating a serious conflict of interest between their legislative and executive roles.”

Farrugia also said that a pre-condition for successful tripartism is a bottom up approach to socio-economic matters that involves all social partners, at national, regional, and global levels.

He criticised the fact that during the ILO conference this year, a bad precedent has been set as the ILO office has openly expressed support for the Swedish Global Deal without seeking, let alone obtaining, the approval of its constituents. “Clearly, this goes contrary to good governance and also contradicts one of the four strategic objectives of the ILO – that of social dialogue and tripartitism.”


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