Issue link: https://maltatoday.uberflip.com/i/1226904
8 maltatoday | SUNDAY • 29 MARCH 2020 INTERVIEW You recently wrote that 'unless government does not step in with substantial wage relief [...] 55,000 people could potentially be laid off or experience dras- tic reductions in their salaries: 33% of all persons employed in the private sector (164,436), and 26% of all gainfully em- ployed in Malta (212,046).' Gov- ernment has since announced a stimulus package - which it later revised. Do you think the revised version of this package is enough to avert the crisis? The Prime Minister an- nounced on Tuesday night a stimulus package to support 60,000 workers that are going to be affected most by the cri- sis. He said that the Govern- ment will offer €800 per month to all workers and self-em- ployed working in the sectors that have closed down in this time of crisis: i.e., the tourism, hospitality, restaurants, arts and entertainment, as well as the retail sector. Employers have also been en- couraged to add another €400 per month so that these work- ers will receive at least €1,200 per month. The Government is also going to offer one day salary per week (€160 per month) to 50,000 more workers who work in sec- tors that will be affected less: like manufacturing, wholesale and retail, and information and communication. This also includes offering to cover two days' salary for all businesses and self-employed in Gozo. This stimulus package is therefore definitely a step in the right direction. It has also been praised by all of the lo- cal social partners and unions. Through this stimulus package, the Government is going to in- ject €71.5 million per month into the economy: going direct- ly to the workers in most need. The Prime Minister also said that the Government will be monitoring the situation on an ongoing basis, and will be ready to increase the stimulus if and when the need arises. In my view, the Prime Minister did the right thing by consult- ing the social partners (Cham- ber of Commerce, Chamber of SMEs, MHRA, MEA) and the unions (GWU, UHM), so that together they could find an ap- propriate response in this time of crisis. The Prime Minister also said that he consulted the Leader of the Opposition. However, this is primarily a medical crisis; and no amount of fiscal and monetary stimu- lus will solve the medical issue. Economic declines in house- hold and business income are also the effect of this medical crisis; so governments need first to invest all the necessary resources to help solve and mitigate the challenge faced by public healthcare services. On- ly then can the economic crisis be resolved. All the same, the improved package of direct aid only en- visages €160 a month for the much larger tranche (employ- ing 104,000 employees) of sectors that are not considered 'critical'. Doesn't this mean that the vast majority of Malta's small and medium enterprises will go under? Given the current situation and resources, the package offers immediate support to those most severly affected. But the Government will also offer €160 per month to 50,000 other workers who will be af- fected less, working in sectors like manufacturing, wholesale and retail, and information and communication. This means that the stimulus package will offer some form of support to 110,000 workers: which amount to 66.8% of all workers in the private sectors, and 51.8% of all gainfully em- ployed in the whole economy. Both the Prime Minister and the social partners have stat- ed that they will continue to monitor the situation as it progresses, and will consider further stimulus to the various sectors of the economy if and when the need arises. Hence, I do not believe that the vast ma- jority of Malta's small and me- dium enterprises will go under. There is an agreement between the Government and the social partners to introduce further stimulus if the situation gets worse, and more direct finan- cial aid will be needed at a later stage. You also wrote that 'the com- mercial banks also need to offer liquidity measures, with very low interest rates, to all businesses in difficulty.' This doesn't seem to be happening (eg, one bank is still charging 6.5% on loans). Should govern- ment intervene directly with interest rates? And is it even possible under EU regulations? All the major commercial banks in Malta: BOV, HSBC, APS and Lombard, have issued statements in the last few days, confirming that they will intro- duce moratoria on both the re- payment of capital and interest Apart from its devastating impact on public health, the COVID-19 pandemic is likely to also wreak havoc upon the global economy. But economist and lecturer Prof. JOE FALZON argues that the economic challenge cannot be addressed, until the health aspect of the crisis is fully resolved Prevention is better than cure Raphael Vassallo rvassallo@mediatoday.com.mt If the country will eventually go into total lockdown, then yes, many more workers will be affected as not all workers will be able to work remotely from home. In such a case there would be a bigger drop in GDP, and a bigger drop in salaries and income of families