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3 NEWS 27.4.2023 Workshop delves into the importance of property valuation THE European Commission has pro- posed sweeping reforms of the EU's fiscal rules when they are reinstated next year, after they were suspended during the Covid pandemic. The reforms are designed to give na- tional governments more "ownership" of debt reduction plans and to make them more manageable, while en- couraging investment and reform. However, Germany and other fiscally hawkish member states have warned the plans will weaken debt and deficit rules. The Commission says the new rules will be simpler, more flexible and will have more effective enforcement. "We are living in a very different world to 30 years ago [when the rules were adopted]: different challenges, different priorities," said Valdis Dom- brovskis, an executive vice-president of the European Commission. Under the EU's Stability and Growth Pact (SGP) member states have been required to maintain deficit levels at below 3% of GDP, and debt levels at below 60%. The rules were effectively suspended when the pandemic hit, as countries raced to spend money on shoring up economies during the crisis which fol- lowed. With the EU facing huge spend- ing challenges on meeting its cli- mate goals, digitalising its economy and coping with Russia's invasion of Ukraine - meaning increased defence spending - a consensus emerged that the existing rules would need to be made more flexible to allow for stra- tegic public spending. The Commission's proposals follow a review of the SGP which was under- way even before the pandemic struck. Under the old one-size-fits-all rules, member states were required to cut debt levels by 1/20th per year in order to reach the target of 60% of GDP, or face penalties. With debt levels climbing during the pandemic, such rigid targets have been seen as unrealistic. Greece's debt level stood at 185% of GDP at the end of last year, while It- aly's stood at 141% (Ireland's debt to GDP ratio fell to 46.5% in 2022). The new proposals foresee the tar- gets of 3% deficit and 60% debt levels remaining in place, but with the Com- mission striking bilateral deals with member states on tailored debt-re- duction paths, ensuring they have enough time to reduce debt levels while allowing scope for investing in the green transition or defence spend- ing. Member states would have to reduce debt by 0.5 percentage points of GDP per year if debt limits were breached, and debt would have to be reduced within a four year horizon. Spending would have to be kept be- low potential GDP growth, but there is no set rule by how much. Officials say the new rules will allow for an extension of the four year time frame to reduce debt so long as there are structural reforms as well as in- vestment in productivity growth, the green transition, defence spending and so on. Germany has already been lobbying hard to maintain strict debt reduction rules. Writing in the Financial Times, the German finance minister Christian Lindner warned that a bilateral nego- tiation between the Commission and a national capital on reducing debt would become a political discussion. He said the Commission's plans, as they were initially floated last No- vember, "do not yet sufficiently define clear requirements for reducing defi- cits and debt ratios or keeping them at sufficiently low levels." Member states and the European Parliament will debate the plans over the next year, with the Commission expecting them to be adopted before the European elections in June 2024. Commission proposes sweeping reforms of EU fiscal rules Valdis Dombrovskis, executive vice-president of the European Commission, said "we are living in a very different world to 30 years ago", when the rules were adopted FINDING the right talent and necessary skills is one of the biggest challenges facing business operations in Malta, according to FHRD board member Stephanie Cacopardo. Malta's severe shortage of skills has been repeatedly brought to the fore with Malta's new employment policy and the Central Bank of Malta both highlighting the urgent need to up-skill and re-skill the Maltese workforce. Cacopardo, Melita Limited's HR Manager, forms part of the Foundation for Human Re- sources Development's (FHRD) new board of administrators, which was chosen during the recent biennial general meeting. She is looking forward to engaging in con- structive dialogue on such pressing issues that impact the operations of diverse busi- nesses. "The island's shortage of skills, coupled with a relatively low unemployment rate, cumbersome work permits and visa issues, as well as lengthy waits for approval all im- pact business continuity. This in turn has a ripple effect on remaining employees' mo- tivation, retention and overall experience," Cacopardo said. Set up in 1990, FHRD works to spearhead the evolution of people management and development practices, as well as the hu- man resources profession in Malta. The HR profession is facing new realities such as remote working, differences in em- ployee interactions, and new payroll/tax im- plications brought about by the pandemic. "I look forward to addressing these chal- lenges with the formidable team of the FHRD board and am thrilled to form part of a foundation that is fundamentally centred on individuals," Cacopardo said. Stephanie Cacopardo

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