Issue link: https://maltatoday.uberflip.com/i/238322
8 News maltatoday, WEDNESDAY, 8 JANUARY 2014 CONTINUED FROM PAGE 1 Mixed reactions to change in minimum wage SPEAKING to MaltaToday, Farrugia argued that the minimum wage could be explained as a means of job refusal. It establishes a standard, which draws a line between jobs that are acceptable and those that are not. "In the case of Malta, jobs which yield a productivity of less than €160 plus other costs of employment are either not accepted by both employers and employees or else, in some cases, are performed in the informal economy. In reducing the minimum wages, countries like Greece and Portugal are openly stating that they would like to attract jobs whose productivity is less than that of the level set before the downward revision. They have, in effect, recalibrated the minimum wage to reflect the situation on the labour market in the interest of enterprise and of job seekers." "For these reasons MEA's position is that the minimum wage should be altered only on the basis of the COLA mechanism, yet government policies should focus on reducing the number of persons on the minimum wage as far as possible. Increasing the minimum wage outright can result in the loss of low value added jobs that might be the source of income to many individuals and families and thus drive them further into poverty and unemployment." Farrugia said that another point worth mentioning is that, given that many people on a minimum wage jobs (basic pay, not gross income) are in the cleaning and secu- rity sectors, MEA has campaigned for government to ensure that the rate at which it awards tenders in these sectors is sufficient for employers to be able to afford to pay higher wages. It recommended that government should set a minimum rate of €7.50 to achieve this objective. This position was also supported by the General Workers' Union. "In conclusion, simply raising the minimum wage may be counterproductive. The main objective should be to reduce the number of persons in minimum wage jobs, which can be achieved through the policy measures outlined above," Farrugia said. The Malta Chamber of Commerce, Enterprise and Industry certainly does not agree with an increase in the minimum wage as a solution to address poverty. "Any measure to address poverty, in fact, needs to be carefully designed and focused to specifically address and support the spending power of the disadvantaged people amongst us," Director General, Kevin J. Borg said. When asked by MaltaToday, Borg said that the Malta Chamber strongly maintains that wages are a function of productivity and not of spending power. "It is unrealistic to assume that the minimum wage can be altered in isolation. "An increase in the minimum wage will inevitably bring about a domino effect further up the ranks and across the whole economy to the detriment of cost competitive- It has to be set at a level, which does not disincentivise the generation and retention of jobs ness." The Malta Chamber has consistently stressed that wealth creation must precede wealth distribution and this sequence must not be reversed, as it would expose the country to the risk of having less resources to re-distribute. "Besides wages, the safety net that safeguards people from poverty is sustained by the productive side of the economy that contributes taxes and social security contributions. This productive side must never be weakened, as this could bring about unnecessary risks to the country's social security system," the Director General of the Malta Chamber of Commerce, Enterprise and Industry said. Union Ħaddiema Magħqudin (UĦM) Secretary General, Josef Vella was not available for comment by the time of going to print. Government rules out renewing IIP after reaching quota JURGEN BALZAN GOVERNMENT spokesperson Kurt Farrugia denied that the Labour government would reopen the Individual Investor Programme (IIP) once the 1,800 quota is reached. On Tuesday, Brussels-based newspaper EU Observer carried out an interview with Farrugia over the controversial citizenship scheme in which he was reported to have "declined to rule out extra quotas in future". However, speaking to MaltaToday, Farrugia said: "I rule out that the programme will reopen". He said the programme is open to 1,800 main applicants, adding, "the programme will close after the 1,800 main applicants is reached. There will be no extra quotas after this limit is reached". The revamped citizenship scheme will require wealthy foreigners to invest at least €1.15 million in order to obtain a Maltese passport. Applicants must also invest in property and government bonds and shares before being granted citizenship. Prime Minister Joseph Muscat said the scheme would close once the 1,800 cap is reached. This capping however does not include additional passports which successful applicants might obtain for their family members. The EU Observer said that the British consultancy firm, Henley & Partners, which was engaged by government to design the programme "stands to make tens of millions of euros for helping Malta create up to 20,000 new EU citizens-on-paper". Every successful applicant can buy additional passports for children up to 26 years old, for their spouse, and his or her spouse's parents and grandparents, for between €25,000 and €50,000 per head. Following the programme's revamp, Joseph Muscat had also said that the scheme will no longer be led by Henley and Partners, whose contract would be revised. However, according to the EU Observer, apart from designing the scheme's legal and administrative structures, Henley will YOUR FIRST CLICK OF THE DAY www.maltatoday.com.mt also provide day-to-day services, such as marketing, and vetting of potential buyers. "In return, it will get a 4% cut of the €650,000, €50,000 and €25,000 passport fees. Henley will also compete with other Malta-based agencies to process sales and plans to charge buyers €70,000 each for its services. The set-up means that even if nobody adds on relatives, and even if Henley sells just 10% of the 1,800 places, the firm, which is based in Jersey, a British tax haven, stands to bring in some €60 million," the EU Observer said. In the interview published by the newspaper, Farrugia also denied that the programme was launched to patch up the country's economy. "We have a strong economy. We're doing this to attract reputable people who can invest in the country," Farrugia said. The scheme is expected to yield over €2 billion, with around half the amount invested in a National Development Fund. Speaking to the EU Observer, Henley's chairman Hugh Morshead, said that the 4% cut was justified because "we've done a lot of advising to the government in terms of the legal set-up, the promotion, and actually setting up our own office in Malta. We've done all this without being paid so far, so it's a commercial risk we've taken". The scheme has generated worldwide interest with the Nationalist Party leading a fierce campaign in opposition to the scheme. The PN has vowed to repeal the scheme once it returns to power, insisting that the scheme was putting up Maltese citizenship for sale instead of attracting longterm investment. The scheme was revamped by the Labour administration after talks between the government and the Opposition collapsed. Opposition MPs have lambasted the government for giving an impression that the country was in a desperate need for a cash injection and accused Muscat of tarnishing the country's reputation. However, in the interview, Farrugia rebutted criticism and insisted that applicants will undergo a severe screening process, which includes a four-stage due diligence process. Farrugia noted: "We're confident that the due diligence process is very rigorous." The EU Observer added that the scheme is being talked about in many countries, including Libya, Saudi Arabia and Syria, and reported that Henley as saying, "there will be enhanced due diligence on politically exposed persons". Yet, the Belgian newspaper said that "given the worst case scenario – a crime, or even an act of terror- ism, committed on EU or US territory by a newly-minted Maltese national – the rigour is questionable, however". Moreover, the report said that, emails sent out by Henley and information put up by other agencies highlight the nature of the scheme as "a back door to other jurisdictions". In January, the newspaper posed as a potential Iranian buyer in an email to Henley's Dubai office. The British firm wrote back saying: "Malta will be very strict to not face a risk in the EU. Therefore only persons with a top background will be successful... We do not know yet if they will accept Iran citizens. We have to see." Henley also highlighted that there is "no residence requirement". The Henley boss was also reported to have admitted that the fasttrack scheme had been scrapped, but his Dubai office said: "The funds (the €650,000 fee) are lost for the applicants but applicants get citizenship within three to six months!" But Zentura, a Maltese agency, which is also keen to scoop business, is being more brazen, the EU Observer said. The company's webpage says: "What is unique about Malta is the complete lack of restrictions, which makes this programme the fastest to obtain European citizenship."