CoVid19 – Malta Bulletin – Malta’s Economic CoVid Emergency Plan – Review

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Prime Minister Robert Abela announced that Government has prepared a 1.8 billion euro package to support the economy, business and families. Government’s priority is that no jobs were lost but if people lost their employment they would be given all support to find alternative employment. This is equivalent to just under 13% of GDP (2019 figures).

Minister for Finance, Edward Scicluna explained that the largest chunk, 1.6 billion euro, will consist of liquidity (tax deferrals to the tune of 700 million euro) and bank guarantees (900 million euro). The latter can give access to an additional 4.5 billion euro in credit. Businesses will be able to request a three-month loan repayment moratorium with their banks.

The other chunk includes a 210 euro million investment in the economy, primarily  in the health sector.

Economy Minister Silvio Schembri explained that with regard to those industry that came to a standstill due to the crisis such as those in the hospitality sector, language schools and others, government will cover two days per week of employees’ salaries. The same applies for the self-employed who will be paid for two days a week capped at 800 euro a month. Government will also cover the self-employed’s employees for three days a week.

Government also announced similar measures on a smaller scale for entities who have lost at least 25% of their business. In this case, Government will be covering the salary for one day a week.

Employees losing their job will be able to a benefit from an 800 euro special benefit.

Other benefits include:

  • A 350 euro cash grant to all businesses for each employee on quarantine leave.
  • Two months of additional leave so that one of the parents will be able to stay at home with children.

Schembri also noted that no new applications for third country nationals to work in Malta will be accepted.

Prime Minister Robert Abela sought to re-assure viewers, insisting that “the Situation in our country is calm and under control. Put your minds at rest, our Health Authorities are prepared for any eventuality.”

Abela said this project was costed and  intended to ensure that once this crisis is over the economy re-starts in a swift manner.

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Measures  

  • Up to Euro 700 million deferral of income tax, VAT and NI payments for March and April for both employers and self-employed.
  • Euro 900 million loan guarantees for businesses up to
  • Three-month moratorium for personal and business loans.
  • Euro 350 for employers per employee on mandatory quarantine.
  • Assistance to businesses and self-employed persons forced to stop operations of 2 days per week based on Euro 800 per month salary focussed on those operations such as accommodation, food and beverages, language schools and entertainment amongst others. Self-employed persons who employ others shall benefit from an additional day (3 days per week).
  • Businesses and self-employed persons who suffered a decrease in business of at least 25% will be granted assistance equivalent to 1 day per week based on Euro 800 per month salary.
  • Those families with working parents that were forced to take leave to care for their children as neither parent nor guardian was able to telework will be granted two months additional leave of Euro 800 per month.
  • Individuals whose full-time job has been terminated as from 9th March 2020 shall benefit from a temporary increase in their unemployment benefit of up to Euro 800 per month.
  • Persons with disabilities who are unable to work from home and decide to stop due to health concerns are entitled to Euro 800 per month.
  • Rent subsidies shall increase for those families where one dependent had his/her employment terminated.
  • All enterprises who terminate an active employment contract shall be denied the possibility of applying for third-country national workers.
  • Malta shall no longer accept applications for new third-country nationals except for highly skilled workers.
  • Assistance to all third country nationals to find alternative employment in case of Job termination.

Media Reports 

Times of Malta / Newsbook / Malta Independent /MaltaToday/ TVM / Illum / Net News


Reactions 

The Malta Chamber of Commerce, Enterprise and Industry regards the measures announced this evening by the Prime Minister as very disappointing.

They certainly fall short of the responsible calls made by the Chamber to Government in a repeated fashion over the past two weeks. The Prime Minister declared that these measures were intended to protect jobs and ensure that employees suffer no reductions to their salaries. In reality, the Chamber can responsibly declare that the employees will be the biggest loser from the support package announced this evening. The Chamber is in a central position to make this claim because it is in touch with the needs and pains of business during these challenging times.

The subsidies on salaries was the priority measure for the Chamber on behalf of members. The Chamber is convinced that there are valid socio-economic justifications for Government to extend temporary support to ensure that affected companies maintain employees on their books whilst business is at a standstill. Such support would serve to avoid large-scale redundancies which would inflict social hardship on affected families and increased recurrent expenditure for Government by way of unemployment benefits. At the same time, such assistance would ensure Maltese companies’ strong competitiveness position upon resumption of business. To this end, the Chamber had suggested that in cases of companies suffering in excess of 25% loss in turnover, Government should pay 50% of theemployee’s salary up to a maximum of the average salary with the employer covering a further 25%. The announcement made today is equivalent to a mere subsidy of 20% of the employee’s salary at the level of the minimum wage.

Consequently, the Chamber is convinced that the announced measures will make it impossible for employers to avoid significant redundancies. In a scenario of looming mass layoffs, even the deferment of payment of payroll taxes and VAT, which accounts for the bulk of the package, becomes a redundant measure. This amount will not be paid after recovery but lost forever if there are significant job losses and declines in local sales.

The Chamber is also disappointed to note that no reference was made to the fact that the Government will be implementing measures to reduce public sector spending.

The Chamber, on the other hand, noted that almost one-half of Government’s €1.8billion stimulus package is composed of loan guarantees for business which may be leveraged to €4.5billion via the banking system. Indeed, government-guaranteed loans were an integral part of the Chamber’s proposals for business. Nevertheless, the Chamber fears that their potential effectiveness has been placed into serious doubt by the insufficiency of the wage subsidy measure.

On a more positive note, the Chamber noted the Government’s long-awaited announcement to partially offset the employers’s cost for Quarantine Leave at a rate almost equivalent to the minimum wage (or €350 per employee). Even this, however, will not fully compensate employers for abuse by those employees who intentionally self-inflict quarantine.

The Chamber also noted a comment made during the Press Conference by the Minister for the Economy to the effect that Government may announce further incentives in the coming days, however, it fears that any further announcements may now be too late to avoid any undesirable consequences on the economy.

Government of Malta / RSM / Malta Chamber / CiConsulta

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